Sapers, Carl & Jay Wickersham, The Architect s Responsibility Regarding Construction Costs (2010)

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1 Sapers, Carl & Jay Wickersham, The Architect s Responsibility Regarding Construction Costs (2010) Much of the current criticism of architects is that they are too occupied with their dreams and not enough focused on concrete reality. The worst of them - or perhaps the best of them - are seductive, as well. Unless lashed to the mast the clients hearing their siren call will fling themselves into the sea and disaster. No wonder, then, that owners of building projects seek practical advisers to protect their financial interests from the seduction of architects. Frank Lloyd Wright humbled the great merchant prince, Kaufmann, when the latter dared politely to question the firmness of Wright's structural design at Fallingwater. And many star architects refuse to design to a client's needs, let alone the client's pocketbook. The myth abroad in the land is that no architect will subordinate his or her own ideals to the practical necessities of the client. Some would even argue that architects do not consider as relevant the "Three Ms" mechanics, materials, and money which lie at the center of the client's anxiety. One solution for those convinced by the myth is to buy the design concept from a star designer and buy the detailed design from which the project is to be built from a practical, down-to-earth production house. Another solution, which gained currency in the 1990s, is for the client to hire a project manager - often a general contractor - who will in turn procure such design services as are necessary from an architect subordinated to the manager's will. It could be argued that the parlous state of architecture as a profession stems in no small part from architects who abused their clients' trust, and that each generation of young architects has focused so narrowly on developing a design aesthetic that they ignored the Three Ms which were central to their clients' concerns. Of course, the young couple seeking to build their own home do not typically have the luxury of project managers, in-house construction experts, or value engineering. These are the helpers that corporate America now relies on when embarking on a building project to protect against the siren call of the seductive architect. The young couple, if they have dared to engage an architect, have only the architect to shepherd them through the valley of the shadow of death, which is how many remember their first encounter with a building project that stretched their financial capability to its utmost limit. Did Will Bruder do right by Hill and Sheppard? They. of course, were unusual clients. Steeped in the art world, they wanted a house that expressed the best in modern architecture. They wisely chose an architect who could deliver a triumphant design.

2 Bruder got a "good vibe" from their first meeting which, in a manner of speaking, may be that the clients trusted Bruder and were prepared to rely on his judgment Why didn't he immediately disclose to Hill & Sheppard what his experience to date surely told him: no architect-designed house, and particularly no Bruderdesigned house, could be built for $65 per square foot? Perhaps Bruder guessed correctly that there was more room in their budget than the clients had reveled to him. Perhaps he was convinced that Hill & Sheppard wanted a triumphant design more than they wanted to stay within their budget. But wasn't it his obligation, nonetheless, to let them make the choice with realistic facts before them? When the architect and his client reached agreement on $85 per square foot, shouldn't that figure have nagged at Bruder's conscience as he sat on the Mexican beach and conceived the project design? If Bruder himself did not possess the knowledge of materials and mechanics to realize necessary economics, one possible choice was to engage someone like Krista Kenyon, the analytical carpenter who could figure out how to make the design modules fit the available materials. (Walter Gropius used to boast that his house in Lincoln, Massachusetts came from simple materials available in the hardware store and the "five & dime.") Another choice was to hire an experienced local contractor to provide realistic estimating and value engineering as the design progressed. But both choices involved additional expense. While the fee paid to Bruder was not niggardly, it hardly covered Bruder's time, let alone the time of these outside experts. Why, one might ask, shouldn't Bruder, who knows so much, be expected to have steeped himself as well in the Three Ms? Your teachers are fond of telling the story of Thomas Jefferson that is recounted in a young Vermonter's visit to Virginia in 1822: Wishing to visit the buildings of the University of Virginia, then in the process of erection at Charlottesville, and also to visit their illustrious projector, Mr. Jefferson... 1 procured a letter of introduction to the superintendent of the works, and repairing to that village, at once delivered my letter to the gentlemen to whom it was directed. 'That is Mr. Jefferson," he said, glancing over the letter and seeing it included the request of an introduction to that personage. "That is Mr. Jefferson whom you see yonder, taking the chisel from the hand of an Italian sculptor and showing him how to turn a volute of tile capital on which he is engaged." "Why, does Mr. Jefferson go into sculpture in so practical a manner as that?" I asked in some surprise. "Yes," was the reply. "Yes, often when he detects faulty work. Indeed, we consider him the best workman on the grounds. 1 1 Thompson, D.P., Green Mountain Boy at Monticello (Brattleboro. VT) 1962, pp. 19, 20.

