Episode 77:

Hello and Welcome to the Part3 with me podcast, 

The show that helps part 3 students jump start into their careers as qualified architects and also to provide refresher episodes for practicing architects. I am your host Maria Skoutari and this week we will be talking about the RIBA Professional Services Contracts. Todays episode meets PC1 & PC2 of the Part 3 Criteria.

So I previously covered the architects appointment in Episode 6 and the RIBA Standard Professional Services Contract in Episode 7. Today I will be going in more depth on the contract terms and expanding more on the RIBA Domestic Professional Services Contract and the RIBA Concise Professional Services Contract.

As previously mentioned and I’m sure you are all aware that its very important that architects have an appointment in writing from the beginning of a project with a client which outlines their scope of services and respective fees for those services and also state any additional roles they may be able to offer. And architects are also required to have appointments in place as required from them under the ARB & RIBA Codes of Conduct to have a written appointment in place before starting any work.  

So the RIBA Professional Services Contracts consist of the:

• RIBA Standard Professional Services Contract for Architectural Services
• RIBA Concise Professional Services Contract for Architectural Services
• RIBA Domestic Professional Services Contract for Architectural Services
• RIBA Principal Designer Professional Services Contract for Architectural Services
• RIBA Sun-consultant Professional Services Contract for Architectural Services

And today as I mentioned, I will expanding more on the Domestic and Concise Contracts. All Services Contracts have been designed by the RIBA to be:

• In line with current working practices, legislative changes and procurements methods
• Attractive to clients, architects and other consultants, with robust and fair terms
• Suitable for a wide range of projects and services 
• Based on the latest RIBA Plan of Work

So before choosing the most appropriate contract form, there are a few key items to consider:

• The Type of Client, whether they be a commercial or domestic client. So if the client is a commercial/business client then the Standard & Concise Contracts will be more suitable, whereas if the work is for a clients own home and they are deemed as a consumer client then the Domestic Contract will be more appropriate 
• Also the type and complexity of the project will determine the most suitable contract form. The Standard contract is suitable for large complex project, the Concise contract is suitable for more simple, non-complex, commercial projects of any value whereby the building works to be carried out will be using a building contract such as the RIBA Concise Building Contract, the JCT Minor Works Contract or JCT Intermediate Contract. And then with the Domestic contract, that’s suitable as a consumer contract for simple domestic projects of any value whereby the building works to be carried out will be using a building contract such as the RIBA Domestic Building Contract. 
• And lastly, another item to factor in when selecting the most appropriate contract form is the chosen procurement route, for example the Concise and Domestic Appointment Contracts are not suitable for procurement routes such as Design and Build as they formed on the basis of a traditional form of building contract to be used. 

So once the client type, complexity of the project and procurement routes have been determined, then the relevant RIBA Professional Services Contract can be selected.

The RIBA Concise Professional Services Contract, as mentioned, is suitable where the architect/consultant undertakes a commission for architectural services using a traditional form of procurement. It is suitable where the Client is acting for a business or for commercial purposes on simple, non-complex, commercial projects of any value. The Contract Terms in this contract are less detailed than the Standard Contract form in order to reflect the less complex nature of the project. The Schedule of Services sets out a range of tasks that the architect/consultant may need to undertake at each RIBA Stage as well as providing core architectural services, advice and information on other activities listed under the ‘other services’ section. The Concise appointment form also sets out the services the architect/consultant will not be providing. If any minor roles and services are required, then the architect/consultant should check and ensure that those services do not extend their liability beyond that set in the Contract. 

