In Germany, prices for design work until last Thursday were governed by the Honorarordnung für Architekten und Ingenieure (HOAI). The “tariff scale” that existed in its current form since 2013 established the minimum and maximum payment for certain works, depending on their volume, complexity and other circumstances. As a rule, the fee of the architect who was involved in the project from start to finish, including the field supervision, in practice was about 10% of the budget. The legislatively fixed minimum fee, according to the Federal Chamber of Architects and the government of the country, prevents the low quality of design, which can entail danger to the life and health of citizens. Also, the established minimum preserves Baukultur (culture of architecture and construction) and helps to keep within the "ecological framework". The maximum fee rate protects the customer against possible overpayment.
Establishing such a framework for payment of services is a common practice in the case of liberal professions. These include lawyers, consultants, private practitioners and, of course, architects and engineers: it is often difficult for a non-specialist customer without the help of the state to determine how much he should pay them for a particular job, since it is difficult to calculate concepts that are taken into account - experience, educational level, etc. Similar laws to the German law regarding architects and engineers existed in 2007, for example, also in Belgium and Italy. It was possible to circumvent the HOAI framework in Germany, but only under unusual, special circumstances.
In 2015, the European Commission found that HOAI did not comply with the 2006 EU Service Directive: this provision is discriminatory on the basis of the citizenship of the specialist / place of registration of the company, is not necessary to achieve the stated goals and is not consistent with these goals. In 2017, the European Commission filed a lawsuit against the Federal Republic of Germany with the European Court of Justice, a Luxembourg-based EU court of highest jurisdiction, whose decisions cannot be appealed. Last week, on July 4, 2018, the court ruled (see the document here) that the HOAI should be canceled: this decision has no retroactive effect, but when concluding new contracts, the tariff framework will no longer be taken into account. In addition, tenders will now appear in Germany, where participants compete in the cheapness of their services.
It should be noted that the court did not accept all the arguments of the European Commission. In particular, he did not agree that HOAI prevents citizens and firms from other EU countries from working in Germany, while the lawsuit stated that it is difficult for foreigners to enter the German market, which is densely occupied by local professionals (130,000 architects, tens of thousands of engineers) if they cannot offer a more attractive rate for their services. Or, on the contrary, doing design work of an unusually high quality or unique in type, they will not be able to request a fee higher than the statutory one. The court also found it reasonable for the German government's statement that the minimum tariff provides quality assurance, while the European Commission did not agree with this: according to its statistics, German architects and engineers earn more than their colleagues in other EU countries, but there is no evidence that foreigners work worse.
At the same time, the court did not see in the HOAI consistency with the stated goals. This provision applies only to architects and engineers (in Germany, to be called a representative of these professions, you must be a member of the union, that is, conditionally, have a license). However, design work there can be done by anyone, say, a draftsman or a facade worker, and they can be paid as much as they want, and no one protects the quality with Baukultur in this case.
A fixed maximum fee also seemed to the judges an unnecessary measure: in their opinion, it is enough to inform customers about the rational amount of remuneration for an architect or engineer in the form of official recommendations, and how much to indicate in the contract - they can decide for themselves.
Architects and engineers in Germany, led by the leadership of all their trade unions, criticize the decision of the European Court of Justice. In their opinion, HOAI was very helpful to small and medium-sized bureaus when concluding a contract with a customer, otherwise they would have been charged indecently low fees. Now the market will be flooded with "discounters", which can generally oust small bureaus from the profession. Success is predicted only for large workshops that have free financial resources for maneuver. Other observers, on the other hand, believe that success will be achieved primarily by self-employed professionals who do not need to think about employees: they can afford to lower prices.
As a measure to preserve the existing situation, it is proposed to leave HOAI in a recommendatory capacity, and also hope for the conscientiousness of architects and engineers, who will still refrain from dumping.
Despite the sad prospects for German professionals, it should be noted that HOAI benefited primarily workshop owners or self-employed professionals: according to this study, in 2006-2012, for which the state raised HOAI tariffs by 10%, the net income of architects and engineers at the head of a bureau or working independently grew by 8%, and hired employees did not rise at all. That is, such a scheme increases inequality in pay within the profession. In addition, the same authors believe that, despite the rise in tariffs, the quality of design work has even dropped slightly (although in this case, even they themselves call their statistical calculations not very indicative).
