Design Services Scope, Extra Services and Fees

Overview
Within the CMAA CCM domain of Program and Project Management, the topic of Design Services Scope, Extra Services and Fees tests your understanding of how the design professional's (A/E's) agreement with the Owner is structured, how the Construction Manager (CM) helps define and police that scope, how additional (extra) services are identified, authorized and paid for, and how design fees are calculated, allocated and controlled. On the exam, this material shows up as scenario questions in which you must decide whether a requested service is basic or additional, who authorizes it, how it should be compensated, and what the CM's proper role is.

Why This Topic Is Important
1. Design drives cost. Roughly 70 to 80 percent of a project's life-cycle cost is committed during design. If the design scope is vague or incomplete, the Owner ends up paying twice: once for extra design fees and again for change orders during construction.
2. The CM is the Owner's advocate. In CM-as-Agent (agency CM) and Program Management arrangements, the CM is frequently tasked with drafting the Request for Qualifications (RFQ) and Request for Proposals (RFP) for design services, evaluating proposals, negotiating fee, and administering the design contract. A CM who cannot tell a legitimate additional service from an attempt to bill for correcting the designer's own errors is failing the Owner.
3. Scope creep is the most common source of fee disputes. Unclear boundaries between basic services, supplemental services and additional services lead to claims, strained relationships and schedule delays.
4. Budget integrity. The CMAA Standards of Practice stress that the design fee is a line item in the Program Budget and must be managed like every other cost, including a design contingency for legitimate extras.
5. Exam weight. Questions on this topic cut across several CCM domains: Project Management, Cost Management, Contract Administration and Risk Management. Understanding it well yields points in multiple areas.

What It Is: Key Definitions
Design Services Scope is the written description, contained in the Owner-A/E agreement, of exactly what the designer will deliver, by phase, for the agreed fee. The industry reference point is the AIA B101 Owner-Architect Agreement (and its engineering equivalent, EJCDC E-500), which CMAA documents are coordinated with.

Basic Services are the services included in the base fee. They traditionally follow five phases:
  1. Schematic Design (SD) - concept, site plan, massing, preliminary cost estimate (commonly about 15% of fee).
  2. Design Development (DD) - systems selection, outline specifications, refined estimate (about 20%).
  3. Construction Documents (CD) - drawings and specifications suitable for permitting and bidding (about 40%).
  4. Bidding or Negotiation - addenda, pre-bid conference support, bid evaluation (about 5%).
  5. Construction Contract Administration (CA) - submittal review, RFIs, site observation, payment certification, substantial and final completion (about 20%).
Basic services also typically include one cost estimate per phase, code research, normal coordination of consultants (structural, mechanical, electrical, civil), and a defined number of design review meetings.

Supplemental Services are services that are known at the time of contracting to be needed but are outside traditional basic services. They are listed in the agreement with a designated responsible party (Owner or Architect) and are priced up front. Examples: programming, existing conditions surveys, site evaluation and selection, geotechnical engineering, civil or landscape design, interior design and FF&E, sustainability or LEED certification, BIM beyond the standard level, commissioning, security or acoustical design, fast-track multiple bid packages, detailed cost estimating, and post-occupancy evaluation.

Additional (Extra) Services are services that arise during the project and were not anticipated at contracting. They are compensable only with the Owner's prior written authorization (except for emergencies) and generally fall into two categories:
  a. Owner-driven changes: revisions to the program, budget or schedule after a phase has been approved; changes required by enactment of new codes after the design was completed; Owner-requested alternates or value engineering redesign beyond the agreement; services required because the Owner furnished inaccurate information; preparing documents for a second bid when bids exceed budget due to Owner-added scope.
  b. Construction-driven or third-party changes: reviewing an excessive number of substitution requests or resubmittals, evaluating contractor claims, responding to RFIs caused by contractor error, extended CA because the contractor exceeded the contract time, services related to replacement of a defaulted contractor, expert witness or dispute resolution support.
Critically, correcting the designer's own errors, omissions or inconsistencies is never an additional service; it is part of the designer's standard of care obligation.