Now looking at the RIBA Domestic Professional Services Contract, this form is suitable where the architect/consultant also undertakes a commission for architectural services using a traditional form of procurement. IT is suitable for commissions for domestic projects of any value, where the client is a consumer client and are undertaking work relating to their own home. The Contract Terms are quite similar to those in the Concise Appointment Form apart from some of the rules or procedural requirements which are designed to minimise conflict with the Consumer Rights Act 2015. A consumer client is subject to the Consumer Rights Act 2015 which requires all contracts for services must provide for services to be performed with reasonable care and skill, the information which is said or written is binding where the consumer relies on it, if the price is not agreed beforehand then the must be provided for a reasonable price and the service must be carried out in a seasonable time. A consumer client has the right to cancel a domestic contract up to 14 days after the day on which the client agrees to go ahead with the service. In these circumstances, the architect/consultant, must give written notice to the consumer of their right to cancel the contract within the cooling off period which starts on the day the consumer receives the notice for their right to cancel. The consumer must also be provided with a detachable document which they can use to cancel the contract within the cooling off period. If the contract is cancelled by the consumer within the cooling off period, then the architect/consultant can only recover payment for any services supplied prior to the cancellation only if the consumer gave their consent in writing to commence the work before the expiry of the cooling off period.

The Schedule of services within the Domestic Appointment form, sets out the range of tasks the architect/consultant may need to undertake at each RIBA Stage reflecting the complexity of the project, as well as providing core architectural services, advice and information on other activities listed under the ‘other services’ section. The Domestic appointment form also sets out the services the architect/consultant will not be providing and if any minor roles and services are required, then the architect/consultant should check and ensure that those services do not extend their liability beyond that set in the Contract. In terms of the Principal Designer Duties relating to domestic clients, although the RIBA generally recommends using the separate appointment form for those services, to make the appointment process is simpler for the domestic client and to be consumer compliant, the Domestic Appointment Form, incorporates the services of a Principal Designer to ensure the client fully understands and meet their obligations under the CDM Regulations 2015. Also, to avoid conflict with the consumer’s rights under the Consumer Act 2015, the architect/consultant must always explain and agree the scope of the proposed contract with the client as a consumer and the client should be given adequate time to study the proposed Contract to seek more information, or to discover the meaning of certain clauses.

The Domestic Appointment Contract is designed to avoid conflict with a consumer’s rights and simplify the sometimes onerous task of agreeing the terms of a consumer contract.

Now, let’s look at their structure in more depth, all professional services contract overall structure follows the same order and format, these consists of:

• The Agreement
• The Contract Details
• The Contract Conditions
• The Schedule of Services 

They also include a contract checklist at the start for items to be considered before signing the Contract. All Contract forms follow the same principles with a few minor variations to suit each respective version. 

So as mentioned first we have the Agreement: 

This the section where the parties to the Contract sign and date the document

Then are the Contract Details were:

• Under Item A - The clients name and details are stated
• Under Item B - Would be the architects/consultants name and details are stated
• Then under Item C - is the site address to be outlined
• Item D - Is where the Project Brief is outlined, together with the construction cost and project programme
• Under Item E - Are the names of any other client appointments needed on the project 
• Item F - Covers the Basic Fee and other Services
• Item G - Is for time charges
• Item H - Expenses
• Item I - Would state the payment frequency 
• Item J - Includes the Professional indemnity insurance
• Item K - The dispute resolution options
• Item L - Information formats to be shared
• And Item M - Is for any Supplementary Agreements if appropriate

So that covers the Contract Details, then you have the Contract Conditions which are split into the Definitions of Terms and the Clauses:

The Definition of Terms is essentially a list of words and phrases that are found throughout the document and are explained within the definition of terms.

Then the Clauses section are the major terms of the Contract which determine the obligations of the parties. The Clauses are set out in a similar order to the Contract Details.

