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?
CORRECT RESPONSE : A
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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