The biggest question…how much?

Everyone works to a budget – right? No one wants to overcapitalize or feel ‘ripped off’. There’s only a tiny percentage of the population who are willing to spend whatever it takes to get what they want (if you know anyone like this, send them our way – I’d love to meet them!).

So when it comes to the design of your surgery, of course you want to know how much? You may have read on that it really depends on the scope of work on your particular project. I thought it would also be worth discussing the different ways designers present their fees.

Pricing Approach Description
Percentage Fee You are charged a percentage of the final overall construction costs of the project. Designers will work out an estimate of the construction costs using their previous knowledge of surgery fitout costs and then charge a percentage. This is how architects generally present their fees

For example, your designer might estimate that a surgery will cost $100,000 to fitout and their fee will be 9% – therefore their fee is $9,000.

Fixed Fee You are charged a fixed fee for the project. A fixed fee is defined by a Scope of Work, with a list of inclusions and exclusions. Typically with a fixed fee, there is no price variation or reconciliation unless you request something that has been stated as an exclusion). everything you will need to complete your design. You should be given as part of the designer’s submission to you.
Phase Fee You pay a fixed fee for each phase. You agree a price on for the next phase once you have finished the prior one.
Hourly Rate You pay an hourly rate for the actual hours worked. This is generally for smaller/decorative projects (for example, a new colour scheme for your existing surgery.)

Scope of Work

Your Scope of Work defines your inclusions and exclusions at each stage of a project. It is useful for each kind of pricing approach. Even if you aren’t using to set the exclusions and inclusions for a fixed price project, you can use it to get clear on expecations for later phases.

Here are some of the key areas of a Scope of Work to consider. Ask lots of questions, and document each area and the standard that will apply. You should understand every item on your Scope of Work.

Concept Design
Survey of existing area (photograph and measure)
Detailed design brief
Floor plans (suitable for first council submission)
Sample board (finishes, colours)
3D illustrations

Working drawings (all areas, including all cabinet details, lighting layout, flooring layout, electrical and plumbing drawings, door schedule etc)
Specifications (including colours and materials, light fittings, body protection, fire safety, disabled access, loose furniture etc)

All items specifically excluded from Scope of Work.

Variable Items
Because the scope for these items can vary quite widely, they need to be specifically included (with details of the scope) or excluded.

  • Graphic/logo design
  • Council submissions or fees (planning, change of use or building)
  • Tendering or construction costs
  • Equipment (supply and installation)
  • Specialist Consultant Fees (eg Radiation Consultants, Structurual Engineers)

If pricing was an animal …

Ok, we’ve explained the basic pricing models, and how to use a Scope of Work to help get things clear.

Sometimes things don’t go as expected. So lets a have a look at a few of the exotic animals you might encounter.

The Peacock

When he displays all his feathers, he appears quite large

Your initial estimate of $100,000 looked great … but then your construction comes back at $150 000!

Beware of looking at pricing models that don’t let you see all of the feathers. You may be Ok with spending $150,000, if that is the surgery design you want. You want to avoid a situation where you are asking for a $150,000 design, and yet you are being quoted $100,000 and will have to pay the $50,000 later. What you want to do is get realistic estimates, and make your decision based on those.

One point to note: Does your designer’s fee basis reward accuracy of estimates? If the overall costs go up, will they stay with the agreed percentage of the estimated fee, or increase their fee by charging a percentage of the increased price?

For example, if the estimated costs were $100,000 but the actual costs turn out to be $150,000, does the designer’s 9% fee mean they are now paid $13,500 instead of $9,000?

The Rabbit

One cute little bunny – you turn your back for one minute and suddenly there’s more than you expected

Your designer might present you with a basic fixed fee to get you started, perhaps as part of a Phased Fee approach.

Then they might say, ‘well, now you will need more detailed drawings – this will be an additional cost’. And then they might say ‘Oh, you want a 3D illustration – well, that is going to cost some more’. They continue to add on their services and that initial fee pales into insignificance when compared with the actual cost.

Unfortunately, once you have signed their contract you feel obligated to continue with their services – it’s only human nature.

Things to look out for: to avoid meeting the rabbit, use a Scope of Work to discuss future phases, and perhaps get indicative estimates. Understand how the designer typically works – what is included or excluded from the estimates?

The Cat

You think you everything is fine, but suddenly you get a nasty scratch

Some design/construct companies may have a licensing fee. Basically, it’s a fee which you will be invoiced if you decide to give the construction side to another company and not sign up with the design/construct company.

Apples to Apples

These are only a few of the ways fees can be presented.

Different pricing models can make it difficult to compare ‘apples to apples’ when selecting your designer.

To avoid surprises, use a Scope of Work and ask lots of questions. If you don’t understand any of the information presented, don’t hesitate to ask – you should know exactly what you are paying for and if this will cover all your needs.