• Section 1 - Covers General Interpretation of the Contract
• Section 2 - States the Clients Responsibilities
• Section 3 - States the Architects/Consultants Responsibilities
• Section 4 - States any Assignment, Subcontracting or Other Client Appointments to be undertaken and that these will not be carried out without the written consent of the other party 
• Section 5 - Sets the requirements for Fees and Expenses including Payment Notices and Notice of Intention to Pay Less
• Section 6 - Outlines the agreement regarding Copyright and Licenses
• Section 7 - States the Architect/Consultants Liability 
• Section 8 - States the requirements for the architect/consultant to always hold an active Professional Indemnity Insurance
• Section 9 - States the process when it comes to suspending or terminating the contract
• Section 10 - States the preferred methods of Dispute Resolution to be used if a dispute arises under the contract 
• Section 11 - Sets out the Information Formats to be shared 

Then following the clauses, you have the Schedule of Services:

Which sets out the services to be performed by the Architect/Consultant which follow what services and tasks are to be performed at each respective RIBA Stage from 0-7 also including any general and additional or other services that may be provided. By completing the Schedule of Services, the architect/consultant is authorised to perform and be responsible fore the performance of the services selected. 

The Schedule of Services is much simpler in the Domestic and Concise Contracts than the Standard one as they are both for more simple projects and they are both designed for an appointment to carry out architectural services only, unlike the Standard Professional Services Contract where the architect/consultant may be required to undertaken additional roles and services. There is an option in the Domestic and Concise forms to include additional roles if required. The tasks are then set out on a stage by stage basis for a traditional form of procurement covering Stags 0-7.  

All schedules exclude the Principal Designer Role and if this role is to provide, it should be done under a separate contract such as the RIBA Principal Designer Professional Services Contract. The Domestic form, however, to include for the architect/consultant to act as Principal Designer.

A key item to note is that sometimes the chosen appointment form will be made for the whole duration of the project, other times it may that appointment is only for a defined Work Stage or it may be amended later in the process if the role, scope of services or procurement method change, so the appointment will need to be updated to allow for those changes. All RIBA Professional Services Contracts have been made flexible to allow for such occurrences that’s why the RIBA appointment form tend to be the most preferred to be used as they are offer fair and balanced interests for the parties, they are more cost efficient and convenient than bespoke contracts offering detailed and comprehensive guidance based on legal opinion.

If an architect is asked to consider a bespoke agreement, they should in the first instance consult their professional indemnity insurers and then if required seek further legal advice as there is always a risk of onerous terms being imposed within the contract that may increase the architect’s liability, so careful examination of the bespoke contract will need to be undertaken before the architect accepts it. 

So, reverting back the clauses, first focusing on the client details under Section 2 of the appointment contract:

The client has various obligations under Section 2 irrespective if they are a business or domestic client. These include:

• Advising the architect/consultant of the project requirements and of any changes required
• Providing the necessary information for the proper and timely performance of the services 
• Providing decisions and approvals necessary for the performance of the services
• Paying the architect/consultant for the services performed
• Appointing or engaging any other client appointments required to perform work or services under separate agreements and requiring those appointed to collaborate with the architect/consultant.
• Giving early warning of matters likely to affect the performance of the services an agreeing next steps to mitigate the consequences

Throughout the project the Client must issue instructions through the Architect/ Consultant and not deal directly with Other Client Appointments and Contractors or interfere with the Architect/Consultant’s duties or actions under the Building Contract.

The Client must also accept that there are some areas, outside the Architect/Consultant control, for which they are not responsible for, such as:

• that planning permission and other approvals from third parties will be granted and if granted will be done so in accordance with the anticipated timescales
• maintaining any programme and/or any target cost for building work, which might need to be reviewed as a result of matters outside the control of the Architect/ Consultant

Now looking at Section 3, when it comes to the architect/consultant details:

A key item to be wary of is the services and obligations to be performed with reasonable skill, care and diligence and it should be noted that any changes to the duty of care, such as fitness for purpose, may not be covered by their professional indemnity insurance. 

The architect/Consultant is only obliged to perform the duties they have agreed to perform, for the agreed fee, as set out in the appointment document. It’s crucial that the Architect/ Consultant fully define their duties in the appointment, without vagueness and ambiguity to avoid any misunderstandings with the client. If an architect chooses to perform a role that is beyond the duties set out in the appointment, they run a high risk of being held responsible for them because they will have assumed liability through their own actions.

