Client-architect relationships and agreements

Background

Successful relationships between architects and clients are essential for a number of inter-related reasons. They foster effective communication so that the client’s needs and expectations in relation to time, costs, the design and the final built outcome are well understood by the architect, but also so that the architect’s expertise and limitations are made clear. Engagement and collaboration between the client and architect and other relevant project participants can help align the design and built outcome with the client’s vision, while also ensuring effective management of time and cost limitations. These features can also assist in establishing mutual trust, respect and confidence between the architect and client and drive positive outcomes from the perspectives of both the client and architect.

The Systemic Risks Report includes a chapter concerning client-architect relationships and agreements.[1] It discusses the importance of a well-functioning client-architect relationship to drive successful design and construction outcomes.[2] It also outlines the various aspects of the client-architect relationship that are regulated under the Victorian Code and the NSW Code respectively,[3] including the requirement that a client-architect agreement is in place. The Systemic Risks Report notes that these regulatory requirements are designed to ensure that the client-architect relationship is managed well.[4]

The focus groups were used to undertake a deep dive into sectoral participants’ views regarding how client-architect relationships can be undermined as well as ways in which they can be enhanced. This chapter contains an analysis of the key issues discussed by focus group participants during the deep dive into client-architect relationships and agreements.

Key issues and findings

The key issues discussed by participants during the focus groups for this theme are summarised in Table 1 below together with the main findings reached by the Steering Committee.

Table 1. Key issues and main findings for deep dive into client-architect relationships and agreements

The next section of this chapter contains a discussion of the main insights and implications for this theme.

Insights and implications

Factors that can have an adverse impact on the client-architect relationship

The Systemic Risks Report notes that client-architect relationship can be affected by various factors.[5] Focus group participants were asked to identify factors that can lead to poor relationships. Set out below is a summary of the main factors identified by the participants:

• The client’s brief and design expectations: Competing views between the client and architect about the brief and the detailed design may destabilise client-architect relationships.
• Inadequate skills and expertise: Client-architect relationships could be undermined when architects do not have the right skill set to undertake a project or fail to alert a client when extra skills are needed.
• Ambiguity of roles and responsibilities: Unclear roles and responsibilities, particularly in the context of projects involving complex, multi-party relationships can lead to confusion and poor relationships, including between the client and architect.
• Engagement for partial services: The client-architect relationship could be affected if an architect is engaged to develop the initial design, but the builder, other type of practitioner or client progresses the project without further input from the architect.
• Onerous contractual obligations: Bespoke contracts that impose unfair contractual terms on architects and uncapped exposure to liability can be detrimental to client-architect relationships.
• Fee arrangements and variations: Fee arrangements for architectural services that do not adequately account for cost escalation and fee variations can destabilise client-architect relationships.
• Inefficient and ineffective communication and engagement: Client-architect relationships may be compromised if clear lines of communication do not exist and relationships are not based on transparent, open, honest communication and engagement.
• Lack of detail in design documentation: Lack of detail in design documentation could lead to building defects which can, in turn, result in poor client-architect relationships.
• Regulatory non-compliance: Failure to comply with regulatory requirements can undermine client-architect relationships, as addressing non-compliance may result in costly variations and delays.

Notably, these factors relate to various aspects of the client-architect relationship and apply at different stages of the process of procuring and providing architectural services, ranging from brief preparation to design documentation and ensuring regulatory compliance. This indicates that a good client-architect relationship requires commitment and attention to the relationship throughout that process. Further, efforts to establish and maintain a well-functioning relationship necessarily involves a comprehensive and holistic approach.

A number of the factors that can have an adverse impact on the client-architect relationship may arise in the context of particular procurement processes and may be outside architects’ control, such as the engagement for partial services, ambiguity of roles and responsibilities, and onerous contractual obligations (these are discussed in more detail below in Chapter 7 on Design & Construct Procurement). However, some factors are at least partly within architects’ control regardless of the procurement process.

In relation to the adequacy of skills and expertise to undertake a particular project, the regulatory frameworks applicable to architects require architects to have sufficient skills and competence and to act with due care when providing architectural services.[6] Further, the NSW Code specifically requires an architect to advise a client to obtain specialist advice or services concerning an issue arising in connection with the provision of architectural services if the architect believes it is in the client’s interest to do so.[7]

The regulatory frameworks do not specify the scope of skills that architects are required to possess, although the context suggests that they cover skills relating to the provision of architectural services. Various comments made by focus group participants suggest that architects are expected to have skills in project delivery. In that context, comments were also made that architects need to be flexible and capable of adapting to changing conditions throughout a project. These comments suggest that architects may need to upskill in the area of project delivery but they may also need to adapt their behaviour in the context of particular projects to ensure their approach to project delivery is tailored to each project and is appropriately modified when project conditions change.

