Consulting Section 15

[said the noob]

why is it that the consulting sector in Engineering generally is less lucrative than other industries such as Finance Consultants? and compared to other sectors such as oil and gas, EPC, utilities, generally are less lucrative? I feel like as structural engineers there is alot more risk in what we do but get paid less?

tia

 

[GeoEnvGuy]

In my opinion structural engineering consulting services are based on lowest price and being cheaper than your competitors. I called a couple of my local structural firms for a quick quote, they told me a couple thousand. I then asked how much is his competition going to quote, they told me probably less.

Owners are not interested in the best quality structural engineer, they want the cheapest that meets code, gets permits,and provides decent service.

The first stage of site investigation is desktop and it informs the engineer of the anticipated subsurface conditions. By precluding the site investigation the design engineer cannot accept any responsibility for providing a safe and economical design.

 

[TehMightyEngineer]

Yep, geo has it correct. There's too many people doing it and no perceived value or obvious difference to a typical client between a good structural engineer and a bad one (at least until after the job is completed). Often you also have other engineers diluting the mix even further by cutting corners deliberately or unintentionally. In my local area I'd say way less than half of the engineers I've personally worked with have extensive experience with structures but most all of their companies offer structural engineering services in one form or another. Lots to say on this but it's all pretty much been said before.

I believe the only possible way to fix this is to setup your business so that it does not rely on clients that need or otherwise cannot afford what you deserve for your work. Leave the residential work, condo work, "quick jobs" and what not for someone else. Focus on clients where your work is meaningful. If you can cultivate work with industries, contractors, municipalities, sub contractors (like precasters, retaining wall manufacturers, etc.), or architects or engineering firms without a dedicated structural engineer; those people will see your service as adding value to their work. Find people who have possibly worked with another structural engineer before and try to provide a better service at a fair price. They'll know what they want and what good engineering is and like someone who recognizes when they have a good mechanic they will stop shopping around and just go to you directly for future work. Not saying you can then overcharge for your work but rather then you have the freedom to ignore what other people are charging and charge what you need to pay your bills and make a profit commensurate with the skills and specialties you have.

Then, with a steady base of work, you can look at the one off jobs and quote them a fair price. If/when they walk then no loss to you other than the time to quote it, they can go shop at the firms that will give them a plan stamp or substandard engineering. But, if you perpetuate this race to the bottom then the cycle will just continue. Additionally, you can (and should) tell them when they don't actually need an engineer. If they want a price for engineering but really they just need a skilled contractor then tell them that.

I've been thankful that the majority of my work is and has been for people who value a good engineer. I'm spoiled I guess but I'd go bankrupt before I started charging bottom dollar prices for my engineering skills.

Ian Riley, PE, SE
Professional Engineer (ME, NH, VT, CT, MA, FL) Structural Engineer (IL)
American Concrete Industries

https://americanconcrete.com/

 

[Tommy385]

agreed with previous comments. I would add that it seems to be worldwide issue.
We are compared to other industries underpaid, but at least we have the busiest forum here..

 

[said the noob]

Thank you guys for the posts, it does make sense why we are underpaid if everyone is trying to undercut each other to get the job, but it appears we are different from let say, construction contractors, where there is an obvious difference between an expensive one and cheap one.

I also see this problem for architect and maybe they have it even worse off than us, I have see architects spend many times the hours we do on a project and I am thinking they only charge maybe double our % of the construction costs so at the end of the day it almost seems like they are loosing money.

I believe one way we can provide value to a project is a good structural engineer can provide the minimum to meet code in a more efficient way to limit labour and material costs (ie slab thickness, column layout, core walls layout, construabulity in our designs etc)

I just find it difficult to swallow when some of us are loosing sleep at night(I am sure many if you guys have experienced this)not knowing if our designs are being carried out to its fullest extent on site and also the design actually working as intended and at the end of the day nobody really values a good structural engineer.



Thx

 

[MIStructE_IRE]

Nobody values a good engineer, no matter how good.

I believe if more buildings actually fell down we would be much richer men!