There are two critical factors the architect/consultant needs to consider when preparing the appointment which are considering Codes of Conduct and setting out the business’s complaints handling procedures to be made available to the client. 

In terms of the architect/consultant’s rights and obligations, they are required to:

• exercise reasonable skill, care and diligence to be expected from an experienced professional in the provision of such services for projects of similar size, nature and complexity to the Services
• performing the Services with due regard to the Client’s Brief
• advising on the progress of the performance of the Services or any other matter that could affect the delivery, cost or quality of the Project
• collaborating with any Other Client Appointments appointed or any others employed by the Client to perform work or services on the project
• giving early warning of anything likely to affect the provision of the services, including delay and additional costs, and to agreeing suitable steps to mitigate the consequences.

It should be noted that these obligations only apply to the extent which can be achieved in providing the standard of reasonable skill, care and diligence.

Under the appointment contract, the architect/consultant also has the right to retain copyright in the information, drawings and documents produced in performing the services, although they do give the client a licence to copy and use the information for the purposes related to the construction of the project. And they also have the right to suspend or terminate their services due to the client’s failure to pay any fees. 

Next under Section 4 Assignment:

This section covers the right of either the client or architect/consultant to be able to transfer their roles and responsibilities to a third party which requires the consent of the other party before the assignment can take place. The architect/consultant also requires the client’s prior approval before sub-contracting any part of the services to perform part of the services.

Assignment under the Professional Services Contracts involves the transfer by the first party of their rights to receive performance under the contract to another party meaning the first party will no longer receive any benefits of their previous rights which are all transferred to the other party. There is also the option of Delegation, which involves the transfer by the delegating part of some or all of their performance obligations or conditions requiring performance under the contract to another party. For delegation to be effective, the new party must agree to perform the services but the key thing to note is that the delegating party remains liable for the delegated performance. 

Now in terms of the Architects Roles and subcontracting under Section 4:

The Architect/Consultant will normally act as Lead Designer responsible for the coordination and integrating the work of other Consultants and Specialists. On smaller projects the Architect/Consultant will combine this design role with that of Project Lead, Contract Administrator, and so on, whereas on larger projects the project roles will be more separate and distinct. 

The Professional Services Contracts enable the Architect/Consultant to undertake the architectural roles but also to take on the role(s) of other disciplines. In the case of the latter, the Architect/ Consultant takes on the responsibility and liability and the Client has one point of contact and a direct contractual link for those services. On smaller commercial projects and domestic projects, the Client, might assume that the Architect/Consultant is including the structural or cost control services as part of their services, in such cases the Architect/Consultant should advise the Client that it is in their best interest if the other Consultants are appointed directly by them. This then provides the same direct contractual link between the Client and Consultant so that the Consultant is directly liable to the Client for their own work and insurances. The Architect/Consultant then takes no liability for those other services apart from the responsibility to coordinate and integrate their work. If the client, however, still insists the architect/consultant undertakes the non-architectural services, meaning the architect appoints the other consultants, then the direct contractual link is lost and the architect will be responsible for those services and the client will only have the architect liable for them if any issues arise. In such cases, the architect can either decline the appointment or ensure that any agreements with sub-consultants are signed off before the contract with the client is signed. Of course, the architect should first check with their insurers if they can cover the employment of sub-consultants and also determine the sub-consultants basic competence, insurances and social media. Then the architect or client may require the sub-consultant to enter into a Collateral Warranty to retain a direct contractual link. 

Now lets move to Section 5, Fees, time charges and expenses:

Fees refer to the payments made by the Client to consultants for services under the terms of a Professional Services Contract. Fees are generally paid in instalments based on either regular dates or predefined stages of completed work. Fees will be dependent on the nature of the project and the circumstances of the appointment, the architect/consultant should therefore make it clear what is and isn’t included within the fee to avoid any misunderstanding.

