Billing for Construction Support 1

[Martino8]

Good Morning everyone,
This is my first post. Really appreciate all input.

In every engineering office that I’ve ever worked in, we’ve billed Time & Materials for hours spent during construction support including:
A. Correspondence with design team, contractors, suppliers etc.
B. Limited assistance regarding feasibility of construction methods
C. Shop Drawing Review
D. RFI Responses
E. Structural Observation
F. Not a complete list (I’m probably forgetting something)

We have a new client that is asking for information about our billing approach for item D (RFIs). This category can be further broken down into:
D.1 Unforeseen conditions or construction mistakes that require new details.
D.2 Value Engineering requested changes.
D.3 Clarifications or Minor errors & omission corrections to the construction docs.

They have no problem being charged for items D.1 & D.2, but are questioning whether category D.3 should be billed. Our approach has loosely been that a small amount of category D.3 should be expected on large projects and any hours spent clarifying the drawings or making minor corrections are included with everything else and added to the invoice.


Anyone approach this differently?

 

[JedClampett]

No one is paying for a perfect job. They are paying for a standard level of care that you or one of your peers would produce. In that standard level of care, there will be mistakes. And it's better (and likely more efficient) to pay the original design engineer to interpret and correct their mistakes than to punish them by making them absorb it. Think of it this way:
[ul]
[li]You want construction mistakes to be corrected promptly and competently. Does the owner want them treated as free work, going to the bottom of the pile?[/li]
[li]Who decides if the RFI is D.1, D.2 or D.3? Do you want to have endless arguments regarding that or just get them solved?[/li]
[li]If the owner thinks the project was poorly designed, there's other mechanisms to handle that. Mostly, don't use the engineer again.[/li]
[li]And it's going to end up as an accounting issue. "Charge most of that RFI to this one to keep our losses low."[/li]
[/ul]

 

[KootK]

I normally wouldn't charge for D.3 unless ridiculous and time consuming requests for clarification are being asked. I agree that no job is perfect but, as illustrated here, I feel that it's a perception problem to be selling "pay me to correct my mistakes". I think that it's better client management to build that into your original fee if you can do so without it costing you work.

 

[SteelPE]

I am just a one man shop and have only really worked for 1 small contractor before going out on my own.

I would not qualify D.1 nor D.2 as an RFI's, hose are changes to the scope of work. I would agree that D.3 is an RFI... and I would not typically invoice the client for those services.

That being said, I don't try to nickle and dime my clients to death. If it's a simple quick detail/hand sketch I would probably just give them what they want so they would just go away.

 

[dik]

I'm with Koot on D.3... and charges for the rest are arbitrary... that the client would ask for such a list would run up a bit of a flag.

Rather than think climate change and the corona virus as science, think of it as the wrath of God. Feel any better?

-Dik

 

[kipfoot]

I agree with KootK and SteelPE. This is the crux of a lot of liability issues and it's ultimately in my interest if a contractor calls to ask about something that's ambiguous or unclear on my drawings. If it's something that I feel I should have picked up in the base fee, I won't bill the client.

 

[Martino8]

I can see both sides.
1. You're buying a set of documents with an expectation based on a standard of care and no set can be perfect. (We have 28 sheets for the job in question).
2. I can also understand the whole "why should I pay for your mistakes" mindset.

Could there be a difference among client bases? It seems to me that approach 2 is more common with small jobs & contracts that are directly with homeowners etc.

 

[JedClampett]

It's a slippery slope. You've agreed to do the engineering for free. How about the rework, if required? To make it right, the contractor needs to buy 5 more yards of concrete. Why should the owner pay for that mistake? And if you think that's unrealistic, we've had this come up with more than one client. We're a big outfit, but we don't have the pockets to pay contractors.
It usually takes a letter or two, but unless there's negligence, it goes away. Sometimes we make a management decision to help out in the additional cost, but that's not a regular thing.

 

[Brad805]

Our insurance company surveys fees/losses annually and has identified Item D to be a leading cause of scope creep. Very few owners will ever understand why they should pay for D.3. We are largely expected to take a bath on those items because few understand how some borderline weaponize the RFI procedure. Homeowners are generally the most uninformed clients and in my experience few GC's in that world do little checking of shop dwgs.

