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  1. #1
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    Default An architect's "fiduciary" responsibility?

    What is this supposed "fiduciary" responsibility that architects are supposed to have with their clients and just what does it really mean? Is it some kind of oath they take when they finally get licensed by AIA or is it something contractual and if so in what contract agreement is it actually spelled out?

    Part 2, do contractors ever have this same"fiduciary" responsibility, or if they don't should they?

  2. #2
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    Default Re: An architect's "fiduciary" responsibility?

    From Websters:

    fiduciary

    A person, such as an investment manager or the executor of an estate, or an organization, such as a bank, entrusted with the property of another party and in whose best interests the fiduciary is expected to act when holding, investing, or otherwise using that party's property.

    or:

    one often in a position of authority who obligates himself or herself to act on behalf of another (as in managing money or property) and assumes a duty to act in good faith and with care, candor, and loyalty in fulfilling the obligation : one (as an agent) having a fiduciary duty to another

  3. #3
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    Default Re: An architect's "fiduciary" responsibility?

    I think it's contractural and it appears somewhere in the AIA 101 contract. Not sure so I'll have to look it up
    Last edited by Jerrald Hayes; 10-07-2004 at 02:44 PM.

  4. #4
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    Default Re: An architect's "fiduciary" responsibility?

    Thanks Dave but maybe I'm not framing the question properly since I got pretty much the same answer over on Breaktime. I know what a fiduciary is and what it means but what I am wondering is why do architects have a fiduciary responsibility but contractors don't?

  5. #5
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    Default Re: An architect's "fiduciary" responsibility?

    Perhaps it refers to the Arch. role as agent for the owner in disbursal of the owners funds (payment approvals)

  6. #6
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    Default Re: An architect's "fiduciary" responsibility?

    About a year ago I was talking to my attorney about the fiduciaty responsibility condo Board members have to their condo unit owners. During our discussion, he said the condo Board members, even thouogh they are not paid, act as their associatoin unit owners "agent". An architect also acts as an "agent" for his client.

    Contractors do not. The question about "contractors" is really which contractors. For remodeling projects whee there will be subs used, I often tell the potential customer that by acting as the GC, and even though I wil do some of the work, I am still acting as an "agent" of theirs to assure that everything done not only by the subs, but myself as well is done correctly and to their (the customer) benefit. For that reason, I also sometimes tell them that I am really like a "trusted advisor", before, during and after the project has been completed, and do act accordingly. In fact, I have a book entitled "The Trusted Advisor."

  7. #7
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    Default Re: An architect's "fiduciary" responsibility?

    Think of an architect sort of like an Owner's attorney who is drafting a contract for use between the Owner and Contractor. (In fact, architects ARE drafting much of the contract between Owner and Contractor.)

    After the contract is drafted, if a dispute comes up, the attorney would have a fiduciary responsibility to represent the client's interests and would not necessarily have the contractor's best interests in mind. Architects are trained to have a similar attitude. As a philosophical construct, it makes sense; you've got a party on one side of the contract (the contractor) who is experienced and knowledgeable, possibly with decades of experience. On the other side, an Owner who may be totally clueless. Having an architect as an owner's representative helps balance the contractual equation. In theory, at least.

  8. #8
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    Default Re: An architect's "fiduciary" responsibility?

    Explain to me this:

    A client goes to a very well established architect, with a budget for an addition to their very old house. The architect builds a set of plans with specs that amount to 3 times the homeowner’s budget. By the way a lot of it was code information and construction specs that didn’t apply to this jobs specs that were obviously cut and pasted. The architect says it can be built in their budget. They go out for bid. Project includes a full kitchen and a full bath, a fireplace with cultured stone, and high-end components throughout. I provide them a detailed bid at 3 times their budget. They show my numbers to their arch. He says: “this guy is trying to rob you, it can be done to your budget.” Now I look like a crook in their eyes. They pursue more bids from 3 more Contractors, who come back with a price at roughly 3 times their budget, with in a few thousand of mine. They go back to the architect; does he budge on his assessment?