Factors that will affect the fee include:

• The Architect/Consultant’s costs and time charge rates, relating to geographical location, practice size, reputation and specialist skills

• the extent of the Architect/Consultant’s services and the type of procurement

• the size and complexity of the project and any project-specific requirements
• refurbishment and extension work to existing buildings which are likely to be significantly more resource-intensive

• repair and conservation of historic buildings which is more complex, and the fee will be proportionately higher

• repetition

The fee can be either a percentage fee, fixed or variable lump sum or time charge. The Basic Fee under the appointment will cover normal services and the fee for any specified ‘other services’ should identify their fee and if those will be on a time charge of lump sum.

So what happens if the Basic Fee needs to be adjusted? - The Professional Service Contract allow for this to be done and the circumstances in which the architect can reasonably amend the fee. If the client makes changes to the brief, the cost estimate or programme which result in additional work for the architect and is outside their control, then they will be entitled to additional fees including allowance for any loss and/or expense calculated on a time basis at the rates set in the Contract Details. If, however, any change rises due to an action by the architect which is in breach of the contract or services, then there is no entitlement to additional fees. 

A common part for confusion is with percentage fees, so where percentage fees apply, the Architect/Consultant could potentially suffer loss of fees as a result of reductions in the value of the works. This can arise from a number of reasons such as a fall in the market or the Client decides to reduce the scope of the works for budgetary reasons. Assuming the Architect/Consultant has already carried out the work, under the Contract they will be entitled to compensation for the reduction of the Construction Cost arising solely from matters not prevailing at the date of the Contract. The Architect/Consultant will also be entitled to adjust their fee if any additional work is instructed or as a result of the Client entering into any Supplementary Agreements that are made after the date of the original Contract.

Unless the fee absorbed the expenses, then these should also be listed within the appointment contract. 

Under the Housing Grants, Construction and Regeneration Act, the Architect/Consultant has the right to be paid in interim, periodic or stage payments if the project period is more than 45 days and to be informed of the amount due, or any amounts to be withheld. Under the Domestic Appointment, however, a consumer client is exempt from the provisions of the HGCRA and Late Payment of debt Regulations. Sometimes, however, the Client may have an issue with the work, the level of service or decide that they wish to pay less, they may issue a ‘Pay Less Notice’ to be served before any contractual deadline. If the outstanding fees are not paid at a later date then the matter can be referred to an adjudicator which may agree with the reduced sum or decide than an additional sum is due and the client will need to pay that within 7 days of the date of the decision or by the Final Date for Payment.

If the Client defaults and does not pay in the contracted timescale, then the Contract gives the Architect/Consultant the option to suspend use of the copyright license, suspend or terminate performance of the Services, start dispute resolution procedures and/or take steps to recover the debt. 

Now in terms of the Architects liability under Section 7 & 8:

The Professional Services Contracts provide for the architect’s liability for loss or damage not to exceed the amount or amounts recoverable under their PI insurance or exceed the net contribution provisions, meaning their liability will be limited to the share of any loss that can be shown to be the architects responsibility. The purpose of net contribution is to provide a fair balance of the risks between the architect and client. 

The architect should, therefore, maintain a specified amount of insurance cover for the project until at least the end of the liability period and to be no less than the amount required by the ARB. The amount of professional insurance to be maintained for the project should be reasonable in relation to the risks and consider the Consumer Rights Act. 

Now when it comes to terminating the contract under Section 9:

The client can suspend or terminate the contract at will but the architect can only do so for reasons specified in the conditions, which as previously mentioned, include failure to pay the architects fees, if the client infringes their obligations, if the architect can’t continue with the work for reasons outside their control, due to force majeure, and so on. 

