ID 34013 Lecture Notes - Lecture 7: Scope Creep, Stuart Pugh, Length Overall

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Published on 13 Mar 2018
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Chapter 6: Project Compensation and Design Fees
Design Service Fees
fees=income for the company
Charging a professional fee instead of selling merchandise
Variety of fee methods, different methods are better at different times and under different
circumstances
Billing Rate
A dollar amount charged for each design professional; usually expressed as an hourly
rate
Billing rate=salary rate of employee+overhead expenses+profit
Most commonly, your billing rate should be a multiplier of 3x’s your salary
Based on salar is far more simple to calculate
Based on DPE is more accurate
Overhead expenses
Also called selling and administrative expenses, as those expenses incurred whether the
firm produces any revenues or not
Expenses necessary to “keep the doors open”
Non-billable time
rent , phone, copies, advertising, etc.
Fringe Benefit
An extra benefit supplementing an employee’s salary, for example, a company car,
subsidized meals, health insurance, etc.
Direct Personal Expenses (DPE)
A number that includes salary+benefits, taxes and paid holidays
Direct and overhead expenses
Profit
Most accurate way to determine multiplier
Billable rate based on DPE
Direct Personal Expense and Fee Multiple
o Total annual salaries $100,000
o Total fringe benefits $
Estimating Design Fees
Understand the scope of services
Calculate costs carefully (including expenses and profit)
Considerations when developing a fee
Know what the market charges
Maintain your reputation
Your value is in what your client values
Relationships
Offer services others don’t
Residential projects vs. commercial projects
Designer’s experience
Client’s experience with an ID
Size and complexity of project
Indirect Job Costs
Overhead
Overtime
Indecisive client
Scope creep
Unforseen consultants
Unforeseen job site delivery costs
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