    Now how does this apply to responsibility? What amazes me is the homeowner still holds this architect in high regard. Now 6 months later the homeowner’s are looking to other options remarkably similar to one I gave them during a first meeting over a year ago, long before the architect was brought in. Now who was keeping the homeowner’s well being in mind?
    Dave
    NB Custom Renovations
    __________________

  9. #9
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    Default Re: An architect's "fiduciary" responsibility?

    Dave:

    I posted here a few weeks ago a scenario just as you painted, it actually happened to me recently. Question, is it the fault of the architect or client or both? I’m sure it’s different in every case. Here is my solution which I have offered to several clients and architects with absolutely no positive response. Hire a qualified builder early on to price out the job as it progresses, giving a cost benefit analysis on items as they are added or designed. Pay the contractor a nominal fee with the assurance that he will be one of the bidders and obviously because of being familiar with the project and having developed a relationship with the client, the nominal fee will be worth being in this prime position. This way the job doesn’t get out of hand, which is always what happens.

    Does the fiduciary relationship that an architect has include designing a home within budget?

    By the way, in most cases, I think a contractor, while having a responsibility to the client (a contractual one) to deliver a product based on the contract documents, does not have the same fiduciary relationship and responsibility to the client as the architect. I’ve done jobs where I felt the client expected that from me, and I certainly wanted to satisfy their expectations, but it’s hard for a contractor to be totally unbiased and look out for the client 100%.

    "A builder is only as good as his relationships with good architects".

  10. #10
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    Default Re: An architect's "fiduciary" responsibility?

    I will respond here as an architect. In the above case, I think the architect may have an ethical (and perhaps a contractual one if using an AIA contract) duty to redesign the scope of the work to fit the client's budget, IF the client was clear that this was a budget not to be exceeded, AND if the architect had some control over setting the scope and design to meet this budget.

    That said, if the client INSISTS on a particular project scope, certain materials, a certain set of pricey contractors (theoretically; not referring to you), or other cost items beyond the architect's control, AND still says they have a fixed budget, the architect is put in a very difficult position.

    Often it's hard to know if the client's stated project requirements or the budget should be the controlling factor, and sometimes you can't get the client to tell you. At least 50% of the time, clients describe a $300K project and tell you they have a $100K budget. So as an architect, do you tell them right off they simply can't afford what they want (making them mad and possibly firing you) or just go ahead and design exactly what they want and let them worry about the money? Or just plan to do some normal trimming down the road?. Shooting high and then trimming back is a legitimate strategy to get the client as close as possible to their stated design goals.

    Thus many architects focus more on the design than the budget. And you know what? Most clients figure out how to get the money if they really like the design. Architects GET TRAINED by past clients to not pay a lot of attention to the initially stated budget. Rightly or wrongly, that's what's in the mind of many architects.

    I'm a big advocate myself in doing what Allan suggests: getting a contractor into the process early for a reality check before the client invests in the fully detailed construction doc's.

    In Dave's case, the architect sounds a little removed from reality, and certainly unprofessional if Dave's account is accurate. 3X the budget is a pretty large factor to be off, but it can happen. And if it does, you can calmly explain to the client:

    1) Reduce the project scope to whatever they feel comfortable with. (And I would expect a large portion of the cost of redrawing plans to be borne by the architect, UNLESS the client was telling the architect to proceed with the project scope and not worry about budget).

    2) Come up with more money. (Which they often do.)

    In any event, telling the client that the contractor is trying to rob him is pretty pathetic, and it's probably wise to stay away from this architect in the future. But I didn't have to tell you that, did I? <grin>
    Last edited by RichardAIA; 10-09-2004 at 08:30 PM.

  11. #11
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    Default Re: An architect's "fiduciary" responsibility?

    Richard, I was just involved in a job where a couple I knew wanted to build a new home, I recommended a very good architect, he designed the house, I know his fee approached 100K. The plans were a 40 pages set, the project manual 130 pages. I bid against 2 other, what I would call higher-end builders, I was low bid by $20,000, but all the bids came in way over their budget. They proceeded to blame the architect for having over-designed the house, and are now using what I would call a very low end builder to build a house. The architect’s side of the story is of course that they simply designed what the client asked for. I don’t think I have ever seen a job come in under a clients budget.

  12. #12
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    Default Re: An architect's "fiduciary" responsibility?

    Allan:

    Interesting that they accuse the architect of "over design" yet are willing to risk a lot to get as close to this design as possible, regardless of the quality of construction.

