Consultancy Fees: Dichotomy between A/E’s Need to Maximize Profit and Employers’ Need to Minimize Cost

Abstract

This technical note investigates the importance of fees to architects and engineers (A/Es) with respect to the need of clients to minimize production costs. Data were collected by in-depth interviews with 12 subject-matter experts from the construction industry. The main finding is that, when it comes to the selection and engagement of consultant A/Es, the Economic Theory of the Firm regarding the need to minimize production cost and maximize profit is applicable to design-builders and A/Es, respectively. Design/builders do regard low fees as important, because their overall competitiveness is also dependent on how much fees their design consultants are charging them. Client organizations pointed out that it is not very important to select low-fee A/Es. Their reasons are the need to employ quality consultants, the fact that fee is not a cost significant item as compared with the overall development cost, and the need to motivate consultants by paying them adequate fees.