What a great discussion today with our residential designer colleagues!
Today’s topic was about contracts and agreements.
We started with sharing our coffee and tea mugs, and after an icebreaker video, we moved into our questions and discussion.
These designers care!
They openly shared their strategies and experiences with their peers, from setting clear boundaries on revisions to navigating agency requirements, and demonstrate a collaborative spirit that enriches the industry!
Their approach emphasizes integrity, trust, and a genuine desire to help clients realize their vision, while protecting the creative and professional standards that allow them to deliver exceptional work. This dedication to excellence and mutual support not only enhances client satisfaction but also fosters a respectful, supportive community within the design industry.
Here’s a recap of what we discussed. Enjoy!
Question 1 was: In your residential design work, do you use a standard agreement for every project, or do you customize it? If you customize, could you share some examples of what that looks like and explain why you choose to tailor the agreement for each project?
The discussion among designers brought out many great points.
In residential design, using customized contracts rather than a standard agreement is widely favored among design professionals to better address the unique aspects of each project and client relationship. Designers typically start with a basic contract template but tailor it for each engagement to reflect the project’s specific needs, budgetary constraints, and client preferences.
Many designers have multiple contracts across project phases, such as separate agreements for preliminary design, detailed construction design, and field observations, which can offer clearer structure and security for both parties.
A common approach to use is the 20-30-50 structure, where the preliminary design is estimated to be approximately one-quarter of the project, which allows the designer to adjust further phases based on early insights. Designers often base their contracts on hourly rates with provisions for adjustments. If clients request changes frequently, the contract allows a shift back to hourly billing after a specified number of revisions. This approach ensures flexibility and safeguards against unmanageable scope creep.
Additionally, designers emphasize transparency from the start, and discuss fees, revision policies, and other costs outside their scope, which they carefully detail in the agreement. Having this clarity upfront is essential because home projects can require compromises among factors such as house size, features, and budget.
To initiate the client relationship, some designers charge a booking fee, or use a letter of engagement, which helps to secure their time and resources. Some designers also include a preliminary feasibility study which is a lower-cost service that can assess the viability of the project. These customized, phase-based agreements reflect a commitment to manage project risks effectively while accommodating the client’s evolving vision.
Question 2 was: How do you address situations where a client disagrees with your fee after the agreement has been made and work has already started? Specifically, if the client claims they didn’t understand the terms of the agreement, how do you ensure clarity around payment terms and resolve the issue?
The professional designers who attended shared the following important points and their experience.
When clients dispute fees after the agreement is in place and work has begun, it is crucial to address the situation with clarity and professionalism. Ensuring that clients fully understand payment terms starts with a transparent, well-drafted contract, reviewed by both parties and even their legal counsel if necessary.
Having clear agreements help to minimize misunderstandings, and helps clients grasp the scope and value of the designer’s services from the start.
Demonstrating the value of the designer’s work is also essential. By emphasizing how the designer’s expertise can prevent costly mistakes and delays, clients are more likely to appreciate the long-term savings and benefits of hiring a skilled professional building designer.
Having a strong sense of one’s own self-worth as a designer is vital, and sets and communicates the designer’s value with confidence, which underscores why the fee is justified. While some designers might find it challenging to convey their value effectively, it helps to focus on specific qualities and services that differentiate their work from others. For example, building a reputation for reducing construction costs through precise communication and planning often leads to repeat engagements with builders and positive client referrals.
Designers who charge premium fees often provide enhanced services that stand out from others in the field. Understanding these differentiators can help build client confidence in the fee structure.
When having to address a dispute from the client about the designer’s fees, it is helpful for the designer to emphasize their commitment to open communication and the benefits of a clear agreement, and also reiterate the value of what you as a designer bring to the project.
When asked what these professional building designers put in their agreements that stand out from other designers, they responded with these helpful ideas:
- Some designers often include unique provisions and clarifications to set their services apart and ensure that their clients have a clear understanding of what is and isn’t included in the project scope.
- Many designers specifically outline the scope of services, and mention exclusions such as site plans or electrical plans, which prevent misunderstandings. To reinforce this clarity, some designers incorporate a summary of the client’s wish list and requested features, so that the clients can revisit their initial goals and expectations throughout the project.