 

[JAE]

...and women


Check out Eng-Tips Forum's Policies here:
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[KootK]

less lucrative than other industries such as Finance Consultants?

My little brother is finance and this comes up frequently. His explanation:

1) Money guys understand money and value better that we do, even though we think that it's all very simple and obvious.

2) No money guy ever went into money to not have any so they tend to exhibit more solidarity than we do on compensation. With technical work, there's always some nerd out there willing to buy an assignment because they think it's cool. Sometimes... that nerd is me. Ergo the fundamental supply and demand problem.

I feel like as structural engineers there is alot more risk in what we do but get paid less?

Do yourself a favor and get that nonsense out of your head this instant. The price of all goods and services ultimately comes down to replacement cost and does not fundamentally reflect effort, skill, or induced suffering. My father, who birthed my money guy brother, also had some interesting advice that I've found to be spot on over the years. He told me that there are only two fundamental ways to make money, both rooted in supply and demand:

1) Do something that other people won't do. Shovel shit, put yourself in harms way, be parted from your family for extended periods.

2) Do something that other people can't do. Cardiac surgeon, professional athlete, rock star, entrepreneur.

His point in telling me that was to steer me towards #2, education in particular. Structural engineering tries to be in the arcane knowledge "can't do" category but doesn't do that quite well enough I'm afraid, particularly in the age of computers. One nice thing about entrepreneurship is that, while not everybody can do it, pretty much everybody can take a swing at it if they are so inclined. Yay capitalism (tempered with appropriate socialism)!

 

[WARose]

If people want a change with this....we need to be more vocal about including language in the PE/SE rules that would exclude these overseas designs. I'm no lawyer, so I'm not sure how to say it....but there has to be one.

As it stands now, large outfits are sending work overseas, then it's getting stamped here. The "review" clause in some states rules is allowing this.

 

[TehMightyEngineer]

I believe one way we can provide value to a project is a good structural engineer can provide the minimum to meet code in a more efficient way to limit labour and material costs

This does not add any perceived value to the owner; they already assume this is taking place. In addition, what differentiates you from every other engineer trying to do the same thing?

Put yourself in the owners shoes. If they have no knowledge of your skills they get quotes from 3 engineers, and get three different numbers. What items are apparent other than who has lowest price?

A well-marketed company that looks impressive on paper?
Able to meet their timeline better than the other engineers?
Specialty services offered?
Previous projects?
Reviews and ratings from past clients?

Technical skill of the structural design is not on that list. If you figure out how to put it there let me know.

My thoughts, which are untested as I don't run a firm (yet), is related to how a contractor recently sold me on their company when I needed some blow-in insulation installed in my very tight attic. They added value during the quote process. The other companies were good and all had decent prices, but this insulation company went above and beyond. They inspected my roof and we spent an hour or so debating how to get proper ventilation in my tight eaves. They candidly admitted that it wouldn't be perfect but they had an idea on how to solve the problem and we discussed it. I asked them about some government rebate program and they pointed out quickly why I shouldn't bother as it wouldn't save me money in the end. None of the other companies did this other than say "your eaves are tight". They proved to me that their technical skill added value before I even hired them. They were middle of the pack on price; I went with them and after the job was done I couldn't be happier.

I hope to emulate this when I am competing against other engineers. For right now I'm spared as most of my engineering costs get folded into the cost of precast products.

Do yourself a favor...

KootK: Every guidance counselor in high-school should have the 2nd-half of your post framed on their wall. Too many people get suckered into "pursue your dreams" without actually finding out how or why it will (or wont) make them money.

Ian Riley, PE, SE
Professional Engineer (ME, NH, VT, CT, MA, FL) Structural Engineer (IL)
American Concrete Industries

https://americanconcrete.com/

 

[KootK]

I believe if more buildings actually fell down we would be much richer men!

