METHODS OF COMPENSATION | COMPREHENSIVE LECTURE | Ar.

Jomarie Viel Maglunob

I. STANDARDS OF PROFESSIONAL PRACTICE DOCUMENT 210

Architect’s Guidelines for Standards of Professional Practice (SPP) Compliances – Methods of Compensation and Schedule of
Fees
*This replaces the 1979 UAP Doc 208-B (Methods of Compensation and Schedule of Fees)

II. THREE MAIN TYPES OF COMPENSATION:

1) PERCENTAGE-BASED FEE
2) LUMP-SUM OF FIXED FEE
3) TIME BASIS FEE
1. PERCENTAGE-BASED FEE

1.1. Percentage Based on Project Construction Cost – Fee is a percentage of the Project Cost declare at the time
of the project.

Most common compensation; based on project type, budget, can adjust fee; advantage – proves fair to both client and to architect;
fee of architect is derived by multiplying the specified percentage by the PCC

Types of PCC

a) Probable Project Construction Cost (PPCC) – an initially estimated amount

Can be arranged in 2 ways:

1.1.1. DAEDS – Detailed Architectural & Engineering Design Services

(Assume this if the type of service is not specified.)

1.1.2. DADS – Detailed Architectural Design Services

DAEDS is not equal to DADS; DAEDS is more common than DADS

The amount of DADS is 60% of the DAEDS. Architect is entitled to this amount because s/he is the lead professional &
coordinates the works to the other allied professionals necessary to complete the project

b) Awarded Project Construction Cost (APCC) – an amount based on the winning bid for the project

c) Final Project Construction Cost (FPCC) – the final cost based on the actual proceedings of the project

1.2. Unit Cost Method – Fee is computed by cost per square meter of the project and is based on accurate and
timely data.

Initial estimate; Variation of the PCC; requires accurate & timely data;
Computation is based on the cost per square meter of the project

1.3. Value-Based Pricing/Percentage of Gross Rentals – Fee is based on the outcome or revenue or profitability
results of the service or building.

In this arrangement, architect goes beyond basic maintenance & upkeep responsibilities to come up with
schemes for maximum profitability, such as gaining maximum building occupancy and making the building as
efficient as possible.

e.g. Sales In Retail Facilities; Leasing In Housing; Leasing In Commercial Spaces

Usually used for post-construction since building is already functional;

2. LUMP-SUM OF FIXED FEE – Fee is an estimation of the Direct Cost with a margin of profit.

● An appropriate percentage of PPCC; an estimation of the direct cost and then adding a reasonable margin of profit

● This method is appropriate when scope of services required can be clearly and fully defined form the beginning of the
project; it is very important that the client and the architect agree on the: Scope of project; schedules for designs and
approvals; construction schedules;

● other variables crucial to the project

● to avoid changes in the contract, it is important to include in the service agreement a time limit for the performance of
services and that an additional compensation is to be required for changes required by the client beyond the agreed
upon limit

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 METHODS OF COMPENSATION | COMPREHENSIVE LECTURE | Ar. Jomarie Viel Maglunob

3. TIME BASIS FEE – Used when services are in short periods or interim in nature, the scope of work is difficult to determine
in advance; this method is usually used for: services that cannot be well-defined; pre design services; partial/additional
services; rendering expert testimony; consultancy

3.1. Multiple of Direct Personnel Expense (MDPE) – Non-creative work (e.g. accounting, secretariat, research
works, data gathering, preparation of reports, etc.); Fee is based on the technical hours spent for the works.

