CHITKARA SCHOOL OF

PLANNING & ARCHITECTURE

PROFESSIONAL PRACTICE – X SEM.

A
PRESENTATION
ON
Architectural Practice
Content : Architectural Practice

Type of Practices

Setting office, Office Organization, Management

Income Tax, Service Tax etc.

LEARNING OUTCOME OF THE LECTURE

 Understanding various opportunities and types of practices

 Understanding the process of setting up office, its structure,

organization and management

 To understand terms related to tax.

 Setting up office

After acquiring basic qualification an Architect has to decide about his

professional career. He must know what options are available to him and
which option he should choose :

1) An Architect has the following career options :

2) He can be a proprietor of a firm
3) He can be a partner/associate of a firm
4) Employee in a private firm
5) Architect / Researcher in a public area
6) Faculty member in an academic institution
7) A developer, a Builder,
8) Journalist, communicator or a media person
9) Conservation or heritage architect
 Setting up office

 In order to choose appropriate professional career for himself an architect

needs to ponder the following :
1. He must decide whether he want to be generalist or specialist.
2. What are his values? How does he wish to be rated by his clients , contractors,
fellow architects and public?
3. He ought to learn to manage himself.
4. He should posses good skills of translating his thought process to the clients.
5. He must manage projects professionally by building a good team and by doing
his best in terms of skill, time and effort.
6. He must review his performance at the end of each year.
7. He must be able to give “Value for Money” to his clients.
8. He must learn to change with time to cater need of modern world.
9. He must be proactive in all his dealings with his clients, with statutory
authorities, with his consultants, staff, contractors etc.
Type of practices

 Basically there are three types of architectural practices :

1. Proprietary or individual practice

2. Partnership Practice
3. Limited liability or Private Limited Company
 Type of practices : Proprietary Practice

 Established and run by an individual Architect

 The entire capital (investment) needed for buying premises, office furniture's,
equipments, etc is raised by individual architect.
 All the decisions regarding every aspects are taken by an individual. Thus, there
are less scope of disputes.
 The credit for successful projects is not shared.

 Disadvantages :
 Individual has to share every responsibility of every aspect of the practice.
 In a large and complex project, managing design and execution becomes
difficult.
 Practice may be effected due to prolonged illness and to take off time for a
holiday might be a problem.
 Type of practices : Partnership firm

 Two or more architects or an Architect and a professional dealing with some

aspect of building such as structural design or project management can
promote a partnership firm.
 A legal agreement is drawn up stating that the capital brought by each partner,
their respective shares, responsibilities, liabilities etc. Most of these
agreements are a WILL, meaning thereby that such partnership agreement will
remain in force al long as the partners wish to remain together.

 The agreement consists :

 how the firm will be wound up or how the shares of a deceased partner
will be dealt with.
 Contains an arbitration clause to take care of disputes and differences
among partners.
 Written on a stamp paper and signed in presence of a witness.
 It is not necessary to register it with registrar of assurance.
Type of practices : Partnership firm

 Advantages :
 All aspects of the practice are shared
 Skills, temperament and expertise can be used for varied tasks.
 Multiple projects can be handled with ease

 Disadvantages :
 Practice suffers if there is no meeting of minds

 All partners have to share responsibilities equally even if one of them

commits mistakes or neglects a project.
 Type of practices : Limited Liability or Private
Limited Company

 An architect can set up a private limited company in which he can take two or more
directors who must be registered with COA.
 It is regarded as a business firm and not a professional firm .
Advantages :
 Include the right to engage in any sphere of building activity such as becoming
developers, providing turn-key-services.
 The capital can be borrowed from financial institution or from the director himself.
 The directors can be paid salary or honorarium in addition to their share of profits.

Disadvantages :
 It is not treated as a professional firm as far as income tax, provident fund and
gratuity and other laws are concerned.
 All members of the firm must be registered with COA to participate in any
Architectural Competitions.
Establishing of Architects office and its
organisation

 The reputation of an architect and capacity to get more assignments

depends upon his integrity, expertise efficiency and commitment.

 Some critical areas of professional concern to set up an office are:

1. Location and size of an office : In a metropolitan city, medium sized
city, or in a small but growing town.

 Office cum residence:

 Advantages : No need to buy expensive office space, one can
choose personal hours of working depending upon urgency. No
travel time.
 Disadvantage is clients and contractors tend to come on odd times
disturbing not only your privacy but your of your family members
too.
Establishing of Architects office and its
organisation

2. Staff :
 Every architectural office need technical and non technical staff. Their
salaries, service conditions, etc differ form practice to practice.
 The only stipulation for a small practice that a minimum wage to be paid
to every employee as stipulated by state Government. Apart form this the
employer has a moral responsibility to look after his team needs and cater
them substantially in terms of wages, leaves and consultations.
 Working hours and days in a week to be fixed as stipulated by state
Government.
 No medical or leave travel assistance is given by small practice. However,
some contribution to employers own provident fund (PPF) is made by the
employer.
 Failure to abide by these regulations can lead to penal compensation. In
case of Provident Fund Regulations it may entail imprisonment also.
Establishing of Architects office and its
organisation