While I'm sure that this was meant rather facetiously, I believe it to be an important part of this problem. In a statistical sense, the quality of structural engineering work truly does NOT have meaningful consequences. So why should clients pay for good work? I have exactly one idea for how this might get fixed without going to straight protectionism. It's based on my expectation that, baring frequent earthquakes, only a structural engineer can really parse out good structural engineering work from bad. So I'd like to see all jurisdictions legislate a mandatory, anonymous, 3rd party peer review for all structural works of any significance. Set the fees at 15% of the EOR fees or something. I feel that this would lead to several desirable outcomes:

1) Higher quality structural work.

2) More volume of structural work available.

3) Crap structural work would hold up permits etc and cause delays. At long last... consequences.

Some of the seismic jurisdictions like California and New Zealand have already taken meaningful steps in this direction which I feel is great.

As it stands now, large outfits are sending work overseas, then it's getting stamped here. The "review" clause in some states rules is allowing this.

In the interest of full disclosure, I should admit that this is a part of my business model at the moment. I mostly do and stamp my own US work, leveraging a favorable US/CAN exchange rate. In some troublesome jurisdictions, however, I'm partnering up with others to stamp my work where needed.

 

[WARose]

In the interest of full disclosure, I should admit that this is a part of my business model at the moment. I mostly do and stamp my own US work, leveraging a favorable US/CAN exchange rate. In some troublesome jurisdictions, however, I'm partnering up with others to stamp my work where needed.

But I am talking about stuff getting sent to India/China and then getting stamped here for a fraction of the cost if all the work was done here.

 

[TehMightyEngineer]

WARose:

I both agree and disagree. I honestly have no real heartburn about someone playing by the rules but finding a way to do the work cheaper. If someone in Guangdong can design a beam just as good as I can; fine. If they provide a crap design or don't play by the rules; then I'm pissed.

In short, I don't want protectionism; that doesn't elevate our profession.

The best example of my thoughts is related to the PE/SE rules you noted. I'm all for a SE title restriction to those who have passed the 16-hour SE exam. That exam is brutal and if you pass that you know your stuff IMO. That said, I don't feel it should exclude someone who hasn't jumped through all the hoops if they can profess their skills in other ways than a title.

So I'd like to see all jurisdictions legislate a mandatory, anonymous, 3rd party peer review for all structural works of any significance.

This can work; all my DOT designs undergo extensive review. Sure, sometimes I get a lazy reviewer who clearly skimmed things, but often I see them coming back with detailed comments. I highly doubt an unqualified engineer could do DOT work in my home state without getting tripped up quickly by the review process.

The trick would be twofold; selling it to the owners/contractors and making it actually a solid review process that doesn't just turn into another checkbox on the permit process (just look at how ineffective a typical code enforcement officer is). Ideally, I'd suggest that the owner would be required to hire the 3rd party inspector. Florida does this where threshold buildings (3 stories or more, or high occupancy) require a state-licensed threshold inspector to perform 3rd party inspection. It's mostly inspecting the contractor but it would be ideal to have them also be required to review the structural design as well.

Either that or implement an audit system. Similar to auditing PDH credits, have a state board audit a random design by a few randomly selected engineers.

Thoughts?

Ian Riley, PE, SE
Professional Engineer (ME, NH, VT, CT, MA, FL) Structural Engineer (IL)
American Concrete Industries

https://americanconcrete.com/

 

[KootK]

I understand and expected that the India/China stuff was the crux of your comment WARose. But, truly, I am a lesser version of that same problem. So I think that it's best to just own up to that and let the chips fall where they may. Like you, I eat what I kill these days so I make use of every competitive advantage available to me. While I apologize for nothing in that regard, I do not relish the extent to which I may be souring other people's markets as other groups have soured mine.

I would love to see a day come where clients sought me out based on the merits of my engineering skill such that I could ditch the low cost angle altogether. Unfortunately, the guys that do the best job of marketing technical work are invariably the business & marketing guys. And, almost by definition, your good technical engineers rarely possess that same skill set.

 

[WARose]

I both agree and disagree. I honestly have no real heartburn about someone playing by the rules but finding a way to do the work cheaper. If someone in Guangdong can design a beam just as good as I can; fine. If they provide a crap design or don't play by the rules; then I'm pissed.

