If you are undertaking a significant project with a building contract in place, you will likely need the services of a contract administrator to administer the building contract in a fair and impartial manner. Contract administrators ensure that contractual procedures are correctly followed and accurately recorded. But, how much do contract administrators charge?
This guide will tell you what you need to know about how much contract administrators charge and what will affect fees for your project.
For further information on what a contract administrator does, please read our article here.
Contract administrator fees can vary considerably, as there are no longer standard fee scales published by the Royal Institution of Chartered Surveyors (RICS) or Royal Institute of British Architects (RIBA). In addition, no two projects or clients’ needs are the same. Contract administrators will charge fixed fees if the scope is clearly defined and the project is not too complicated. Others may charge a fee that is a percentage of the construction cost or work on a time-charge basis. We explore these three options below:
Lump sum fees are best employed on projects where the scope of works required from the contract administrator is clearly defined. It is important to state precisely what works, tasks and outputs will be completed for the agreed fee. This is because additional works, or client changes, will be charged in addition to the agreed scope of service, and usually at a higher hourly rate than the lump sum fee is based upon.
The role of the contract administrator does not technically start until a building contract is in place between the employer and building contractor. However, in practice the contract administrator is usually appointed at the tender stage when procuring the building contractor. Therefore, it is unlikely that percentage fees will be right choice for appointing the contract administrator. This is because the duties of the contract administrator during the construction stage are stated within the building contract and at the tender stage tasks will be reasonably easy to schedule. If this is not the case, then percentage fees can give the client a reasonable indication of total contract administrator’s fees based on the latest cost plan or pre-tender estimate (construction costs only). You should allow for some flexibility if the project scope is increased and as it is a percentage fee, it will automatically take account of any changes in the estimated construction costs. The contract administrator will review the construction cost as the project develops, providing a straightforward method of adjusting fees to reflect changes in the project size or complexity. This should be without the client having to incur unforeseen or uncontrollable additional fees.
Time charged fees work well when a speedy appointment is needed, the scope of services has not been defined, or the client intends to increase the construction scope as the project develops. It is also suitable where the client wishes to commission a contract administrator on a monthly basis during the construction stage. Time charged fees provide flexibility when a pay as you need approach is used and enables services to be executed quicker than having to prepare a brief, scope or wait for a fee proposal. This option offers the least certainty for clients, so we suggest the contract administrator estimates the time involved and/or agrees a fee cap or a regular fixed monthly payment.
The short answer to the question, how much do contract administrators charge, is – it depends on your project. However, the following explains what you should expect to pay.
As a guide, based on averages fees for contract administrator services, both pre- and post-contract, clients should expect fees between 0.60% and 3.20% on construction values between £250,000 and £10,000,000. There are many factors that affect contract administrator fees, and these are discussed later on in this guide.
The table below shows both traditional contracts and design and build contracts. The services of the contract administrator differ from those of the employer’s agent and therefore this should be considered when reviewing fees. Furthermore, under some traditional contracts there is a requirement for a quantity surveyor. Quantity surveyor fees are specifically excluded from the contractor administrator fees shown below.
| Contract value | Traditional contract contract administrator | Design and build contract employer’s agent |
| £250,000 | 2.40% | 2.50% |
| £500,000 | 2.20% | 2.30% |
| £1,000,000 | 2.00% | 2.10% |
| £2,000,000 | 1.50% | 1.90% |
| £5,000,000 | 0.90% | 1.70% |
| £10,000,000 | 0.60% | 1.50% |
| Contract value | Traditional contract contractor administrator | Design and build contract employer’s agent |
| £250,000 | 3.00% | 3.20% |
| £500,000 | 2.75% | 3.00% |
| £1,000,000 | 2.25% | 2.70% |
| £2,000,000 | 1.50% | 2.40% |
| £5,000,000 | 1.05% | 2.00% |
| £10,000,000 | 0.80% | 1.70% |
| Grade | Lower quartile | Median | Upper quartile |
| Sole practitioner | £55 | £82 | £100 |
| Principals excluding sole practitioner | £80 | £100 | £105 |
| All principals, partners and directors | £78 | £95 | £100 |
| Associate | £60 | £80 | £90 |
| Senior surveyor | £50 | £68 | £75 |
| Surveyor | £40 | £50 | £60 |
| Postgraduate/assistant surveyor | £30 | £40 | £48 |
The fees clients pay for contract administration services will depend on the nature and scale of the project. There are several other factors that affect the average fee scales listed in the above tables:
The contract administrator can be a member of the professional team already working on the project, for example the Quantity Surveyor, Project Manager or architect. If this is the case, then this can also affect fees, as there will not be the same level of familiarisation needed and therefore economies of scale can be achieved by increasing the scope of one of the consultants. Fees will also be affected by the type of practice, based upon their workload and reputation. Fees paid ultimately will come down to what you want the contract administrator to do and how long you require their services. Using the Royal Institute of British Architects (RIBA) stages, a contract administrator’s services will typically fall under two distinct parts:
Part 1 (RIBA Stage 4) – services are typically between planning submission and construction, identifying suitable contractors, preparing the tender documentation, tender reporting, and negotiating the final tender price.
Part 2 (RIBA 5-6) – services during the construction phase; contract documents, reporting on progress, chairing, and minuting meetings, certifying payments, and facilitating agreement of the final accounts.
Contract administration is a service-based industry, so anything that affects the amount of time taken to deliver the work will impact how much a contract administrator charges. Clearly defining the scope of the contract administration services, duration of involvement, and complexity will assist with producing a fee. However, do not fall into the trap of cutting and pasting or even copying a contract administrator’s Schedule of Services without first thoroughly reviewing it for relevance, as this could result in a significantly higher fee than you may need to spend.
Cheaper does not necessarily mean best value, unless of course you are comparing “apples with apples”. This may take a little time on your part as you will need to fully review the fees and ensure they meet the necessary requirements and scope of services. Do not be afraid to ask questions and delve into the detail, and even ask for examples or templates for the proposed service deliverables.
Another element that affects cost, and potentially quality of service, is whether the contract administrator intends to the use an assistant or experienced consultant. If an assistant is proposed, find out the level of supervision and quality control checking procedures they have in place. Perhaps ask the prospective contract administrator who will be working on your project and for a copy of their CV.
Lastly, it is important there is rapport and trust between you and the prospective consultant as you will need to have a close and good working relationship that could need to be maintained over a long, and potentially stressful, period of time.
Evolution5 provides contract administration services for clients in the South and London. If you like to find out more, you can browse our Contract Administration and Employer’s Agent services, see our projects, or to speak to an expert by getting in touch with us using the button below or calling us on 02380 405073.
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