● Computation is made by adding all the costs of technical services, then multiplying it by a multiplier to cover overhead
profit
● Multiplier ranges from 1.5 to 2.5 depending on the office set-up overheard, experience of the architect and the
complexity of the services
● Total fee is then added w/ the cost of the total reimbursables (i.e. transportation, living allowance, housing, etc) that
the project required for the professionals

Formula:
● (Architect’s Rate x No. of Hours Spent) + (Consultant’s Rate x No. of Hours Spent) + (Technical Staff’s
Rate x No. of Hours Spent) = DIRECT COST
● Direct Cost x Multiplier (Range: 1.5 to 2.5) = FEE
● Fee + Reimbursable Expenses = TOTAL COST OF SERVICES

3.2. Professional Fee + Expenses (PFPE) – Continuing relationship on a series of projects; fixed fee or lump sum is
to be paid and this amount already accounts for overhead and profit has been established

3.3. Per Diem, Honorarium + Expenses – Work that requires the Architect’s personal time (i.e. meetings, trainings,
seminars, oculars, consultations, etc.)

● e.g. attending project related meetings, seminars, trips; conducting ocular inspections for project; conferring w/
others regarding prospective investments/ventures, etc.

3.4. Salary Cost x Multiplier + Direct Cost or Reimbursable Expenses – For projects with costs & time constraints
that are difficult to determine at the onset of the project.

● Method is based on the total basic salaries (Direct Salary Expenses) of all Professional Consulting Architects
(PCAs) and their staff multiplied by a factor from 3.0, plus reimbursables

Formula:
● [Salary Cost x Multiplier (Factor of 3.0)] + Reimbursables = FEE

3.5. Per Diem or Hourly Basis – For projects requiring intermittent personal service or occurring in irregular periods
of time; includes travel time.

Architect must be compensated for the times s/he spends on the work, including travel time. (e.g. applicable to
consultancy services, testimony in court)

3.6. Retainer – For when the Architect’s services is to be required at intervals. An amount is paid at regular intervals.
Services of the architect will be available to the client when required.

● In this method, a stipulated amount is paid at regular intervals where the consulting architect is obliged to render a
certain service or to spend a certain amount of time on the client’s requirements

4. MIXED METHODS OF COMPENSATION – a combination of two or more methods of compensation.

III. SCHEDULE OF FEES

1. Pre-Design Services (SPP Doc 201)

● After initial client meeting, architect must submit his/her proposal of pre-design services stating the following: scope
of work; manner of payment; owner’s responsibilities; other conditions and services
● Prior the start of pre-design services, a professional service agreement is necessary between the owner/client and
the architect
● Architect should request an acceptance fee equivalent to 5% of the agreed upon professional fee upon signing of
the service agreement

a. MDPE
b. PFPE
c. Lump Sum
d. Per Diem
e. Mixed

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 METHODS OF COMPENSATION | COMPREHENSIVE LECTURE | Ar. Jomarie Viel Maglunob

2. Regular Design Services (SPP Doc 202) – DAEDS vs. DADS; all allied professionals assume their own civil liabilities
separately. In DAEDS agreement, architect does not assume the responsibilities and liabilities of the other allied
professionals
● Professional arch’l work is classified w/ the degree of complexity and skill required to meet the client’s requirements
on technical, functional, economic, and aesthetic constraints
● With this, different building types are grouped to determine fair remuneration to the architect

a. Percent of PCC
(For Recommended Professional Fees (RPF)& Schedule of Fees per building type, see Annex A)
b. Unit Cost Method based on PCC
c. PFPE
d. Lump Sum
e. Per Diem, Honorarium + Reimbursable Expenses
f. MDPE
g. Mixed

SCHEDULE OF PAYMENTS: THINGS TO NOTE

● PARTIAL PAYMENTS – It can be made such that the framework of the manner of payment are still within the
outline stipulated in this document

● SUSPENSION OF WORK – when the work is abandoned in whole or in part, the owner/client shall pay the architect
the amount due for the services rendered corresponding to the stage of suspension or abandonment

● NON–IMPLEMENTATION – when the architect has completed all contract documents, regardless whether the
owner/client implements the design, the owner/client is due to pay the architect an amount equivalent to 90% of
the architect’s RPF

● EXTENSION OF CONSTRUCTION PERIOD – when portions of the building/s are erected at different period/s of
time, extending the initial estimated construction time, the fee of the services rendered during the Construction Phase
shall be adjusted accordingly, proportionally.