In short, I don't want protectionism; that doesn't elevate our profession.

What is going on is destroying our profession. I've seen it used as leverage even in commercial work.

How does it elevate our profession to allow this to happen? What is the point of someone getting a grad degree and a SE (both of which I did), to compete against someone who lives in a country where the cost of living isn't even a quarter of what it is here?

If ASCE can push all this stuff about raising the bar and so on.....seems to me like they could put aside some time to fix this. You can "raise the bar" all you want.....nobody will want to reach it if this isn't addressed.

 

[TehMightyEngineer]

What is going on is destroying our profession. I've seen it used as leverage even in commercial work.

How does it elevate our profession to allow this to happen? What is the point of someone getting a grad degree and a SE (both of which I did), to compete against someone who lives in a country where the cost of living isn't even a quarter of what it is here?

Are they actually playing by the rules, though? If someone in India gets an SE license and is designing a structure just as good as I can and leverages their cost of living then I lost not because their cost of living is lower but because mine is too high. However, if some guy in the states is offering design services to someone and is simply plan stamping a drawing their guys in India drew up then they're not playing by the rules. Even if by some quirk they are playing by the rules, then the rules should be changed.

In my home state I can legally stamp other engineering works if I verify all the work involved. I could conceivably get someone out-of-country to perform the design and drawings but I want to see detailed calculations and follow along with the design process (providing input where relevant), make changes where appropriate, go through all their work and make sure it matches work I could do. In short, the cost I save likely would be offset by the work involved to review. This is how it should be; if it's not then either the system is broken or they are not playing by the rules.

Yes, I'm sure there are big firms where they can have foreign engineering divisions who are fully licensed and they can offer a lot of quality engineering for cheap. Yes, this hurts our competitiveness if we're not leveraging this, but we live in global economy. Too many old-guard businesses are dying because people put their fingers in their ears and ignored global competition until they vanished.

The "profession" of factory work hasn't been destroyed; it simply moved. If a similar thing occurred to engineering it wouldn't destroy the profession, just relocate it. You will never stop this, you can either adapt to it or hope you retire before it comes to pass. If you recall your engineering history; France used to be the prime location of structural engineers back in the day. Did they have similar complaints when engineers from England got in on that work?

Thus, I'll find other ways to compete against that sort of business rather than price alone. I wont rely on someone setting up a wall to insulate me from the world just so I can make more money.

Edit: Sorry, WARose; I'm addressing you directly. Similar to KootK's signature, my intent it to passionately debate this. Not implying you are wrong nor implying anything against you. Hope I didn't come off as aggressive or dismissive. I value your opinion greatly.

Edit Again: Hey, I just noticed that KootK doesn't have his usual signature any more. Gave up warning people in advance KootK?

Ian Riley, PE, SE
Professional Engineer (ME, NH, VT, CT, MA, FL) Structural Engineer (IL)
American Concrete Industries

https://americanconcrete.com/

 

[WARose]

Are they actually playing by the rules, though?

Yes they are. (At least as they stand now.)

If someone in India gets an SE license and is designing a structure just as good as I can and leverages their cost of living then I lost not because their cost of living is lower but because mine is too high. However, if some guy in the states is offering design services to someone and is simply plan stamping a drawing their guys in India drew up then they're not playing by the rules. Even if by some quirk they are playing by the rules, then the rules should be changed.

That's my point. It isn't licensed engineers in India stamping this stuff.

The "profession" of factory work hasn't been destroyed; it simply moved.

Just about the same thing.

If a similar thing occurred to engineering it wouldn't destroy the profession, just relocate it. You will never stop this, you can either adapt to it or hope you retire before it comes to pass.

If this happened to any other profession.....there would be hell to pay. I've seen how lawyers (for example) fight for their profession. We just get run over.

If you recall your engineering history; France used to be the prime location of structural engineers back in the day. Did they have similar complaints when engineers from England got in on that work?

I don't know when "the day" was you are referring to here.....but the British have traditionally protected their professions. When the "brain drain" began to happen in the UK in the 70's/80's.....it was professional organizations in the UK who were among those advocating a tax cut. (Which happened under Thatcher.) Here, we seem to want to penalize ourselves rather than protecting the homefront.