The sufficiency of design documentation is also a critical issue that was raised across multiple focus groups and was also discussed in the Systemic Risks Report.[8] Comments made by focus group participants illustrated how insufficiently detailed documentation could lead to misunderstanding or misinterpretation of the architect's design intent by contractors, subcontractors, or other project stakeholders and that this can, in turn, lead to errors, omissions or substitutions during the construction process and ultimately result in delays, cost overruns and building defects. As illustrated by the Lacrosse case, this scenario could also expose architects to civil liability and may result in architects being in breach of their professional standards obligations.[9]

The Victorian and NSW Codes impose general obligations on architects to act with reasonable care in providing architectural services;[10] this implies that design documentation must be sufficiently detailed given the context in which that documentation is provided. The focus group comments confirm the need for architects to invest in more detailed design documentation, although the point was also made that, under D&C procurement, design documentation is only completed to a stage required by the contractor and that there is no obligation to provide full documentation. This highlights the dilemma that architects may face – namely, that detailed documentation is important to ensure compliance with their professional standards obligations and to protect architects from exposure to liability. However, architects may only be contracted to provide limited design documentation.

It should be noted, however, that one focus group participant suggested that some architects may use limited design documentation as a risk mitigation mechanism. There is no evidence that this is a generalised issue. Nonetheless, it is worth emphasising that the reliance on limited design documentation to mitigate risk may ultimately increase exposure to risk and could result in a breach of professional standards obligations.

Architects could benefit from more guidance about the significance of factors that can have an adverse impact on the client-architect relationship that are within their control and how those factors could be effectively mitigated. Raising awareness among sectoral stakeholders about factors that are outside architects’ control could also enhance the client-architect relationship and outcomes for all parties.

Roles, responsibilities and obligations

A specific issue considered during the focus groups was whether architects’ understanding of their obligations to clients is aligned with what clients and other sectoral participants understand those obligations to be. Misunderstanding on this issue could diminish trust, cause communication breakdowns, and lead to unmet expectations.

As context, the point was made during the focus groups that an architect’s specific obligations to a client will depend upon the particular project and the architectural services that have been procured. Nonetheless, focus group participants were able to articulate in general terms what they consider to be architects’ main obligations, which fall within the following broad categories:

• scoping and delivery of design services;
• management of the client-architect relationship;
• management of fees;
• regulatory compliance;
• contractual compliance; and
• risk management.

Comments made by focus group participants suggest that there isn’t a common understanding of architects’ main obligations to their clients because each stakeholder group represented in the focus groups referenced or emphasised different categories of obligations. This lack of common understanding could conceivably compromise the well-functioning of the client-architect relationship. Indeed, ambiguity about roles and responsibilities was identified by focus group participants as a factor that can have an adverse impact on the client-architect relationship. Moreover, such ambiguity could undermine architects’ capacity to effectively advocate for the design process, aspects of the actual design, and their own interests in the context of a construction project if their role, responsibilities and obligations are not well understood.

Nonetheless, apart from risk management and contractual compliance, each category of architects’ obligations identified by focus group participants is specifically governed by the regulatory frameworks applicable to architects. More specifically, architects must act with reasonable care, including in relation to the scoping and delivery of design services by architects.[11] Regarding the management of client-architect relationships, architects must have a written client-architect agreement in place and must comply with obligations about the context, manner and speed with which architects communicate with their clients.[12] In addition, architects must ensure that their fees are consistent with the client-architect agreement and that clients are provided with statements of account.[13] They must also ensure that they comply with all applicable laws.[14] Consequently, compliance by architects with their professional standards obligations will help to overcome at least some of the risks to the well-functioning of the client-architect relationship that might otherwise arise due to ambiguity about architects’ role, responsibilities and obligations.

During the focus groups, clients’ obligations to architects were not considered in detail as the focus was instead on architects’ obligations to clients which are governed by the regulatory frameworks, whereas clients’ obligations are not. Nevertheless, the point was made during the focus groups that the relationship between architects and their clients is a mutual one. Clearly, clients also have a role to play in ensuring a successful relationship with architects and bear responsibilities and obligations in the same way that architects do. Clarifying the client’s role, responsibilities and obligations could help to enhance client-architect relationships.