 

[jittles]

No one is paying for a perfect job. They are paying for a standard level of care that you or one of your peers would produce. In that standard level of care, there will be mistakes. And it's better (and likely more efficient) to pay the original design engineer to interpret and correct their mistakes than to punish them by making them absorb it.

Jed, I'm in agreement with you.

I would also argue that it's diminishing returns on your effort as you approach "perfect" drawings. More and more time spent reviewing to catch less and less errors. Overall, it ends up cheaper to charge to correct a few minor mistakes along the way than to burn time and charge a disproportionately higher fee up front. And let's be realistic, you still won't end up with 100% perfect drawings.

Time is the other currency not being discussed here. Getting those slightly-less-than-perfect drawings out a few weeks quicker, then correcting some mistakes along the way can very well result in less time/fee spent for your design, and overall the project ends up cheaper.

That being said, we all draw our own lines between a little mistake easily overlooked and a bone-head drawing error that you know you never should have made. I've corrected errors on both sides of the argument, sometimes for "free" under the base fee, and sometimes for an hourly charge under the construction support phase. Not something I would want to define in a contract, that's just a case-by-case basis.

 

[phamENG]

If my RFI response is limited to "see note x on page y" or "detail z clearly shows..." or "code section blah blah says this...", "or this condition is similar to the condition shown here...", then I bill for the clarification.

If my RFI response is "here's a sketch to cover this new condition that was hidden during the field investigation", then I bill for it.

If my RFI response is "here's a sketch to cover that condition"....because it's right there on plan clear as day but I didn't detail it...I don't bill for it. I agree nobody (should) be hiring me to produce a perfect set of drawings, but they are hiring me to provide a complete design. If I fail to do that (reasonable, unforeseen conditions aside), my client does not owe me anything extra. Now, if they hire an incompetent contractor that doesn't know how to read a set of drawings, I'm not going to teach them for free. I'm going to charge my client with an explanation of what I'm doing, and they can back charge the contractor for the time if they choose.

 

[1503-44]

I would include a small percentage for that in everything you deliver. Every drawing and report should have enough time built into the initial MH estimate for an internal review, client review and correction cycle. 10-20% is typical. I have yet to see a perfect anything after 45yrs of doing this. I'd pretty much have to say that, if you do actually push dwgs and reports out the door without making any corrections, then its 99% certain you're selling shall we say, "substandard items".

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[TLHS]

It really depends on the client.

Contractors: Generally want a lack of hassle and reasonable cost certainty. The engineering on this is fixed price for small things that I can limit the scope of. There is always some amount of construction support built in, with explicit descriptions of what that includes (limit on number of RFIs, hours, drawing reviews, whatever). If you make their life easy during design and construction, they'll pay you 20% more than they'd pay the guy they have to fight with constantly. You aren't a big enough cost on their balance sheet to be an issue.

Laymen: If I'm doing work directly for a person who doesn't interact directly with engineers or the construction industry regularly I approach it sort of like a contractor, but build in extra hand holding and support time. The client often doesn't understand the steps they need to follow and there's often surprises. They also need more inspection and review, if they're building something. They're also not big enough money to want to deal with the stress of a bunch of $500 changes that you have to fight for. It also leaves a bad taste in a client's mouth. People can deal with you being expensive more than they can deal with paying more than they expected.

With institutional clients, government, and larger stuff where there's a project manager and design gates and similar things, it's a different story. The design is time and materials with a cap on the PO, but with very broad exclusions and limitations. Construction support is straight up time and materials and is often excluded in the design budget and approached as a separate PO later on. That kind of client is set up for project changes. It's also much less personal. If you communicate the limits of your original estimate then it's fine to ask for more if that changes.

 

[dik]

It really depends on the client.

Not normally on my projects... depends on me and how I perceive the problem...



Rather than think climate change and the corona virus as science, think of it as the wrath of God. Feel any better?

-Dik