In addition to the contractual obligations to give notice to suspend or terminate, the Contract can be immediately terminated by notice from either party should the other party:

• become bankrupt

• be subject to a receiving or administration order

• go into liquidation

• become insolvent

• make any arrangements with creditors

• become unable to perform its obligations through death or incapacity.

Termination under such cases will need to be submitted in writing.

And then this of course, may unfortunately lead to Dispute Resolutions covered under Section 10:

In the Professional Services Contracts, the client can refer a complaint to the appropriate professional body if the architects conduct or competence appear to fall short of the standards relevant to the Codes of Conduct. Therefore, architects are expected to have in-house complaint handling procedures to deal with any complaints promptly and provide these procedures to the client in writing. Whatever the dispute, the architect should ensure they have detailed records to hand to be provided as evidence. Under the Concise form, the dispute can be referred to adjudication if the negotiation process fails and under the Domestic form, if no process is set within the contract then mediation should be sought in the first instance and then it would progress to the courts if a solution is not found. The use of any processes, other than legal proceedings, must be negotiated, but only the Client can make the decision to use arbitration.

And lastly as part of Section 11, the parties to the appointment contract should agree on the provision of information format:

This can be digital or hard copy and the architect should agreed the format of the output and deliverables at the outset of the project to avoid any misunderstandings or assumptions that client or other party may make. This also determines from the outset the common standard all design team members will be working to allowing interchangeability, compatibility and interoperability maximising efficiency and minimising discrepancies, e.g using BIM.

A key items to note is that The RIBA Professional Services Contracts 2018 and their Schedules of Services are designed to be used with suitable supplementary documents, i.e. Novation Agreement, Collateral Warranty, Third Party Rights Schedule or any other documents. 

So once all the relevant sections have been completed, what’s the process if an amendment ends up being required:

Generally, the Professional Services Contracts have been prepared to be used without amendments and to be kept as originally drafted to ensure the relevant safeguards remain intact for both parties. However, if the client wishes to make material alterations to the Conditions, firstly legal advice should be sought, and the amendment can be made either by setting out the amendment on a separate sheet and attached as a numbered appendix to the Contract with original text struck through clearly identifying what exactly has been changed with each amendment initialled by or on behalf of the parties. Or alternatively, the architect/consultant should make the necessary amendments to printed copy with each amendment to be initialled by or on behalf of the parties. 

Once the documents are finalised, they are to be signed by both parties and both should retain a copy of the contract with the original or certifies copy to be sent to the client.

So to sum up what I discussed today:

• All professional services contracts have been drafted with traditional procurement in mind, although adaptations can be made to meet requirements of other procurement methods
• If the client is commercial and the project is simple then the Concise Professional Services Contract will be the most suitable
• If the client is a consumer client and the project is of a simple nature, then the Domestic Professional Services Contract will be most suitable
• If the project is complex for either a consumer or commercial client, then the Standard Professional Services Contract will be most suitable
• Make sure to distinguish the differences between commercial and consumer clients
• If undertaking the Principal Designer role on a commercial project, use a separate and distinct PSC.
• On a domestic project, ensure that you do not take on the role of Principal Designer on a domestic project inadvertently. Agree whether you take on the client duties in writing.
• Always keep an accurate record of the discussions and send a copy to the client.
• Ensure that either the client gives instructions to proceed with specific tasks, or can be shown to have done so. In either case, make certain that the terms, and in particular the fees, for undertaking the work are clear in each invoice.
• Make clear what is included and what isn’t in the fee and services  and explain how the fee has been calculated.
• Ensure that a consumer client understands their role and responsibilities under both the PSC and the building contract.
• Do not accept the standard of ‘fitness for purpose’.
• Advise the client on the need for other consultants and include the requirement in the fee proposal so the client can’t say they did not know about it at a later date and ensure all roles and relationships between design team members are fully documented and understood.
• PII to be maintained at least until the end of the period of liability for the works
• And make sure to take appropriate legal advice before signing any Supplementary Agreements