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EMD, another name for extortion money

February 20, 2013

What’s wrong with clients?

What is with the idea of treating architects and designers (essentially service providers) as contractors? That means you have employed someone whom you don’t have the ability to judge, or you fear will run away.

And what have architects done to deserve this?

Being desperate to get a project doesn’t count, sorry.

Is this a new racket? Or simply moronic hangover mentality within lower levels of bureaucracy?

1. Asking designers for money to empanel them (=To be in the pool of prospective designers. Not at all the same as getting the project.) This money remains deposited with the authority or the client till the time they specify, some times even after that.

2. Asking the empanelled architects to bid, almost always with a separate proposal for each of the projeccts, often requiring some work, even concept design. And ask them to do so with an EMD – not bank guarantee, mind you, to the tune of 5%-20% (yes, seriously) of the expected fees.

3. Then, judging them on lowest quote basis, or asking a technically better person to come down to the lowest quote.

4. Thereby, getting everyone’s EMD on the higher expected price, then lowering the fees, and trying to keep the selected bidder’s EMD till the project is over, many times for years.

For a tangible product, like a building, this was not a bad way to get contractors to be responsible. But for designers? Everyone involved seems to be going out of their minds.

Let’s look at how this works in architecture design:

As with many service industries, creative or otherwise, the stages of work and payments are predefined.

So in a big project, specially, at every stage, there is a way of ensuring the client is safe.

Letter of Intent, or declaration that the architect is hired by a government agency, is the first document that happens from client side. After which the designer may raise invoice for mobilisation or security. (Towards initial expenses like survey, investigation, site visits and liasining with local agencies, even when not counting the work put in by the architect,  so mobilisation really isn’t part of profit as many seem to think) From here, the architect’s work starts: research, developing a program, concept, and first models/ 3Ds to explain the design.

Therefore, with or without a mobilisation advance, the designer has always put in more than what s/he has received.

(On a side note: What is the guarantee the client will pay after the designer has spent time and often money as well in creating a design?)

Going forward, not closing or signing off on a stage is normal. I note the problem of what is properly part of a stage, and what can’t be changed after that stage – because it is exponentially more effort to revise as stages advance – no one seems to understand this but the designer.

Not receiving the money on time is expected, only because it happens all the time.

Not receiving the last payment long after the project is completed too is almost routine.

So within this anarchy, if you issue me a Letter of Intent when I am almost done with working drawings, a tender is about to be floated by contractor, or detail design is long over, I can’t run?

Sure I won’t, because you not only have my design, but also my money.


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