When the construction period exceeds six (6) months, the fee for the remaining works (Periodic Construction
Supervision) shall be doubled

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3. Specialized Architectural Services (SPP Doc 203)

a. Percent of PCC (Cost of Work)
(For RPFs& Schedule of Fees per Service, see Annex B)
b. Unit Cost Method based on PCC (Cost of Work)
c. MDPE
d. PFPE
e. Lump Sum
f. Retainer
g. Per Diem, Honorarium
h. Mixed

4. Full-Time Supervision (SPP Doc 204-A)

a. Percent of PCC – RPF = 1% to 1.5% of PCC
b. MDPE
c. PFPE
d. Lump Sum
e. Per Diem, Honorarium

5. Construction Management (SPP Doc 204-B)

a. Percent of PCC – RPF = 1.5% to 3% of the PCC
b. MDPE
c. PFPE
d. Lump Sum
e. Per Diem, Honorarium
f. Mixed

6. Post-Construction Services (SPP Doc 205)

a. Value- Based Pricing or Percentage of Gross Rentals, Maintenance Fees,
& Security Fees – RPF = 4% to 6% of Gross Rentals (Incentive-Based)
b. Monthly Salary
c. MDPE
d. Retainer + Reimbursable Expenses
e. PFPE + Reimbursable Expenses

7. Comprehensive Architectural Services (SPP Doc 206)

a. Percent of PCC – RPF = 2% to 5% of PCC
b. MDPE
c. PFPE
d. Lump Sum

8. Design-Build Services (SPP Doc 207) – DS-Build Services by Admin’n / DS-Build Services on a Guaranteed Max. Cost
a. Percent of PCC – RPF = 7% of PCC (Design-Build Services by Administration)
b. MDPE
c. PFPE
d. Lump Sum
e. Per Diem, Honorarium + Reimbursable Expenses
f. Mixed
g. Built into the Guaranteed Maximum Cost
(Design-Build Services on a Guaranteed Maximum Cost) – RPF = 10% of PCC

9. Architectural Design Competition (SPP Doc 208)

a. Salary for the Secretariat
b. Office Overhead Costs
c. Honorarium for the Professional Advisor
d. Honorarium for the Technical Advisor
e. Honorarium for the Jurors
f. Prizes and/or Honoraria for the Winners and/or Participants(See SPP Doc 208)

10. Professional Architectural Consulting Services (SSP Doc 209)

a. Per Diem or Hourly Basis
b. Retainer
c. Salary Cost x Multiplier + Reimbursable Expenses
d. Lump Sum
e. Percent of PCC (Cost of Work)

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 METHODS OF COMPENSATION | COMPREHENSIVE LECTURE | Ar. Jomarie Viel Maglunob

IV. GENERAL PROVISIONS

1. COLLECTION OF PROFESSIONAL FEES – It is unlawful for any unlicensed and/or unregistered

person to collect a fee for architectural services.

2. INTEREST DUE TO LATE PAYMENTS – The Architect is entitled to interest at the prevailing rate set
by the BangkoSentral ng Pilipinas (BSP) and mutually agreed upon by the Architect and the Client,
on all fees, other charges and reimbursements due and not paid within 30 days from receipt of
billing.

3. GOVERNMENT TAXES – The Architect’s Fee is a net amount. Apart from income taxes payable by
the Architect, all other taxes (e.g. VAT) that the national government and local government may
impose on the Architect brought about by the services performed for the project shall be paid for
by the Client.

4. ARBITRATION – In case of any dispute between the Architect and the Client, the dispute shall be
dealt with in accordance with RA 9285 (Alternative Dispute Resolution Act of 2004).

5. PENALTY CLAUSE & SANCTION – Any individual, partner. firm/corporation/consortium who

engages in architectural services, but are not qualified in accordance with the provisions by laws,
particularly under R.A. No. 9266 (The Architecture Act of 2004) and its IRR shall be subject to
sanction/s by the appropriate public or private entities, without prejudice to the filing of
appropriate criminal, civil or other administrative or cases pursuant to existing laws.