 

[MIStructE_IRE]

In Ireland we generally don’t find that we’re competing with China/India on our projects. However we’re constantly competing with the cowboy who’s willing to cut everyone else’s throat and it becomes a race to the bottom. Very frustrating.

Regardless, I don’t think there will ever be great money in our profession. The closer you are to the money, the more money you’ll make...and as engineers we are way down the line!

Interesting notes above about clients and what they want in an engineer. The way it is here, clients dont want the guy who can save them 5% on their steel tonnage or the guy who can shave a few kg/m by doing a fancy buckling check.. They want the guy who brings them for dinner, gets them concert tickets, gives out the expensive brandy at Christmas.. That’s the reality of business, not engineering. And unfortunately, many engineers are not great at that stuff as pointed out by Kootk above.

 

[HuckleberryFinn]

Are they actually playing by the rules, though? If someone in India gets an SE license and is designing a structure just as good as I can and leverages their cost of living then I lost not because their cost of living is lower but because mine is too high. However, if some guy in the states is offering design services to someone and is simply plan stamping a drawing their guys in India drew up then they're not playing by the rules. Even if by some quirk they are playing by the rules, then the rules should be changed.

I'll share my experience at one of the larger companies that I believe was a competitor to WARose's. Typically very early in the project bidding/negotiation process a decision would be made by the management of the company about the appropriate amount of work to be sent to an oversea's office vs. kept in the US. I've personally seen as low as 30% and as high as 90% (though it varied by project and also occasionally what the client was willing to tolerate) of the total structural work sent to oversea's offices. The work is then completed (sometimes with some level of back-and-forth between the US/Oversea's operations, sometimes with very little (if any)) and sent back to the US for review by a senior engineer/lead engineer who then stamps the work. I worked on several projects that had oversea's components and not once did I meet an engineer that was licensed in the US on the other end of the phone/emails.

Is this legal? In some states, absolutely (via the "review" clauses in state's engineering board rules). I'm likewise sure it goes on in jurisdictions where it is not legal and is either not reported or not investigated (thankfully I was never asked to take part in a project in one of these states). Should it be legal? From the perspective of every US trained and licensed engineer, I would think not - Honestly, even the company management was not very thrilled with the idea, most viewed it as inevitable and something we would have to work with or perish.

For your information, the going rate in India (for our group) was around $15/hr all-in/out-the-door for a senior engineer with at least 10 years of experience in the field. Compared to a rate of maybe around $120/hr for a similar US engineer.

 

[TehMightyEngineer]

WARose: sounds like you're saying that the rules are permitting an unlevel playing field. In that case; I agree that the rules should be changed.

To use my factory example; I imagine other companies that kept their factories domestic decry the fact that China has lax enivronmental standards, working conditions, and so on. I agree that tariffs or subsidizing local work could be used to offset these and create a more level playing field.

In short, I believe in fair competition; if there is unfair competition then I'll be the first to decry it in our profession.

I don't know when "the day" was you are referring to here

16th and 17th century. Sorry, historical anecdote about the dawn of structural engineering; not exactly a fair apples to apples.

You're right that a country as a whole has an interest in protectionism if only to prevent a "brain-drain". I'm referring specifically to the profession exclusive from a countries interests.

HuckleberryFinn: Great anecdote. I guess the only question I have is how much review actually went on? Were the senior engineers actually reviewing the work or just quickly reviewing with some amount of plan-stamping? If you can't answer this I understand.

I would entirely agree that the profession cannot sustainably continue to rely on self-policing of our profession any more. The rules are setup assuming that the threat of a board cracking down on a firm outweigh the benefits; I would highly suspect that is not the case. If these rules are being broken then the system needs to change. If there are loopholes in the rules then they need to be patched.

Ian Riley, PE, SE
Professional Engineer (ME, NH, VT, CT, MA, FL) Structural Engineer (IL)
American Concrete Industries

https://americanconcrete.com/