Is the Tshwane Council closure effecting your cashflow?
There is growing frustration regarding obtaining approvals from the now closed City of Tshwane’s Building Control Department. Many of our members who have already submitted drawings before the lockdown are unable to hand over copies of approved plans to clients who may have already been waiting months before the pandemic. There have been reports of Architecture practices having cashflow problems as a result of the clients unwillingness to pay for stage 4.1 without council approval. We investigated the legitimacy of withholding fees and how you could unlock this vital cashflow. Cashflow that could be the difference between having to retrench a large portion of your staff or even close your businesses.
Let’s start at looking at the SAIA Client Architect Agreement and the deliverables under stage 4.1:
- Prepare documentation sufficient for local authority submission:
- Co-ordinate technical documentation with consultants and complete primary co-ordination.
- Prepare specifications for the works
- Review the costing and programme with the consultants
- Obtain the clients authority and submit documents for approval
The primary goal is to prepare documentation sufficient for Local Authority’s consideration for approval. This includes obtaining the clients authority, which is covered in completing the necessary paperwork under FORM 1 of the NBR. FORM 1: “Declaration by persons responsible for preparing an application for approval of erection of the building in terms of section 4 of the Act”. As SACAP Registered Professional Architects, we can prepare the applications however the approval process itself is out of our scope of work. Therefore, under the Client Architect Agreement we should be entitled to the payment of Stage 4.1 after completing our obligations having submitted to council and not after approval is achieved.
Notwithstanding the clarity of this clause there are many complexities to consider. A heavy-handed approach retrospectively may cause tension between Architect and client. We all want to retain a good relationship with our clients while keeping our businesses afloat. Each professional will need to decide how he/she navigates this issue using the knowledge of your specific contract as a foundation. Knowing your own professional obligations and your client’s obligations will greatly assist you in planning the way forward. Even before the lockdown and the closure of the council many of us had an unclear understating of the separation of these obligations. This has compounded the problem putting unnecessary weight on Architects to deliver the imposable.
The following client obligations need to be met before you can submit drawings for approval:
SAIA Client Architect Agreement, 2.1 Client’s obligations
1.1.2 Provide the Architect with copies of the title deeds, diagrams, lease conditions and details of other pertinent constraints related to the project and establish site boundaries, beacons, datum levels and such other features as may be relevant; the Architect shall also be provided with a survey drawing and any certificates related thereto
1.1.3 Provide the Architect with all available and relevant data pertaining to existing buildings
1.1.4 Appoint a representative who shall promptly provide the Architect with information when requested by him; the representative shall make himself reasonably available for consultations during all stages of the project and be authorised to make decisions
1.1.9 Pay charges related to all necessary approval processes
1.1.10 Pay the Architect an agreed fee (usually on a time-charge basis) for any work carried out by him that falls outside the agreed scope of service
1.1.15 Review the plans and specifications submitted by the Architect and determine that the Architect has adequately interpreted the client’s requirements and that the building will be suitable for the intended use
1.1.18 Acknowledge that the Architect is not authorised to instruct the contractor to commence construction prior to obtaining local authority approval or any other statutory approval which may be required; the consequences of such an instruction to the contractor to proceed shall be for the account of the client.
In a perfect world the client would provide you with all the information required for council submission at the beginning of the project. The Architect would then use these constraints along with the brief to design the building. However, we know in practise that this is not always possible. There might be paperwork outstanding if the property is being rezoned, consolidated, title deed restrictions are being removed or the existing approved drawings are not available. Even if you do have all the property information, an application can be delayed due to the client’s non-payment of bulk contributions, outstanding rates bills, and council fees. Delays could also be due to internal issues at the council itself. In most cases it is the above-mentioned elements that cause the most substantial delays during the approval process, not the architectural drawings.
The Client Architect Agreement places most of these elements under the client’s obligations, reinforcing the thinking that Architectural fees cannot be linked to obtaining approval as so much of the application process falls outside of our control. It is therefore essential to have an adequate written agreement of appointment clearly stating these client obligations. Ideally you should only submit the drawings and documents to council on the client’s behalf, or give them to the client if the client is making the submission himself, after having received payment for the services up until completion of 4.1.
Unlocking the cashflow from stage 4.1 can greatly improve the survival of many practices. Now might be the time to have that difficult discussion with your client and reach a compromise that gives you a bit of space to breathe. Remember your client will be negatively affected if you go out of business at this essential time in their project. The PIA will continue with our communication with the City of Tshwane to reopen submissions as soon as possible. To reduce the foreseeable massive backlog and to allow more professionals to submit applications and complete stage 4.1.
The bigger lesson here is to change to way we work going forward, and avoid such problematic discussions with the client after the horse has bolted. We should be having these conversations with our client upfront, and ensure all parties sign the necessary formal appointment agreements at the start of any project. We all what to go the extra mile to make our clients dreams a reality, however in our eagerness to please let us not forget the reality of the challenges we all face in obtaining plan approval.
This article was prepared with the PIA as part of the Professional Practice Portfolios initiative to promote good business practice within the profession.
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