Fees and Compensation Methods
  - Stipulated (Lump) Sum: fixed fee for a defined scope. Best when scope is well defined. Risk of scope creep shifts to the designer; Owner has cost certainty.
  - Percentage of Construction Cost: historically common (often 5% to 12% depending on type and complexity). Simple to apply but creates a misaligned incentive: the designer earns more as construction cost rises and is penalized for successful cost reduction. The basis must be clearly defined (estimated vs. actual cost, inclusion of change orders).
  - Hourly or Time and Materials, often with a Not-to-Exceed (NTE) cap: appropriate when scope is undefined (programming, studies, additional services). Requires timesheet audits.
  - Multiple of Direct Personnel Expense (DPE) or Multiple of Direct Salary: hourly billing based on salary times a multiplier covering overhead and profit (typical multipliers 2.5 to 3.5).
  - Cost Plus Fixed Fee: reimburses actual cost plus a fixed profit; common in public and federal work.
  - Unit Price or Per-Square-Foot: used for repetitive building types or prototypes.
  - Reimbursable Expenses: printing, travel, permit fees, renderings, models, usually billed at cost plus a modest markup (often 10%). The agreement should include an allowance or cap.

How It Works: The CM's Role Through the Project Life Cycle
1. Pre-Design / Procurement of the Designer. The CM helps the Owner develop the design services RFQ/RFP, including a clear program statement, budget, schedule, deliverables list, and the dividing line between basic, supplemental and additional services. The CM recommends a compensation method matched to scope certainty, verifies the fee against the Program Budget, and participates in negotiations. Qualifications-Based Selection (QBS) is standard for public work (Brooks Act and state mini-Brooks statutes): rank on qualifications first, then negotiate fee with the top-ranked firm.
2. Contract Formation. The CM reviews the Owner-A/E agreement for consistency with the Owner-CM agreement (CMAA A-1) and the future construction contract so that roles (for example, who reviews submittals, who certifies payment, how many site visits are included) are not duplicated or omitted. The CM recommends a reasonable design contingency (often 5% to 10% of the design fee) to fund legitimate additional services without re-approvals that delay the project.
3. Design Phase Management. The CM tracks design progress against the deliverables schedule, conducts constructability, cost and schedule reviews at each milestone, and documents Owner approvals at the end of each phase. Documented phase sign-offs are essential: they establish the baseline against which any later Owner-requested change becomes a legitimate additional service.
4. Evaluating a Request for Additional Services. The CM applies a consistent test:
  - Is the service already included in basic or supplemental services? If yes, deny.
  - Was it caused by the designer's error, omission or lack of coordination? If yes, deny (not compensable).
  - Was it caused by an Owner decision made after phase approval, by a third party, or by changed conditions outside the designer's control? If yes, it is likely legitimate.
  - Is the proposed fee reasonable (hours, rates, multipliers, consultant markups)?
  - What is the schedule impact, and is it reflected in the proposal?
The CM then prepares a written recommendation; the Owner, not the CM, grants authorization, and the designer should not proceed before receiving it. Authorization is formalized by amendment or change order to the design agreement, and the design contingency log is updated.
5. Invoice Review and Fee Administration. The CM reviews design invoices against percent complete by phase (for lump sum), against timesheets and the NTE (for hourly), and against the approved amendment log for extras. Reimbursables are checked against receipts and the allowance. The CM also monitors fee earned versus work delivered to detect front-loading.
6. Construction and Closeout. During construction the CM tracks CA effort (RFIs, submittals, site visits) against the quantities assumed in the design agreement so that an overrun can be identified early and its cause (contractor performance, Owner changes, or design quality) assigned correctly. At closeout the CM confirms record document deliverables and final fee reconciliation.

