Party wall fixed fees – fixing a problem or part of a problem?
Party wall surveyor’s fees are contentious and often the source of friction. Surveyors argue all the time as to what is reasonable. It is easy to argue that high fees are unreasonable, but there is also a case to be made, very strongly, that low fixed fees are also unreasonable. Some surveyors like to describe this as ‘the race to the bottom’.
This article looks at the two main pricing strategies that surveyors use, highlighting the pros and cons of each approach, and concludes that fixed fees are part of a solution when it comes to keeping surveyor’s fees in check, whilst variable fees ensure quality is not compromised.
The cost vs quality vs time trade off
There is the idea that there are three elements that compete with each other when it comes to work, and that you can generally choose two elements at the expense of the third. These three elements are cost, quality of work, and time i.e. how quickly a job is concluded:
Quality ← Time
By prioritising cost and time, it is suggested that quality is sacrificed. Likewise, if time and quality are prioritised, it is likely to cost the building owner more. This is a fairly basic theory with plenty of flaws, but it is not to be dismissed, as business models rely on trying to prioritise all three of these elements, but often find that they are falling short in at least one. Understanding this can help to determine how fees work.
How do fixed fees work?
Generally speaking, fixed fees apply to building owners. Surveyors are asked to provide a prospective client with a fee proposal, and may state that they are able to agree an award for a loft extension for £950 plus vat (for example). The building owner is entitled to shop around, and is often understandably motivated to obtain a couple of quotes, often going for the cheapest surveyor. The building owner will settle an invoice upon completion of the work and has the reassurance that the fee is fixed, reasonable and within budget.
Advantages and disadvantages of fixed fees
Fixed fees provide reassurance and ensure that if matters become protracted, the building owner can at least have financial security. The cost element should be cheaper, for the building owner’s surveyor at least. However, a warning is required. If there are two surveyors involved, there are often arguments relating to the workmanship of a surveyor on a low fixed fee. They use cut and paste documents with very little tailoring for the scheme in question. They place the burden on the adjoining owner’s surveyor to modify the award and invariably, the adjoining owner’s surveyor’s fee is higher than the building owners. This creates the illusion that the adjoining owner’s fee is excessive, when actually, the higher fee is incurred because the cheap surveyor simply contributed less to the process. A low fixed fee with a quick turnaround means quality is likely to be sacrificed. Fixed fees are great, but they come at a cost, and often this cost is hidden, until it is too late.
There are plenty of surveyors who charge fixed fees, and they don’t try to compete on price. These surveyors still want to provide reassurance to their appointing owner however, they accept that the process takes time, and that they need to contribute meaningfully to ensure that the ‘blame game’ is not initiated. This prevents the building owner from paying an inflated adjoining owner’s surveyor’s fee due to their surveyor’s failings.
The race to the bottom, and low fees, isn’t necessarily a bad thing. Embracing technology, pragmatism and setting up effective systems to manage the workload is to be encouraged, and can lead to good quality work, completed quicker, and for less – essentially allowing all three elements (cost, quality and time) to become more favourable. Fixed fees incentivise innovation, as does competition, and it is essential that party wall surveyors embrace the future, after all, the industry is known to be backwards, slow and outdated.
How do variable fees work?
Variable fees are much more common when a surveyor is appointed to act on behalf of an adjoining owner. The surveyor simply charges by the hour. Hourly rates can vary from as little as £75 to over £400. The building owner who generally foots the bill can be left stressed by the fact that fees can very quickly rack up with little in place to keep them in check. There is uncertainty, and the fee is only made known right at the end of the process, whereby a surveyor reveals his fee leaving the building owner surprised – most of the time not pleasantly.
Advantages and disadvantages of variable fees
The variable fee makes sense, as the building owner is simply paying per hour, so the fee reflects work undertaken. The fear that members of the public can have however, comes from the idea that surveyors are incentivised to prolong disputes, so that they can rack up more hours, inflating their fees. This is the other side to the ‘blame game’, where a surveyor can act overzealously and obstructively, needlessly criticising the quality of a draft party wall award or a building owner’s proposals. The surveyor can pretend (or often believe) that he has to do all the work, and the much required ‘spirit of cooperation’ too often goes missing.
With regards to the three elements of time, quality and cost, variable fees tend to prioritise quality. This means that the parties to the dispute may be better protected by surveyors who wish to do things properly, and without compromise, ensuring that they administer the party wall act effectively. This approach is more in keeping with the case of Welter v Mckeeve, a case where the Judge found it necessary to comment on the conduct of the party wall surveyors. Of all the elements, Welter v Mckeeve suggests that ‘quality’ is the most important, and that surveyors need to do much more than to impress their appointing owners with quick awards done at rock bottom prices. The conduct of a surveyor is vital, and variable fees gives a surveyor breathing space, allowing them to act impartially and in such a way as to ensure that they do not place undue and unnecessary pressure on themselves - unlike the surveyors who work on a fixed fee basis. Surveyors on a variable fee are perhaps less inclined to take short cuts to save time, instead, they push to do the job properly, putting quality at the heart of all they do.
There is friction relating to fees, and a general lack of understanding which can result in the much repeated ‘blame game’. Surveyors arguing and blaming each other reflects poorly on all those who are involved in administering the act. Instead, there can be mutual respect, in that both types of fees require different skill sets that have their flaws, but are also able to improve the industry. Fixed fees drive innovation and change, whilst variable fees maintain high standards and ensure corners are not cut. Whatever side you are on, they both have their merits. Ideally, the industry can make space for both fee strategies, and with a better understanding, they can work together more harmoniously. The reward is a more efficient industry and one that upholds the highest of standards.