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Party Wall Questions #5

Tuesday, 15th March 2011 | by: Peter Barry

Question

What factors should a Surveyor consider when setting the hourly rate to use when calculating expenses for Adjoining Owner appointments?

When a proposed fee appears excessive should a Building Owners’ surveyor ask the Adjoining Owner’s surveyor to justify their hourly rate as well as the number of hours on their time sheet?

This is another question that was raised at a recent FPWS North London forum meeting which I helped to organise. I would welcome the views of other surveyors. If you are a surveyor involved in party wall matters and would like to attend future meetings please email me at justin.burns@peterbarry.co.uk and I’ll keep you updated.

Comment

One of the expert panel suggested that a surveyor working for a firm could use the traditional ratio that he is expected to generate fees to the value of 2.5 to 3 times his salary to calculate a reasonlable hourly rate.

Working that method through, a Chartered Surveyor with several years experience in party wall matters might expect to earn a salary (including bonuses) of approximately £60,000 per annum in the Greater London area.

Using the ratio above he would therefore be expected to generate fee income of between £150,000 and £180,000 in a good year. Allowing for 4 weeks annual holiday, bank holidays and a couple of CPD days that comes down to between £650 and £780 per day.

The number of productive hours in a typical day is a tricky one but if we take away breaks, dealing with new enquiries, etc. I would say that 5.5 hours is a fair estimate. We are left with an hourly rate of between £120 and £140.

If a surveyor is earning considerably more than £60,000 per annum his hourly rate would be higher but he would be expected to enjoy the support of at least a secretary and probably an assistant. In that scenario it should be possible to delegate some of the tasks to those less expensive employees and reflect that in the overall fee.

It was pointed out at the meeting that the formula is of no use to the many party wall surveyors who work for themselves; normally from a small office or from their own home. I would suggest that a surveyor in that situation should use his fees when acting for Building Owners as a yardstick.

Using a very straightforward example of a loft conversion to a semi-detached house; an experienced party wall surveyor might expend approximately 6 hours on the matter. If that surveyor is regularly gaining appointments when quoting, let’s say £750, in a competitive environment then we can safely say that £125 would be a fair hourly rate when acting for Adjoining Owners – the beauty of this method is that the resulting rate will be different for each surveyor but should adequately reflect his rate of work.

In reality, many surveyors do not use such a logical approach to setting their hourly rate. Similarly to Premiership footballers it more a case of “if he’s charging X amount then I must be worth at least X amount plus a bit more”.