3. Official correspondence :
An architect need to handle large volume of correspondence during the
coarse of his practice. It is in the form of letters to clients, contractors,
public officials, suppliers, etc. It is therefore necessary to evolve a system
of maintaining a record of such correspondence.
 Computers have made this tedious task much easier but paper less office
are still not a reality.
 Conventionally architects have been storing their correspondence in either
card, box or level files. Every architect need to device own method of
identification of his files through use of alphabets or numbers.
 As far as drawings and files are concerned every architect devises his own
way of storage.
 Important aspect : to keep a record of every letter, plan or article received
or goes out of office.
Establishing of Architects office and its
organisation
4. Record of Drawings :
 These drawings includes : Preliminary sketches, approval drawings,
production / working drawings, details and “as-built” drawings
 Most architects device their own system of preparing and numbering
drawings; but for certain agencies there is a fixed form of preparing
drawings for obtaining statutory approvals.
 Two methods of folding a drawing : Drawings for statutory approval are
folded in a prescribed manner so that the same can be punched and filed.
 The other method is port-folio method : the prints are folded in a
rectangular or square sizes without any margin on the left. This type of
system is used at construction sites. This permits storage of prints in port-
folio.
 In both the folding it is essential that the tile and number of the drawing
appear in top in folded position.
 Storage of soft copies should be done by following proper path system i.e
project name- project drawing title – sub title –detail title etc to retrieve
easily.
Establishing of Architects office and its
organisation

5. Financial matters:

An architect must learn basic feature of accounting in order to manage his finance.
Apart from managing income and expenses in a judicious manner, he is require to
satisfy income tax authorities.
 Central board of Direct Taxes (CBDT) prescribes rule of following book of records
and filing tax returns on time.
 Daily cash book for daily expenses to be maintained which must be tallied
weekly.
 For every expenses made there must be a cash memo, a voucher, or a stamped
receipt.
 For every payment received , a proper record of all receipts issued is essential.
 All the bills prepared for any service need to be machine numbered.
 At the end of every financial year which is 1st April to 31st March fo the next year,
it is incumbent that the income and expenditure account, profit and loss account,
and balance sheet is prepared and written in cash book and ledger.
Establishing of Architects office and its
organisation

Monitoring office finances :

Periodical monitoring of firms finances and administration cost of individual
project is very important.

A comparative analysis of fees expected and expenses to be dealt, must

be worked out to retrieve the fees before the end of financial year.

Sending bills at appropriate stage and time to the client, reminder call, in
some cases advance receipts in some cases helps in cash flow to look after
the expenses.
Establishing of Architects office and its
organisation

6. Limiting Architects Liability:

Professional liability of and architect cannot altogether be avoided, however it
can be controlled careful planning and implementation. Most claims for liability
arise out of failure to perform something which was expected of him.

This claim can be avoided by enforcing strict quality control at every stage in
terms of drawings, accuracy, material control and workers efficiency.

Variation In estimated cost and actual expenses. Variation to the extend of ten
percentage is acceptable. However, any thing more than that can create a legal
obligation.

It is advisable to mention “probable cost” and sometime if it is stated that

more accurate cost will be available after tenders have been invited.
Establishing of Architects office and its
organisation
7. Interaction with statuary Authorities:
Having a good liaison with civic and other authorities is essential. It will help
in growth of establishment and resolve any issues hindering the projects.

8. Client – Architect Agreement :

1. It is of utmost importance that this type of agreement is comprehensive and
the process of dispute solving namely the arbitration clause is included in it.
2. This can be done by adopting standard form of “ letter of appointment”
recommended by COA.
3. Some public organisations have their own standards form of agreement with
architects. It is advisable to get such a form vetted by a lawyer before signing
it.
4. If the projects involves partial service then the agreement should be
customised by specifying the scope and limitations of the services.
Establishing of Architects office and its
organisation

9. Controlling overhead expenses.

 One may not earn the desired income if overhead expenses are not
monitored properly.
 Project time scheduling and man-hour-projections are done for each
project and monitored regularly the need for payment of overtime to staff
can be curbed.
 Conveyance expenses, hardware's, copies of drawings and documents
should be monitored as well.
10. Tax planning for future needs:
An architects being self employed, need to provide for his future needs
over his retirement, while he is still active.
 Two ways prescribed are : Getting insured at young age so the initial
premium is less and investing in PPF which shall give tax free good returns.
 Income tax

What is meant by TAX ?

 A fee charged ("levied") by a government on a product, income, or activity. If
tax is levied directly on personal or corporate income, then it is a direct tax.
 If tax is levied on the price of a good or service, then it is called an indirect tax.
 The purpose of taxation is to FINANCE government expenditure. One of the
most important uses of taxes is to finance public goods and services, such as
roads, public infrastructures, street lighting and street cleaning. etc
 Income tax

What is meant by Income TAX ?

 This is the Central Government Tax on the income of an individual and of a
company as well.
 You are liable to pay income tax to the Central Government, when your annual
income is more than certain amount. The rate of tax and slab depends on many
variables of assets and income source of an individual.
 Gross income – Allowable expenses = Net Income
 The net income is considered for taxation.
 Rate of income tax : it is changeable. The union finance minister proposes this
rate in the budget every year and becomes applicable when passed by the
parliament.
 Income tax

What is meant by Professional TAX ?

 This is tax laid by state government. This tax is an amount fixed by state
government which is not related to the income of an individual and has to be
paid annually.
 Professional tax is imposed by various states. It is imposed on business owners,
working individuals, merchants and people carrying out various occupations.
 TDS : Tax Deduction at source : As prescribed by the government of India that an
establishment with certain returns need to deduct the tds from their
employees, consultants and other agencies at their end.
 Income tax

What is meant by SERVICE TAX ?

 The Central Government has levied this tax. An architects give professional
service to his clients and this service is taxed by the Government.
 Therefore the an architect has to charge the client on the amount of fees certain
percentage as service tax.
 The amount so collected is to be paid to the Government quarterly. In general
term a service tax registration is mandate if the profit margin of a firm is beyond
Rs ten lacs per annum.
References:
 “Professional Practice and procedure” by Ar. V.S. Apte
 "Handbook of Professional Documents" by Council of
Architecture
 "Architectural Practice in India" by Prof. Madhav Deobhakta and
Ar. Meera Deobhakta