    They obviously could have scaled the project back and gone with a responsible contractor, but chose to reduce quality or reliability or insurance (or whatever) to get what they wanted.

    So I tend to believe the architect in this case. Can you imagine the client being honest and saying to the architect something like, "Hey, you should NEVER have suggested that extra square footage because NOW I WANT IT! You're an incompetent fool for suggesting things that I can't afford, even though I'm now going to try to get them by hook or by crook." Architects sometimes are convenient scapegoats for the client's lack of funds and inability to scale back desire.

    I generally try to fight this by giving clients different design options to create a range of possible costs, so there's a fall-back position if the costs of the preferred scheme are too high. Clients never seem to want to go back to a cheaper scheme, but they can never claim I "overdesigned" when I gave them less expensive options to start with.

  13. #13
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    Default Re: An architect's "fiduciary" responsibility?

    Dave,

    I have a story similar to yours. We got onboard a project early on in the design. We were giving the client a budget per square foot to go with style and design of the home we were going to build for them. We were advising the arch. how to design to keep the cost down.

    The plans were finally finished and sent out to bid. All the numbers were coming back high. I was doing the framing bid and the square foot number that the arch. gave was about 500 sf low. I gave the owner the new numbers and tod him they were high because the sf was larger. They guy owner got upset with me. The plans had to be redone with the house smaller.

    We never built the house. I told the owner it now didn't fit into or schedule because of the design delay. I really didn't want to build for a guy who was already angry with everyone invovled.

    I didn't make a dime on any of this.

    Dave

  14. #14
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    Default Re: An architect's "fiduciary" responsibility?

    John asks:
    do contractors ever have this same "fiduciary" responsibility, or if they don't should they?
    A contractor doesn't normally have a fiduciary duty to the customer, he's just a businessman pursuing his contractual agreement. There is at least one situation (that I can think of) that a contractor would become a fiduciary, that is where the contractor collects more funds from the owner than he has expended into the project (in states where that is still legal). Any funds in excess of what has been expended must be handled as if one were acting as a corporate or individual trustee, there is a fiduciary responsibility owed to the principal party. It is defined as a relationship imposed by law where someone has voluntarily agreed to act in the capacity of a "caretaker" of another's rights, assets and/or well being. The fiduciary owes an obligation to carry out the responsibilities with the utmost degree of "good faith, honesty, integrity, loyalty and undivided service of the beneficiaries interest." The good faith has been interpreted to impose an obligation to act reasonably in order to avoid negligent handling of the beneficiary's interests as well the duty not to favor ANYONE ELSE'S INTEREST (INCLUDING THE TRUSTEES OWN INTEREST) over that of the beneficiary. Further, if the agent should find him/herself in a position of conflicting interests, the agent must disclose the dual agency (acting for two parties at the same time) or risk being accused of constructive fraud in regards to both or either principals
    “It is not an endlessly expanding list of rights —the “right” to an education; the “right” to health care; the “right” to food and housing. That is not freedom. That is dependency. Those are not rights. Those are the rations of slavery – hay and a barn for human cattle.” - Alexis de Tocqueville

  15. #15
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    Default Re: An architect's "fiduciary" responsibility?

    An architect designing something that comes back with bids way over budget has happened to me at least a dozen times.

    The reasons were: the architect never asked about budget, they said it absolutely could be done for that amount, we wanted to try it anyway.

    In most cases, the client was very dissatisfied that so much time and money had been spent designing something they could not afford. Or, after talking with a few contractors, the client realized that the architect over designed elements that could really save them money.

    Richard, I understand that architects have been trained by prior clients to design it the way they want it. But, in my humble opinion, there are more dissatisfied clients than not b/c their architect did not take budget considerations seriously, if at all. It seems to me that clients expect (even if not voiced) their architect to guide them in this and all aspects of their project: design, budget, code... Architects are held in high regard, generally, and clients do look to them for guidance, not just design.

    This may sound outlandish, but I think architects are in jeopardy of losing out as a profession to design/build contractors. At least on a residential level.

    Why don't architects bring the matter up? In a bold way, and strongly recommend that a contractor do some price planning. It would let them off the hook and leave them with more satisfied clients.

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