- Designers who have expertise in navigating regulatory requirements add value by guiding their clients through complex agency processes such as replat waivers or Geo-Haz submissions, which can be challenging without specialized support.
- Structural design experience is another notable differentiator that allows designers to offer enhanced project stability and longevity.
- To support seamless communication and execution, some designers include addendums or exhibits in their construction drawings, which outline specific design elements that streamline the construction phase. For example, designers who produce their own truss plans can help truss manufacturers understand and achieve specific design features, which aligns the final product closely with the designer’s original intent. These detailed inclusions clarify the scope and demonstrate the designer’s commitment to precision and expertise, which enhances the client’s confidence in their choice of a designer.
When asked about their experience with clients who ask for specific dates of the phases of the plans, the designers responded with:
- Clients and builders sometimes request specific dates for each project phase, which can create challenges for designers who need time for thoughtful and creative development.
- While setting clear phase deadlines can help to keep a project on track, frequent or last-minute changes by the clients often disrupt this timeline.
- Designers aim to balance flexibility and structure, and recognize that the creative work they do requires space that is free from undue pressure.
- Some designers manage expectations by advising their clients that the process might take longer than anticipated to ensure quality and precision.
- Rather than charging penalties for missed dates, some designers sometimes offer incentives for early completion if that aligns with project goals and doesn’t compromise design quality. This approach emphasizes collaboration instead of imposing rigid deadlines, which fosters an environment where the designer and the client both feel supported and valued.
- Clear communication about the impact of changes on timelines can help clients make decisions more thoughtfully, which prevents rushed requests near the completion of a phase of the project. Designers who address these timing expectations upfront and explain the value of the creative process, often find that their clients are more receptive to reasonable timelines and understand the importance of allowing space for quality work.
Our third question was: Did you watch the AIBD Monday Minute this week? Have you used something like the 20-30-50 proposal?
Here’s what the designers conveyed:
Many designers have found the 20-30-50 proposal model helpful for structuring project phases, though it often requires adjustment to fit the unique demands of each project and the client. In this approach, the project progresses through distinct stages: initial concepts (20%), design development (30%), and detailed working drawings (50%).
While this breakdown provides a clear, structured approach, some projects such as complex remodels or rebuilding after significant damage such as a fire, might need more flexibility. For example, designers might find that they need to invest more time in the preliminary design phase to clarify requirements before they move on to construction documents. The time they spend in this phase can sometimes surpass the time spent on later stages to ensure that all of the elements align with the client’s vision and avoid costly adjustments later on.
- Many designers have developed custom payment structures to suit both their process and the expectations of the client. Some designers require a 50% deposit to start, with the balance due before they release documents to engineers, which ensures their commitment and reduces risk.
- Other designers tailor the 20-30-50 structure to include additional phases such as a feasibility study or construction observation, with each phase billed upfront.
- Designers often clarify in the contract that retainers or deposits are non-refundable, which can discourage clients from changing course in the middle of the project without considering the designer’s invested time and resources.
To avoid getting stuck in endless revisions, it helps for designers to define what constitutes a “revision” in their contracts.
- Simple adjustments such as repositioning a door or a window might be included as part of the project, but structural changes such as relocating walls might need to count as revisions.
- By setting clear boundaries about what constitutes a revision, designers can preserve the integrity of their time and maintain flexibility when clients request changes.
- Some designers might adjust the final cost of the project based on the number of revisions and the square footage, while other designers might structure their fees according to each phase.
- Having a tailored approach ensures that designers can manage the client expectations while preserving their own capability to produce high-quality and creative work.
In summary, the designers in this industry demonstrate a profound commitment not only to their craft but also to supporting each other and serving their clients with genuine care and diligence. They invest significant time and effort into creating customized agreements and structured processes such as the adaptable 20-30-50 model, that balance their creative freedom with their client’s needs. Their contracts reflect an understanding of the importance of transparency, helping their clients recognize the value and precision that goes into each phase of design.
What a great and lively discussion among everyone! So much gratitude for everyone who shared their strategies, approaches, and experiences!
Thank you for your participation and for reading!
Bernie
