Recently, especially during slow periods and flat growth, murmurs have grown about the need for minimum fees and rates. As we’re in a period of instability and with many questioning the profession’s future in the age of Artificial Intelligence, I thought I would revisit my minimum fees article from 2018.
Professional organisations issued standard fees and scales in various formats from the 1980s through the early 2000s, during which time they shifted from mandatory to advised, recommended, or indicative. Many countries abolished fee scales (1990-2010), arguing they were anti-competitive and that doing so would increase productivity and innovation.
When I previously wrote about minimum fees, I received numerous emails and messages cautioning that it was outlawed and shouldn’t even be discussed, while others thought it would be beneficial to have a floor on fees. The main points of my previous article were that minimum fees may cause clients to shift scope to drafts people or landscape designers, and that minimum fees may work for a period, but eventually firms will go below the minimum due to a lack of work or increase outsourcing to increase efficiency. I argued that the profession needed to spend more time promoting its value rather than infighting and policing minimum fees.
The world and industry have changed greatly in the past eight years since that article, including COVID, the infrastructure boom and the rise of Artificial Intelligence (AI). The larger issue now is that many firms charge hourly rates, which is becoming less tenable when clients see the speed of generative AI. This has led clients to request that what would usually take three to six months to develop be delivered in a third of the time. This may be possible with AI and a focused team; however, it creates an issue for firms that charge by the hour or per square metre/foot. The need for minimum fee rates becomes less relevant as hourly work is placed under downward pressure, and fees become more dependent on the value and expertise your firm brings to the project.
Many firms also use construction value to determine fees, but in recent years this has become problematic as construction and firm operating costs have risen dramatically, leaving design firms with a shortfall when landscape projects span years rather than months.
Many will say we should push back on clients who want firms to use AI; however, with the broader development industry and governments seeking higher productivity to counter the dramatic rise in inflation, I feel we would be pushing against an insurmountable trend. However, firms will still use various design approaches and methodologies (AI vs BIM vs CAD vs hand-drawn), and this will always be the case.
The profession needs to move away from project fees based on hourly rates and redefine the value we provide and how we price tasks and outcomes. Although fees based on construction value may still have a place, the issue often comes when clients ask for breakdowns or hourly rate tables.
The issue with shifting from hourly rates is that many governments and large developers still require hourly rate breakdowns. We can approach this by providing fixed-fee milestones, blended rates, or service hourly rates rather than by discipline or level. This is also where the profession needs to come together with allied professionals to advocate for better fee structures and procurement processes that aren’t reliant on unit rates.
We have seen this shift in legal, accounting, and consulting services as AI has compressed multi-hour tasks and moved from billable-hour rates to fixed fees, capped fees, or value-based pricing. This has created a split between traditional and new practices with different business models. The landscape architecture profession may see a similar shift away from hourly rates and fee scales toward the majority of project fees (without breakdowns) based on tasks and value.
Ultimately, we need to provide clients with a service that delivers value, and they are paying for reassurance that the landscape designs we provide meet their needs and deliver additional value (ecological, social, and economic). We need to own the why and how of the design, not just the visual representation.
When landscape architects calculate fees, they should base them on value, professional expertise, risk mitigation, complexity, and meeting required outcomes rather than on producing a landscape design. At the end of the day, we are providing professional expertise, judgement and desired outcomes, not a replicable product based on time and resources.
Many other issues affect fee calculations in the age of AI, including liability, risk, IP, software access, project compression, and complexity. I address the main issue of minimum fees and the need to educate clients on the value landscape architecture brings, rather than pricing tasks at an hourly rate.
Article by Damian Holmes – Editor of World Landscape Architecture
DISCLAIMER: This article is for educational purposes only. The content is intended only to provide a summary and general overview on matters of interest. It’s not intended to be comprehensive, nor to constitute advice. You should always obtain legal or other professional advice, appropriate to your own circumstances, before acting or relying on any of that content. This advice is general in nature.
Be the first to comment