6. AMENDMENTS – The UAP-IAPOA shall continuously enhance the contents of this document to be
responsive to new challenges and requirements of professional practice.Any amendment to this
document shall prepared by a Special Committee on the Standards of Professional Practice of the
IAPOA. The amendments shall then be submitted to the UAP National Board for approval.

7. EFFECTIVITY – This document shall be effective after approval of the UAP National Board of
Directors and upon recommendation of the PRC and PRBoA for implementation as part of the
PRBoA-issued Resolution on the Standards of Professional Practice (SPP) Documents.This
happened on October 15, 2014.

- END OF MAIN MODULE –

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 METHODS OF COMPENSATION | COMPREHENSIVE LECTURE | Ar. Jomarie Viel Maglunob

ANNEX A
REGULAR DESIGN SERVICES
Recommended Professional Fees & Schedule of Fees

TABLE A.1. Building Type Groupings.

Buildings of SIMPLE utilization & character,
GROUP I
without complication of design.
GROUP II Buildings of MODERATE complexity

GROUP III Buildings of EXCEPTIONAL character & complexity

GROUP IV RESIDENCES

GROUP V MONUMENTAL buildings

GROUP VI REPETITIVE Construction (Except Housing)

GROUP VII HOUSING PROJECTS

GROUP VIII Projects involving EXTENSIVE detail

Alterations & Renovations;

GROUP IX
Rehabilitations, Retrofit, & Expansion/Addition
GROUP X Consultations & Arbitration; Rendering of PROFESSIONAL OPINION

TABLE A.2. RPF for Group I (DAEDS).

Project Construction Cost (PCC) in PHP Recommended Professional Fee
50M and less 5%
50M – 100M 2.5M + 4% of excess of 50M
100M – 200M 4.5M + 3% of excess of 100M
200M – 500M 7.5M + 2% of excess of 200M
500M – 1B 13.5M + 1% of excess of 500M
Over 1B 18.5M + ½ % of excess of 1B

TABLE A.3. RPF for Group I (DADS).

Project Construction Cost (PCC) in PHP Recommended Professional Fee
50M and less 3%
50M – 100M 1.5M + 2.4% of excess of 50M
100M – 200M 2.7M + 1.8% of excess of 100M
200M – 500M 4.5M + 1.2% of excess of 200M
500M – 1B 8.1M + 0.6% of excess of 500M
Over 1B 11.1M + 0.6% of excess of 1B

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TABLE A.4. RPF for Group II (DAEDS).

Project Construction Cost (PCC) in PHP Recommended Professional Fee
50M and less 6%
50M – 100M 3M + 5% of excess of 50M
100M – 200M 5.5M + 4% of excess of 100M
200M – 500M 9.5M + 3% of excess of 200M
500M – 1B 18.5M + 2% of excess of 500M
Over 1B 28.5M + 1% of excess of 1B

TABLE A.5. RPF for Group II (DADS).

Project Construction Cost (PCC) in PHP Recommended Professional Fee
50M and less 3.6%
50M – 100M 1.8M + 3% of excess of 50M
100M – 200M 3.3M + 2.4% of excess of 100M
200M – 500M 5.7M + 1.8% of excess of 200M
500M – 1B 11.1M + 1.2% of excess of 500M
Over 1B 17.1M + 0.6% of excess of 1B

TABLE A.6. RPF for Group III (DAEDS).

Project Construction Cost (PCC) in PHP Recommended Professional Fee
50M and less 7%
50M – 100M 3.5M + 6% of excess of 50M
100M – 200M 6.5M + 5% of excess of 100M
200M – 500M 11.5M + 4% of excess of 200M
500M – 1B 23.5M + 3% of excess of 500M
Over 1B 38.5M + 2% of excess of 1B

TABLE A.7. RPF for Group III (DADS).

