The target-finding phase: planning basis, cost assessment and special termination

The obligation depends on a condition. Section 650p(2) BGB applies "insofar as essential design and supervision objectives have not yet been agreed" (unofficial translation, as are all quotations in this article). In that case the Unternehmer (the contractor in the wording of the BGB, here the architect or engineer) must first "prepare a planning basis for determining these objectives" and submit it to the Besteller (the client) together with "a cost assessment for the project" "for approval".

Three elements matter to the client. First, the planning basis itself: it describes what is to be built and is therefore the yardstick against which later programme changes are measured. Second, the Kosteneinschätzung (cost assessment): it is the first figure that the designer links in writing to the project. Third, the approval: the law does not put the documents before the client for information, but for a decision.

The condition also works the other way. A client who has already agreed programme, floor areas and budget in writing when the contract is concluded has already fixed part of the essential objectives. How far the target-finding phase then still reaches depends on the specific contract. How a budget is written into the architect's contract as a Baukostenobergrenze (construction cost cap) is covered in the article Agreeing a construction cost cap in the architect's contract.

The cost assessment under the BGB does not fit into either of the two sets of rules that designers usually work with. This is a point at which clients and designers easily talk at cross purposes.

Set of rules	First cost figure	Status
BGB, section 650p(2)	Cost assessment for the project	Statutory obligation in the target-finding phase, content not defined further
HOAI 2021, Annex 10	No basic service on cost in LPH 1; cost estimate only in LPH 2	Economic feasibility study in LPH 1 only as an additional service
DIN 276	Kostenrahmen (cost framework) as the first stage of cost determination	Cost planning standard, not a law

The BGB does not define the cost assessment any further. It says neither which method is to be used to prepare it, nor which cost groups it covers, nor how accurate it must be. This gives the client a simple rule: what the law leaves open should be fixed by the contract or, at the latest, by the approval.

The cost framework and the cost estimate as methods are explained in the article on the cost framework and cost estimate under DIN 276. Which basic services the first Leistungsphasen (LPH, work phases) contain is described in the article on HOAI work phases 1 to 3.

The target-finding phase is where case law already places a duty on the architect. On the trend of published decisions, the architect must already in the basic evaluation phase "mark out the economic framework for a building project and take account of [the client's] cost expectations" (BGH, judgment of 21.03.2013, VII ZR 230/11, according to a published summary of the BGH press release).

According to the same decision, the client's Kostenvorstellungen (cost expectations) are relevant even if they contain no precise upper limit. The architect must clear up doubts about the scope of the cost framework, and the expectations regularly become part of the contract if the architect does not object to them. For the client this means: the client's own figure belongs before the designer's cost assessment, not after it. A client who first waits for the cost assessment and then approves it adopts the designer's figure as the starting point.

A short period starts when the documents are submitted. "After submission of documents under section 650p(2), the client may terminate the contract." And: "The right of termination lapses two weeks after submission of the documents."

The consequences of termination are limited. Under section 650r(3) BGB, the designer can only claim the remuneration "attributable to the services performed up to termination". The client therefore pays for the target-finding work, not for the whole commission.

The designer can also force a decision. Under section 650r(2) BGB, the designer may set the client a reasonable period for approval and terminate if the client refuses approval or does not respond within that period. Silence is therefore not a neutral position in this phase.

Termination must be in writing. Under section 650q(1) BGB, sections 650e to 650h, among others, apply accordingly to architects' and engineers' contracts, and section 650h provides: "Termination of the construction contract requires written form."

Situation	Legal consequence	What the client records
Documents under section 650p(2) submitted	Client's right of termination for 2 weeks	Date of submission, complete list of documents
Client approves	Design continues on this basis	Cost assessment with scope, price base, gross or net
Client does not approve or stays silent	Designer may set a period and terminate	Reasons for refusal, counter-proposal on the budget
Client terminates in time	Remuneration only for the services performed up to that point	Written termination, status of services performed

For consumers, the period requires the consumer to have been informed. For a Verbraucher (consumer), the right of termination only lapses if the designer has informed the consumer in text form of the right of termination, the period and the legal consequences. If this information is missing, according to the wording the right does not lapse when the 2 weeks are up.

The protective rules for private clients go further, for example on information that the fee is negotiable. They are summarised in the article The private client: consumer construction contract, developer contract and budget.

The practical value of the target-finding phase depends on what the client makes of the approval. A signature under "agreed" throws the decision point away. A written approval with clear details turns it into the basis for all subsequent cost comparisons. This involves five steps:

1. Describe the figure completely. The approval states the amount of the cost assessment, the cost groups covered, the price base and whether the figure is gross or net. Without these four details, the figure cannot later be compared with any cost estimate.
2. Put the client's own budget next to it. If the cost assessment is above the client's budget, the difference belongs expressly in the document, together with the decision on how to deal with it: reduce the programme, adjust the standard or raise the budget deliberately.
3. Decide whether the budget is a limit or a target. On the trend of published case law, a tolerance margin only comes into consideration if the contract contains indications that the agreed building sum is not meant to be a strict limit (BGH, judgment of 13.02.2003, VII ZR 395/01). The approval is a suitable place to answer this question expressly. This article gives no figures for tolerances; case law on them is not consistent.
4. Take the calendar seriously. The 2 weeks are enough for internal coordination, a query to the designer and, where appropriate, a short plausibility check by a third party, but only if the date of submission is noted straight away. A client who wants a review should organise it before submission.
5. Secure the planning basis as a reference. Every later change to the programme is to be measured against this basis. If the client later changes the objectives, that is an Anordnung (change order) with a possible effect on the fee; the difference between a change by the client and a cost increase caused by the design can only be shown with a dated starting version.

Three patterns regularly weaken the client in this phase. The first is the budget stated orally at the first meeting that never reappears in any document. It may be relevant under case law, but it is hard to prove later.

The second is approval without a date and without a version. If it is not established which planning basis was approved in which version, neither the start of the period of 2 weeks nor the yardstick for later changes can be determined with certainty.

The third is a cost assessment without a statement of scope. A single total figure with no cost groups, no price base and no indication of gross or net cannot be compared with the later cost estimate in LPH 2. The client should not reject such a figure, but should have its basis supplemented in writing before approving it.