Financial Acumen for Architects Flashcards

A developer asks an architect to estimate construction cost for a 50,000 SF office building using the square-foot method. The local unit cost is $220/SF. What is the preliminary estimate?

Answer: $11,000,000

50,000 SF × $220/SF = $11,000,000 preliminary construction cost estimate.

Which contingency line item specifically covers design uncertainties and incomplete drawings during the schematic design phase?

Answer: Design contingency

Design contingency covers uncertainties arising from incomplete or evolving design decisions before construction documents are finalized.

An architect's Basic Services fee is $450,000 on a $5,000,000 construction budget. What percentage fee is this?

Answer: 9%

$450,000 ÷ $5,000,000 = 0.09, or 9% of the construction cost.

Under AIA B101, which phase typically earns the largest percentage of an architect's basic services fee?

Answer: Construction Documents

Construction Documents is the most labor-intensive phase and typically commands the largest fee percentage, often around 40% of basic services.

Life-cycle cost analysis (LCCA) is best used by an architect to:

Answer: Evaluate total ownership cost over a building's lifespan

LCCA evaluates initial cost, operating expenses, maintenance, and replacement costs over a building's service life to identify the most economical long-term option.

A contractor submits a $75,000 change order for unforeseen subsurface conditions. Which budget line should typically absorb this cost?

Answer: Owner's construction contingency

Unforeseen site conditions are typically absorbed by the owner's construction contingency, which exists precisely for unexpected field conditions.

Which delivery method transfers the greatest financial risk for cost overruns to a single entity, protecting the owner from budget uncertainty?

Answer: Design-Build (lump sum)

Design-Build with a lump-sum contract places all cost risk on the design-builder, giving the owner maximum budget certainty.