Project Construction Cost (PCC) in PHP Recommended Professional Fee
50M and less 4.2%
50M – 100M 2.1M + 3.6% of excess of 50M
100M – 200M 3.9M + 3% of excess of 100M
200M – 500M 6.9M + 2.4% of excess of 200M
500M – 1B 14.1M + 1.8% of excess of 500M
Over 1B 23.1M + 1.2% of excess of 1B

TABLE A.8. RPF for Group IV.

Service Recommended Professional Fee
DAEDS 10% of PCC
DADS 6% of PCC

TABLE A.9. RPF for Group V.

Service Recommended Professional Fee
DAEDS 12% of PCC
DADS 7.5% of PCC

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TABLE A.10. RPF for Group VI.

Service Recommended Professional Fee (RPF)
First (1st) Building 100% of RPF for type of building
Second (2nd) Building 50% of RPF for type of building
Third (3rd) Building 40% RPF for type of building
Fourth (4th) and Succeeding Buildings 30% RPF for type of building

TABLE A.11. RPF for Group VII.

Number of Units Recommended Professional Fee (RPF)
DAEDS DADS
1 10% of PCC 6% of PCC
Fee for one unit + 50% for each Fee for one unit + 30% for each
2 – 10
additional unit additional unit
Fee for ten units + 40% for each Fee for ten units + 24% for each
11 – 30
additional unit additional unit
Fee for 30 units + 25% for each Fee for 30 units + 15% for each
31 – 50
additional unit additional unit
Fee for 50 units + 15% for each Fee for 50 units + 9% for each
51 and above
additional unit additional unit

TABLE A.12. RPF for Group IX.

RPF 150% of PCC (Cost of Works Covered)

TABLE A.13. RPF for Group X.

Service Rendered RPF
Technical Opinion/Advice PHP 1,000 / hour (Minimum)
Expert Witness PHP 5,000 / appearance

TABLE A.14. Schedule of Payments.

Cumulative
Work Phase Payment Due
Amount
Upon signing of the Service Agreement 5% of PF 5%1
Upon completion of
+ 15% of PF 20%2
the Schematic Design Phase
Upon completion of
+ 20% of PF 40%2
the Design Development Phase
Upon completion of
+ 50% of PF 90%2
the Contract Document Phase
(Adjust fee to be equal to 90%, as per
Bidding or Negotiation Phase 90%3
winning bid)
+ 10% of PF
Upon Completion of Work (5% for civil liability, 5% for Periodic 100%4
Construction Supervision)
1. Based on original SPPCC as stipulated in the Service Agreement. (Supposed Probable Project Construction Cost)
2. Based on latest SPPCC submitted at that particular stage.
3. Based on winning bid.
4. Based on FPPCC.
- END OF ANNEX A –
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ANNEX B
SPECIALIZED ARCHITECTURAL SERVICES
Recommended Professional Fees & Schedule of Fees

TABLE B.1. RPF for Architectural Interiors (AI), Acoustic Design, Lighting Layout & Design, and Site
Development Planning (SDP).
RPF 10% - 15% of Cost of Work

TABLE B.2. Schedule of Payments for Architectural Interiors (AI), Acoustic Design, Lighting Layout & Design,
and Site Development Planning (SDP).
Phase of Works Payment Due
Upon Submission of Preliminary Design 30% of RPF
Upon Submission of Final Design 50% of RPF
Upon Completion of the Project 50% of RPF
Note: Obviously, this tally does not total to 100%. This will most likely be edited in future iterations of this document.

TABLE B.3. RPF for Physical Planning.

Area RPF Amount
Basic Rate for
PHP 5.00 per sq. m. PHP 250,000.00
the first 5 hectares or less
PHP 250,000.00 +
Over 5 – 10 hectares PHP 4.00 per sq. m. PHP 40,000.00 per hectare above 5
hectares and below 10 hectares
PHP 450,000.00 +
Over 10 – 50 hectares PHP 3.00 per sq. m. PHP 30,000.00 per hectare above 10
hectares and below 50 hectares
PHP 1,650,000.00 + PHP 15,000.00 per
Over 50 hectares PHP 1.50 per sq. m. hectare above 50 hectares
NOTE: These rates apply to moderately flat sites only. If the site is rugged or with steep terrain, the fee shall increase by 20-30%.