Fast-Track and Alternative Delivery Considerations
Fast-track delivery, which overlaps design and construction, increases design effort because the designer must produce multiple coordinated bid packages, respond to construction questions while still designing, and manage more interface risk. Fees are therefore typically higher and often set per package or hourly. In Design-Build, the Owner's design consultant (bridging or criteria architect) has a reduced scope, while the design-builder's designer operates under a different contract and the CM's oversight role shifts to reviewing compliance with the Owner's criteria documents.

Common Pitfalls the Exam Likes to Test
  - Treating redesign caused by the designer's own over-budget design as an additional service. Under most agreements, if the lowest bona fide bid exceeds the budget due to the designer's failure to design within it, the designer must revise documents at no additional fee (after the Owner elects that option).
  - Allowing the designer to proceed with extra work on verbal approval and then disputing the invoice later.
  - Using a percentage fee on a project where the CM's value engineering is expected to significantly reduce construction cost.
  - Failing to document phase approvals, making it impossible to prove that a change was Owner-initiated after approval.
  - Confusing the CM's advisory role with authority to bind the Owner.

Exam Tips: Answering Questions on Design Services Scope, Extra Services and Fees
Tip 1 - Classify first. When a scenario describes a service, immediately sort it into basic, supplemental (known at contract signing) or additional (arises later). The correct answer almost always follows from that classification.
Tip 2 - Look for the cause. Ask who or what caused the extra work. Owner change after approval, new code, third-party or contractor-caused effort equals compensable. Designer error, omission or coordination failure equals not compensable. If the question mentions inconsistent drawings, uncoordinated documents or omitted items, the answer is that the designer corrects them at no cost.
Tip 3 - Remember the authority chain. The CM reviews, evaluates and recommends; the Owner authorizes in writing before the service is performed. Any answer that has the CM approving fee increases on its own or the designer proceeding on verbal direction is wrong.
Tip 4 - Match fee method to scope certainty. Well-defined scope equals lump sum. Undefined or open-ended scope equals hourly with a not-to-exceed. Be ready to identify the weakness of percentage-of-cost fees: they reward higher construction cost and penalize cost savings.
Tip 5 - Know the phase percentages. SD about 15%, DD about 20%, CD about 40%, Bidding about 5%, CA about 20%. Questions may ask which phase consumes the largest share (CD) or how a fee should be allocated when a project stops after DD.
Tip 6 - Over-budget bids. If bids exceed the budget because of designer failure to design to budget, the designer revises at no fee; if the overage results from Owner-added scope or market escalation beyond the designer's control, redesign is an additional service. Read the fact pattern carefully for the cause.
Tip 7 - Fast-track equals higher design fee. Multiple bid packages, overlapping phases and more coordination justify additional design compensation; recognize this when a question changes the delivery approach mid-project.
Tip 8 - Documentation wins disputes. The best answer often involves written phase approvals, a design contingency log, written authorization, and a formal amendment to the design agreement. Prefer answers that create a paper trail.
Tip 9 - Watch for absolutes and role confusion. Distractors often state that the CM directs the designer, that the designer reports to the CM, or that the CM guarantees the design fee. In agency CM, the designer holds a separate contract with the Owner; the CM coordinates and advises.
Tip 10 - Think like the Owner's fiduciary. When two answers both seem plausible, choose the one that protects the Owner's budget and schedule while treating the designer fairly and following the contract. The CCM exam rewards process discipline, contractual correctness and the CM's advisory posture over expedient shortcuts.

Quick Review Checklist
  - Can you list the five basic service phases and approximate fee splits?
  - Can you distinguish supplemental from additional services?
  - Can you name six compensation methods and the situation each suits?
  - Can you explain why designer errors are never additional services?
  - Can you describe the CM's step-by-step process for evaluating an extra-services request?
  - Do you know who authorizes additional services and in what form?
If you can answer yes to each, you are well prepared for this portion of the CCM exam.