The apparent lack of a clear and common understanding of respective roles, responsibilities and obligations of architects and clients may stem from the fact that these may change under some procurement processes. This indicates that more information is needed for sectoral participants on this issue, particularly in the context of different procurement processes.

Factors that affect communication between architects and clients

Effective communication between an architect and client is essential so that the client’s needs are well understood, expectations can be clarified, decision-making can be facilitated, and the risk of disagreements and disputes is minimised. More importantly, clear and open communication throughout a project can help architects strengthen relationships with their clients and build trust, enhance client satisfaction and achieve project success. Communication and engagement between an architect and client are essential for fostering an open, positive, trusting and productive working relationship. In turn, this helps to ensure that expectations are managed, the project progresses smoothly, issues that arise are addressed in a collaborative manner, and the client’s needs are met.

In the Systemic Risks Report, communication was singled out as a key facet of the client-architect relationship.[15] The Report finds that, even though communication is core to a successful client-architect relationship, there is evidence to indicate that poor communication between architects and clients is common.[16] There was general agreement among focus group participants about the importance of communication and engagement for a positive client-architect relationship.

Participants referred to differences in the scope, form and content of communication that is required from an architect as a project progresses. While the regulatory frameworks specify some aspects of an architect’s communication obligations to the client, they do not contain the level of detail about communication requirements across the project delivery process mentioned by participants.[17] As a related issue, it was suggested during the focus groups that architects are likely to have strong skills in communicating about design, but may find communicating clearly about aspects of project delivery more complex even though these aspects are important for the client. The point was also made that architects’ ability to discharge their communication obligations to their clients may be compromised if lines of communication with clients are unclear or limited. Architects could benefit from greater guidance about the details of their communication obligations and how clients’ expectations regarding communication could be practically addressed.

In line with the mutuality of the client-architect relationship, which was discussed earlier in the report, the point was also made that clients need to listen more to architects. This implies that architects may need to be stronger advocates so that clients are more inclined to listen and be influenced by their views and advice. On this issue, various focus group participants stressed the importance of having a good fit between the architect and client and other stakeholders in order to be trusted and that architects need to be prepared to change key personnel if the relationship with the client is not working. Even though these personnel issues are not prescribed under the regulatory frameworks, it is at least arguable that architects need to address them as part of their obligation under those frameworks to have suitable skills and experience when undertaking a project.

Given that communication issues are common in the provision of architectural services, more education and training about all aspects of communication between clients and architects could be beneficial, particularly in relation to project delivery and in the context of different procurement processes. Client-architect relationships could also be improved if clients are more aware of the impact of poor communication between architects and clients on project outcomes.

Use of a client-architect agreement to drive a positive client-architect relationship

The Systemic Risks Report notes the importance of client-architect agreements, which are mandatory under the Victorian and NSW regulatory frameworks, particularly because they can help shape the interactions between an architect and client.[18] However, the Report finds that there is room for improvement in relation to the documentation of client-architect relationships.[19] The focus groups were used to identify whether the obligation to have a client-architect agreement in place is well understood and to assess how these agreements are used in practice.

The focus group discussions indicated practices regarding client-architect agreements may vary among architects but, overall, there appears to be a lack of appreciation of the value of adopting and implementing a standardised client-architect agreement that is consistent with the regulatory frameworks. Participants’ comments suggest that bespoke client-architect agreements are common in relation to both small and large construction projects, even though various standard-form client-architect agreements currently exist. The use of bespoke agreements could mean that they are not compliant with the regulatory frameworks and, moreover, they could result in undue exposure of architects to risk and liability and may deny protection to their clients that might otherwise be available under the standard form agreements.

The focus group discussion also indicated that, for larger projects, clients typically put forward the agreement for review by the architect rather than the other way around, including government clients. This is a concerning situation because an architect’s statutory obligation to provide the client with an agreement that complies with the regulatory framework applies regardless of the scale of a project or the type of client and clients may need to be educated about this requirement. As for smaller projects, focus group participants suggested that architects do not invest sufficient enough time and effort to explain the agreements to their clients. This could translate into a lack of understanding about roles and responsibilities and, as previously mentioned, this could destabilise the client-architect relationship.