TABLE B.4. Schedule of Payments for Physical Planning

Phase of Works Payment Due
Framework Development Plan (FrDP) 30% of RPF
Conceptual Master Development Plan (CMDP) 30% of RPF
Preliminary Master Development Plan (PMDP) 20% of RPF
Detailed Master Development Plan (DMDP) 20% of RPF

- END OF ANNEX B -

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 METHODS OF COMPENSATION | COMPREHENSIVE LECTURE | Ar. Jomarie Viel Maglunob

REGULAR DESIGN SERVICES

PROJECT CLASSIFICATION SMERM RHEAC
1) Simple Projects 6) Repetitive Construction
2) Moderate Structures 7) Housing Projects
3) Exceptional Structures 8) Extensive Detailing
4) Residential 9) Alterations and Renovations
5) Monumental Structures 10) Consultations and Arbitration

GROUP 1 – SIMPLE – require a minimum of architectural finishes, engineering,

and allied architectural elements; shell construction
● Simple Loft Type Bldgs. ● Service Garage
● Armories ● Public Market
● Bakery ● Habitable Agricultural Buildings
● Hangars ● Industrial Bldgs, Plants, & Warehouses
● Parking Structures ● Other Similar Utilization Type Bldgs.

GROUP 2 – MODERATE – require moderate research and engineering

and allied architectural design; repetitive plans; more partitions
● Art Galleries, Libraries ● City Halls, Courthouse, Correctional Facilities
● Supermarkets ● Banks, Financial Institutions, Postal Facilities
● Office Buildings ● Commercial | Recreational | Religious |
● Apartments, Dormitories Educational Facilities
● Bowladromes / Bowling Alley

GROUP 3 – EXCEPTIONAL – complexity; require consultants, large amounts of research, arch’l finishes,
engineering, and allied arch’l elements
● Airports ● Aquarium (marine biologist)
● Mortuary ● Resort Complex
● Telecom ● Research Facilities
● Transportation ● Medical facilities / hospital (electrical engineer)
● Laboratory, Observatory ● Theatres | Gymnasium | Aquaria | Breweries |
● Atomic facilities (physicist) ● Condominiums (considered “exceptional”)

GROUP 4 – RESIDENCES – single-detached; single-attached, duplex; rowhouse / shophouse;

small apartment houses; townhouses

GROUP 5 – MONUMENTAL – require high degree of skill and much precise detailing; requires concept
● Expositions, Fair bldgs. ● Gateways | Special Decorative Bldgs.
● Museums ● mausoleums | monuments | memorials
GROUP 6 – REPETITIVE CONSTRUCTION (EXCEPT FOR HOUSING) – when plans / designs and related
contract documents are re-used without amendments to the drawings & specifications

GROUP 7 – HOUSING PROJECTS – repetitive housing; involves the construction of several residential units
on the same site with the same set of plans

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GROUP 8 – EXTENSIVE DETAIL – projects involving extensive detail such as:

● Architectural interiors ● Development planning and/or design
● Special fittings; Screens; Counters ● Designs for built-in components or elements
● Furniture, cabinets, landscapes

GROUP 9 – ALTERATIONS / RENOVATIONS / EXPANSIONS – also involves retrofit, rehabilitation,

expansions, and/or additions to existing buildings

GROUP 8 – PROFESSIONAL OPINION / CONSULTATIONS & ARBITRATION

● When an architect is engaged to render opinion or give advice, clarification, or explanation to
technical matters pertaining to his/her profession, a certain remuneration is due.
RPF = PHP 1,000 per Hour
(Subject to increase depending on the extent & coverage of the service)

● When an architect is engaged to render his/her opinion as an expert witness, a certain

remuneration is also due
RPF = PHP 5,000 per Appearance
(Regardless whether scheduled hearing took place or not)

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