Does your design team struggle with setting fees? It's one of the hardest challenges for many property design teams who need to price a project before bidding. Too much and you aren't competitive, too little and you could end up losing money!
Charging the right price is easy when you have gone through an effective fee structuring process.
For the Design team, fee structuring establishes the base line of the project cost at different stages of a property development project. Conducting a fee structure allows the Design team to see an outline of the project to better forsee the resources that will be needed.
The team can then work on estimation with considerations on the amount of works, consultant fees and possible charges with the ultimate goal to develop an appropriate commercial offer for their client. In another words, undertaking fee structuring gives clients a projected cost estimate of how much they’ll need to spend to attain their vision to transform the project vision into an ideal environment.
The below fee structuring checklist is just one of the many resources for property design teams available with the SKILLINGs Education All-Access-Pass, which you can try for free for 7 days, no credit card required.
Defining the project scope is the first step in fee structuring. By defining the project scope of work, you are essentially focusing on the things that really matter to the project. You are delineating the services and deliverables you are providing from what you are not.
Defining the project scope is best with a top-down approach. You first start with defining the project and the service you will be providing. Defining the scope of the project includes defining the deliverables, timeline, milestones, and reports.
It is also important to define the deliverables, reports, and inputs by others which are essential to the project but are outside the scope of the service you are providing because these will affect the project timeline and it will show to the client a clear picture of the service you are providing.
It is easier to manage a project scope if it is divided into phases or divisions first before dividing them into tasks, activities, and deliverables. Dividing a project into phases or divisions requires an understanding of the project and how it will be delivered. Divide the project first into it’s major tasks, activities, and deliverables, and then divide them further into their components.
Imagine a project and it’s timeline. Dividing the project scope into its component tasks and deliverables is like dividing the project horizontally, while dividing the project scope into its milestones is dividing the project vertically.
By itemizing tasks, activities, and deliverables, you are sure you’ve considered their costs individually. If a major item is not broken down into it’s component parts, there is a fear that some components’ costs may have been overlooked.
After itemizing the tasks, activities, and deliverables; you can then cost each item. When determining the cost of each component, do not forget to consider both the direct and indirect cost each item entails.
Identify significant progress points in the project. These progress points are called project milestones. Oftentimes, the payment schedules coincide the project progress billings with these milestones.
Estimate the time of completion of each task, activity, and deliverable. Identify dependencies of the items to plot their chronology throughout the project. Then, mark the milestones along the timeline. You should now have a project divided horizontally into its component items and divided vertically along its timeline into its milestones.
Payment schedules are often based on the project milestones and the deliverables, activities, and tasks done on the duration of each milestone. Project progress billings often coincide with the milestones and the amount billed are calculated based on the deliverables, activities, and tasks done on the duration of the milestones being billed.
Taxes are one of the most important indirect costs that you should consider when structuring fees. Paying taxes is everyone’s responsibility. As the saying goes: “Know your service’s worth. Then add tax.”
This is just one of the many resources for property design teams available with the SKILLINGs Education All-Access-Pass, which you can try for free for 7 days, no credit card required.
