By James Heigh, Principal, Colliers Project Leaders
Honourariums can be a key factor in your SIF project’s success. But what are honourariums? How do you calculate one? What are the benefits?
The design-build construction methodology can help to meet the fast-tracked timelines that come with SIF funding. The prequalification process for these projects can be taxing on your project’s proponents. As a result, many expect an honourarium as partial compensation for their efforts.
An honourarium is “a payment given for professional services that are rendered nominally without charge .” During design-build procurement processes, proponent teams often complete up to 33% of the project’s design work without charge. Honourariums tell the proponent teams that their time and effort are valued. They also indicate that you recognize the teams are providing professional services for no charge. Compensating design-build teams is a key strategy in receiving the best possible proposals for your project.
The Canadian Design Build Institute (CDBI) guide to calculating honorariums for design-build proposals (2002) is available free of charge on their website. The document outlines how to determine the amount of remuneration based on the construction budget, scope and cost. The level of detail you request in the Request For Proposals and the complexities of the project also help determine the honourarium. Proponent teams usually receive compensation for about 50% of the costs they incur in the preparation of the proposal. In practice, a proposal may cost more or less than the calculation, but this approach provides a consistent benchmark for all your proponents, and is both reliable and transparent.
Top-rated proponent teams who do not win the contract usually receive a honourarium. Commonly, the winning team also receives a honourarium If the project ultimately does not go ahead.
There are many advantages to making an honorarium part of your design-build procurement. Have you considered using one in your next procurement?