Architectural fee problem

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Aniket Nagdive

June 16, 2022 21:16

An architecture firm is awarded a project for an addition to an elementary school. Project details follow:

• Negotiated fee percentage: 5%
• Construction budget: $5,000,000
• Gross fee profit: 10%
• Consultant expenses: 35%

The firm now wants to manage the available architectural fee with the hours required to complete the project. 

 

What is the available architectural fee?

 

A.	$137,500
B.	$146,250
C.	$162,500
D.	$187,500

 

CORRECT RESPONSE : A

$137,500

 

CALCULATIONS

1. $5,000,000 (construction budget) x 0.05 (negotiated fee percentage) = $250,000 (negotiated fee)

2. 0.35 (consultant expenses percentage) x $250,000 (negotiated fee) = $87,500 (consultant expenses)

3. $250,000 (negotiated fee) - $87,500 (consultant expenses) = $162,500

4. 0.10 (gross fee profit percentage) x $250,000 (negotiated fee) = $25,000 (target profit)

5. $162,500 - $25,000 = $137,500 (available architectural fee)

 

I am wondering why they have substracted gross fee profit from the negotiated fees? 

I believe, we always include profit in our Architectural Fee !!

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  Gang Chen June 20, 2022 04:25

  I guess the intent of the question is:

  What is the fee available to complete the architectural design?

  Gang Chen, Author, AIA, LEED AP BD+C (GreenExamEducation.com)

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  Gang Chen June 20, 2022 04:27

  An architect’s fee proposal always includes profit and sub-consultants’ fees, plus a cause for reimbursable expenses.

  Gang Chen, Author, AIA, LEED AP BD+C (GreenExamEducation.com)

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  Alex Pun September 03, 2022 01:00

  Gang Chen I had the exact same problem. Would you agree that the wording of this question is a bit too vague?

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  Gang Chen September 03, 2022 02:32

  Yes

  Gang Chen, Author, AIA, LEED AP BD+C (GreenExamEducation.com)

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  Natalia Sanchez Robles January 31, 2023 17:37

  I had the same train of thought with this question, so I intentionally didn't subtract the profit in my answer. The wording and vagueness of these questions gets frustrating...

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  Danielle Aspitz February 16, 2023 02:37

  Same here - got this wrong as well. Thought that profit was included in the architecture fee (isn't that the point of the net multiplier / direct salary expense multiplier?). Why would you ever separate it out? Very strange wording... had this issue with a number of the questions on the practice exam... very vague wording.

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  Frank Lee February 16, 2023 14:14

  Why does Profit margin not apply to the consultant?  All expense line items are added, then the profit margin. Calculations are wrong IMHO. 

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  Jiaqi Zhang August 02, 2023 03:50

  Same here. I got this question wrong as well. Now I really suspect it got wrong word.  If you replace "gross fee" with "net fee", everything makes sense then. 

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