3 One can almost hear, echoing across two centuries, the superintendent mutter, "And I wish he'd go home so we could get on with the work." But, of course, Jefferson understood the materials he had chosen and the process of installing them as well as anyone at that job site. Jefferson designed with materials and construction methods with which he had considerable familiarity. But those were simpler times. Jefferson used materials which were being used conventionally; Bruder chose common materials, but used them in highly unusual ways to achieve his artistic objectives. Bruder's office has no endowment to cover the expense of testing methods and materials in order to produce economical results. Moreover. the cost estimate of the architect is always subject to the vicissitudes of a changing market. As happened in Phoenix in 1992, a sharp rise in prices may undermine even the most careful budgeting - particularly when, as in this case, there is no general contractor assuming an overall price risk. When the construction cost exceeds the client's budget, the relationship between the client and architect is invariably strained, to say the least. Frequently, the relationship does not survive the strain. In 1896, when Clarence Beede refused to pay architect George Coombs his fee because the house Beede had bargained for at a budget of $2.500 in fact cost well in excess of $3,000, a Maine court had to resolve tile dispute. The court recognized that an architect might be cavalier enough to guaranty the ultimate construction cost to his client and would be bound by conventional contract law by his guaranty; but absent such a clear guaranty, the court ruled that Coombs was entitled to collect his fee. In reaching that conclusion, the court observed that the price of the house was a function of what Mr. and Mrs. Beede wanted the house to contain and noted, in particular, that Mrs. Beede kept asking for more amenities. The court also wrote that it was nearly impossible for an architect to fix precisely "the cost of any building if the cost is to be measured in any such capricious way as by the bids of contractors. 2 For sixty years, the Maine court decision prevailed and effectively protected architects across the United States from loss when the client's budget was exceeded by the cost of construction. Then an Illinois court took a different view of the issue. Applying good homespun Midwestern values, that court read into a conversation between the architect and his clients about the clients' budget exactly that guaranty that the Maine court discounted as improbable. In fact, the Illinois court found it improbable that a client would proceed with a house design without first obtaining the architect's guaranty as to what the house would cost. 3 A word is necessary on another aspect of the obligation to design to the client's budget. Most of the old legal cases arise in the context of an architect seeking her fee from an owner who abandoned the project because of the unexpectedly 2 Coombs v. Beede, 89 Me. 187 (1896), 3 Spitz v, Brickhouse. 3 III.App. 2d 536 (1954).

4 high construction price. (Sad to say, it is not uncommon for owners to use such a defense when the real reason for abandoning the. project was lack of available mortgage funds, lack of a major tenant or some other cause beyond the architect's control.) Those courts finding that the Architect assumed a responsibility to design to the Owner's budget as a condition of the Owner- Architect agreement denied the designer his fee. There had been, so they reasoned, a substantial contract breach by the Architect, and the Architect could not recover. In a few cases, however, the Owner went ahead with construction of the project on a cost-plus basis or some other basis whereby he was not aware of the cost overrun until it was too late to turn back. In three such cases the courts of Texas. Colorado and Massachusetts, having found that the Architect assumed the obligation, ordered the Architect to pay from his own pocket the cost overrun. 4 All modern court decisions recognize that an architect owes the client a duty of disclosure. That duty means telling the client what the architect knows or believes about the ultimate project cost. It means, as well. never hiding from the client relevant facts about the project cost when they are known to the architect. In short, the architect is a professional who is held to a higher standard than the standard of the marketplace. That standard, often described as a fiduciary duty, means that the architect is expected to be forthright in his disclosures to his client. The Role of AIA Contracts This brings up the subject of contracts, and the standard forms produced by the AIA. Do an initial reading of the B101 form of Owner-Architect Agreement produced by the AIA (2007 edition). We will be returning to this document in several future classes; don t worry now about understanding all the details, but rather try to get a general sense of how the document is organized. (If you have no prior experience with contracts or legal issues, you may find it useful to this point to read the introductory piece by Carl Sapers, On Contracts, contained in the materials for the Understanding Contracts unit.) In general, Article 1 of the B101 contract contains general background information about the project. Articles 2 through 4 and 6 describe the services that the Architect provides to the Owner (client). The responsibilities of the Owner toward the Architect are described in Article 5 (information and services) and Article 11 (payments). Finally, there are several articles that delineate the relative rights and duties of the parties when things get sticky, including the use of the Architect s documents (Article 7), how disputes are settled (Article 8), what happens when the Architect s services are suspended or terminated (Article 9), and a catch-all of legal issues that provide useful clarification (Article 10). 4 Capitol Hotel Co. v. Rittenberg, 16 Tex.Civ.App. 977 (1931); Kellogg v. Pizza Oven. Inc.; 156 Col. 295 (1965): Kaufman v. Leard. 356 Mass. 163 (1969).

5 From the 1960s through 1997, it was the goal of the architects sitting on the AlA's Documents Committee to protect the architect against unfavorable court decisions holding him responsible for cost overruns, like the Illinois case described above. To this end, the AIA forms held that the Architect had no responsibility for designing to the Owner s budget, unless both parties had agreed in writing that the contract would contain a Fixed Limit of Construction Cost. The contract forms then set so many conditions upon the Architect's duty with regard to meeting the fixed limit (e.g., the Owner was expected to cooperate in reducing the scope of the Project) as to make the Architect's agreement to design within a fixed limit of construction cost of little benefit to an Owner. This process illustrates the power of a trade group like the AlA to use the language in the standard forms it publishes to reverse an adverse legal proposition harmful to its membership. Some people describe that process as private law-making." But then the AlA had second thoughts. Beginning in 1997, some professional leaders recognized that owners had lost confidence in the ability of architects to meet the owners' budgets. "The lost confidence in budget control has eroded owner confidence in their architects," wrote one leading practitioner. "The perception that architects either do not care or lack the expertise to manage costs must be dispelled. 5 Over the next ten years, the issue was actively discussed: should the Architect continue by virtue of AlA contract language to avoid responsibility for meeting the Owner's budget or should the Architect assume an obligation to design to the Owner's budget? Read carefully Article 6 of B101 (2007), and you may well conclude that AlA has done an about-face. The Architect now undertakes to design to the Owner's budget as a standard elements of the basic services that it provides. The old notion of a special and unusual fixed limit of construction cost agreement has disappeared. But on close examination, as you look at the protective language that the AIA has retained in Article 6 regarding adjustments of the project design, one might conclude there is less here than meets the eye. No prudent Owner can relax when he signs a B- 101; no realistic Owner can have confidence that it will get the project it expected to get when the Architect assumed the obligation to design to the Owner's budget. 5 Tsoi. Edward, FAIA. "Background to the Changes" (1997).

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