Perks of the job - which to accept, which to steer clear from

We recently had a prospective client meeting for a residential alteration and addition project, and after all of our discussion on the possibilities of the project and learning about what our would-be client is after and how they intend to live their lives in a newly refurbished space – you know, all the good stuff that we talk about when we first meet someone.  Somehow we got talking about construction costs, and then following came up... and I paraphrase our prospective client...

“I was doing some research on architects, and I even spoke to some friends who were saying that it’s common practice for architects to ask builders for a ‘finder’s fee’ if the builder wins the job. Is this something that your office does?”

You might imagine that I was quietly taken aback - this was not a question I was expecting to receive at an initial client meeting, but one I was happy to answer. This was too good an opportunity not to write an article on the topic!

The short answer is that in our office, this definitely is not the case. I can only see something like a ‘referral fee’ that the builder has to pay to the architect for what is the privilege of winning a tender as something that inflates the cost of the project. Personally, I would rather just receive fees for the great value professional services our office provides, rather than seek to get a bonus that the builder has to ‘pay’ for.

From a business perspective I suppose this makes a lot of sense - it’s a way of maximizing profit from a project, and if you think about it further architects pretty much suggest to their clients a plethora of other consultants and services to be paid for by their money in bringing up their project. (See my article on Secondary Consultants, and you can get the picture).  Consider the time architects have to invest in marketing and advertising their business, meet with prospective clients, write a tailored proposal letter, and maybe have a few follow up meetings and other contact points – all of which well before our client-architect agreement is confirmed.  Consultants are critical for the success of any project due to their specialist knowledge and expertise, architects rely on them constantly, but conversely the bulk of consultants rely on architects for work referrals. As do builders when they make it to a tender shortlist. This sounds a bit blunt, but it really boils down to being competent at what they do and they are in with a strong chance.

But consider this, there are some deeper things here, and I might try to draw some links to my own experience that are related.  See what you think….

The Architects Accreditation Council of Australia has a guideline note on how Architects should treat this topic, I’ve copied it verbatim below...

4.8 An architect must disclose to a client or to a prospective client if there has been any payment or other advantage for any endorsement given or comment made about products or services likely to be used in connection with the design, construction, use or occupation of buildings. If such endorsement or comment is made in an advertisement or any publication the disclosure must be included in the advertisement or published matter.

So simply put, this means that if you are a practicing architect, and if you accept gifts, or payment for being a brand ambassador for similar, the onus is on you to disclose these items to your clients where there might be a perceived or actual conflict of interest.

A good example of this is selecting a building material.  Manufacturers invest a lot of resources of getting their products out there and market these quite heavily to Architects – either through agencies. Some go around and offer bottles of wine, maybe tickets to sporting events and the like.  Another example is being a brand ambassador, or even a ‘face’ of products and services that your reputation as an architect is helping to sell.  A few of my colleagues are ‘brand ambassadors’ for an online design services professional directory.

I remember when I was doing my professional practice studies this came up in conversation - what’s ok to accept and what’s not? Well, it’s really up to the individual to decide. The general consensus was that you might say thanks for the gift, but perhaps return it so the issue of conflict doesn’t ever arise. In this instance, the reality is this is not practical.  At one point of my career I remember I was regularly saying to suppliers, ‘I’d rather that you gave our clients a discount than give me a bottle of wine’, and of course because they are in sales and can think on their feet really well said, “Redmond we already do that!”.  Oh, of course you do!  I think at the time the suppliers must’ve thought I was a bit odd – who would refuse a free bottle of wine?!  I had a chat with my Director about this, and he calmed me down.  It’s not that big a deal. 

So instead, what I normally say is… “Well thank you so much for the gift, that was incredibly thoughtful of you!  Just so you know, I’m happy to accept the gift in the spirit of goodwill in which it was given.”  If I get pressed on what this means I say, “Well my love of [insert type of gift here] is well-known.  But just so long as you understand that I’m free to advise my clients independently and impartially, and free to look at other products and services that are available on the market, and if you are fine with this, then I am fine with this too.” Everyone nods, exchanges well wishes, has a great Christmas (or whatever) and moves on.

However, back to the original question.  Making it a condition of a builder to pay the architect a ‘finder’s fee’ as a privilege for winning the job, the perception of such a concept doesn’t sit well with me.  It also raises a question about who is engaging who for the work, if say the Builder is paying the Architect (which they are).  When an architect administers a building contract, they are meant to be fair and impartial to both the client and the builder.  When say you are on site and inspecting the quality of work, assessing progress claims (and maybe variations too), how ‘fair’ and ‘impartial’ will you look in the eyes of everyone involved, if you have accepted monies from the builder?

Architects are engaged by clients to perform a lot of tasks, but one of them includes being their independent advisor and agent who acts in the best interests of their clients (read this article, 10 reasons to hire an architect).  This role is critical in how we engage with the community as professionals.  Understanding how we maintain this responsibility by respecting this role and the requirements is in the best interest of our clients, and of the architectural profession which is needed now more than ever.

Redmond Hamlett is a Director (Project Architect) of WHDA, he regularly engages with the Australian cultural milieu in his design work and loves realizing architectural ambition on site.  You can get in touch with Redmond on 03 7020 5784 or redmond@whda.com.au