A better understanding of the drivers for the preference of bespoke contracts for small and large projects could help to identify how greater uptake of standardised contracts that are compliant with the regulatory frameworks could be achieved. More consideration may be needed of tools that could be used to encourage the use of standardised agreements, such as a standardised description of design services. Further, architects themselves need to adopt a proactive approach in all procurement processes to ensure that the client-architect agreement complies with the regulatory framework.

Impact of fee structures on client-architect relationships

Transparent fee structures can help manage client-architect relationships by clarifying the fees payable for particular design services, the deliverables that can be expected at each stage of the project for particular fees, and additional services that may incur extra costs. The Systemic Risks Report discusses how the approach to project costing and architects’ fees can have an adverse impact on client-architect relationships.[20]

Various aspects of architects’ fees are regulated under the Victorian and NSW Codes. Under both Codes, the client-architect agreement must set out how professional fees and costs of architectural services will be calculated,[21] reasonable estimates of disbursements (where possible),[22] and a requirement that the architect must inform the client how a change or amendment to services will affect the professional fees and costs for the services.[23] The Victorian Code further provides that fees and costs should not exceed the fee structure specified in the client-architect agreement,[24] whereas the NSW Code provides that the cost of architectural services should reflect the fee structure specified in the agreement and accurately reflect the amount of work done or to be done.[25] However, the regulatory frameworks do not prescribe the way in which fees are to be calculated.

During the focus groups, various fees structures were discussed to identify whether and how they could compromise client-architect relationships. The focus group discussion indicated that the fee structure will be dictated by a range of factors, including the type of project, client and design services that are required. However, in general, fixed fees are likely to be preferred by clients because they provide relative cost certainty, whereas fees that are based upon a percentage of construction costs are likely to be favoured by architects because they can enable cost-recovery for inflation and unforeseen developments that can occur during a project. Participants indicated that percentage fees may destabilise client-architect relationships because of the cost uncertainty that they imply. Nevertheless, fixed fees are onerous for architects because they involve a detailed specification of services that need to be costed. Fixed fees also need to anticipate and provide for inclusions and exclusions, which may be difficult to predict at the commencement of a project.

There may be scope for architects to improve their capacity to demonstrate their value to clients through different fee structures. The use of standardised specifications of services could help alleviate the burden on architects when setting fixed fees. By way of context, reference was made during the focus groups to the RIBA Plan of Work, which organises the process of briefing, designing, constructing and operating building projects into eight stages and explains the stage outcomes, core tasks and information exchanges required at each stage.[26]

Education and training to enhance client-architect relationships

There were a range of issues identified by participants during the focus groups that may require further education in order to improve client-architect relationships, including:

• Type and scope of services provided by architects
• Communication about roles and responsibilities
• Risk management and negotiation skills
• Listening skills
• Valuation of services
• Project delivery

These areas are linked to a number of issues that were flagged as having the potential to compromise the well-functioning of the client-architect relationship, and have been discussed above. More generally, the focus group discussion suggests that architects are looking for more guidance about what a good client-architect relationship looks like in practice. Architects could benefit from more education about how their regulatory obligations can be used to forge positive client-architect relationships. Case studies for architects and clients to highlight factors that lead to positive relationships in different procurement and project contexts would be useful.

Concluding remarks

The deep dive into client-architect relationships and agreements has revealed that there is a need and scope for further enhancement of client-architect relationships and the use of client-architect agreements. These enhancements will assist architects to comply with their professional standards obligations under the regulatory frameworks.

A good client-architect relationship requires commitment and attention to the relationship throughout the process of procuring and providing architectural services, ranging from brief preparation to design documentation and ensuring regulatory compliance because a variety of factors can destabilise the relationship during this process.

Even though sectoral participants appear to recognise the important contribution that architects can make to good quality built outcomes, the specific roles and responsibilities among project participants are not well understood, particularly in the D&C context. This could compromise the well-functioning of relationships, especially between the architect and client. More information is needed for sectoral participants on roles, responsibilities and obligations of architects as well as their clients.

Sound communication between the architect and client is critical for a good relationship, yet this is an area where there is scope for improvement both by the architect (particularly in relation to project delivery) and by the client (to ensure that clear lines of communication are in place and working effectively). The sector could benefit from a better understanding of the different facets of communication between architects and their clients and how they can be employed to enhance outcomes.

There is also evidence to indicate that bespoke client-architect agreements are common and these agreements are not being used effectively to manage client-architect relationships and associated risks for both small and large-scale construction projects. Architects need to take a proactive approach to comply with their obligations regarding client-architect agreements in the context of all procurement processes.