Engineering costs for scope of work 1

[controlnovice]

We are currently experiencing electrical issues (motors burning up, starters exploding, etc) at one of our plants.

Because we don't have the electrical expertise, we investigated electrical companies in the area and chose an engineering firm with what seemed to be good background (as much as one can over the phone and via marketing pamplets).

We met the engineering firm's electrical engineer and technician at the plant to review the issues, the plant layout, and scope of work.

The Engineer and technician were both well versed and seemed very capable.

We were asking them to give us a scope of work as they understood it, their deliverables, and estimate to help us troubleshoot the issues.

Now, we just recieved an invoice for several hours of work for them to develope their estimate! Is this ethical? I've never seen this before. It's usually rolled up in overhead costs or marketing or something. Unfortunately, we don't have time (with those kind of issues) to investigate another company.

What should our response be?



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[JAE]

I'm in structural, but my electrical co-workers do the same thing...if we are asked to understand a problem and provide a proposal for engineering services, we do not first charge the potential client for our time. This is simple marketing courtesy and marketing sense. If we spend a lot of up-front time at the site, trying to get a handle on the scope, then we will include some of that time in our proposal. But we won't bill it up front before we even have a contractual relationship with our client.

 

[waross]

This may not be the first surprise.
respectfully

 

[zcp]

Did you hire the guys to come onsite and then ask them to give you a proposal for future work? How was the initial call worded and what did you agree upon in advance?

If they came a long distance / spent a lot of hours onsite, then an invoice for that time could be normal as some companies try to get their problems solved for free under the guise of "a proposal for work" visit.

On the other hand, a lot of companies will roll that time into the proposal or put it on marketing in the hope to get the work.

If you plan to use them, I would negotiate with them and say that you want to be billed all at once when complete. They may just be trying to establish a payment history with you before investing a lot of time / money in you or your project.

ZCP

http://www.phoenix-engineer.com

 

[MintJulep]

Well it's not unethical, but it certainly doesn't seem smart.

Obviously it leaves a bad taste in a potential client's mouth.

However, JAE may be on to something. What was the purpose of the first visit - as they would reasonably expect based on your initial phone call.

Did you ask for someone to come take a look at a problem, or did you ask for someone to come to a meeting to discuss further work.

If the former it is not unreasonable for them to bill for their time (although I certainly would have waited to bill until after submitting a proposal for more work). If the latter than these guys may be good engineers but bad businessmen.

What exactly is the invoice for?

 

[TheTick]

Pay the bill. Smile, and say "It was a pleasure doing business with you." Then stop returning their calls.

 

[SomptingGuy]

The only situation I know of where quotes/estimates are not free is where they are for insurance purposes. The firm is performing a service and unlikely to actually get any work (especially if te insurance company writes the wreck off).

 

[panduru]

zcp has a point there, some companies try to get their problems solved for free. This does happen often enough to be a pain for the firm.

One aspect seems to have missed notice, though: What is the quality of advice provided to the client? Is it of substantial value, whether actually quantifiable or not?

I would not be joking when I quote an anecdote here. An IBM Engineer was called to check a client's mainframe system. The Engineer spent an entire forenoon systematically checking every thing per procedure. Finally, he located a jumper (a very small removable wire connecting "jumping between" two points). It was promptly replaced and the system got back to life.

IBM billed the client one hundred dollars (in those days). The client protested that the cost of the minuscule piece of wire could not be anywhere that figure. IBM promptly explained that the cost of the jumper was, indeed, $1.05 and the $98.95 was the technical fees for identifying the right jumper to replace.

I guess no one was trying to be smart. It's just a matter of perspective.

 

[Senselessticker]

Agreeing with JAE and MintJulep...

If you called a mom & pop type electrical company to "come take a look and tell us what is wrong and what it's going to take to fix it"....then the bill seems perfectly reasonable.

If you called a mom & pop type electrical company and said: "we are interested in entering into contract with you, let's discuss"....then the bill seems a little strange.

 

[sms]

Have you asked them about it? Perhaps it was an over eager accountant? Or some other form of mis-understanding. I bet if you asked you would get a reasonable answer. If not then I would certainly look elsewhere.

Why be offended? Try to clear it up with them.

-The future's so bright I gotta wear shades!

 

[sms]

Oh, by the way. As the supply of engineers in the high voltage electrical business has shrunk, and the demand has increased, I would expect more of this sort of thing. They can't let their guys go do work that is not billable as there is too much billable work to do...

-The future's so bright I gotta wear shades!

 

[SomptingGuy]

One more data point:

My company charges for feasibility studies. It does not charge for quotations. It's important to not let a quotation become a feasibility study.

 

[controlnovice]

One thing I did not add was during the plant review, I could tell they were tyring to think of reasons why our problems existed.

I had to remind them several times that, although that is usually the first thing and Engineer wants to do, our goal today is to review the plant and issues to develope a scope of work.

I think I made it clear.

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This is normally the space where people post something insightful.

 

[Ashereng]

We were asking them to give us a scope of work as they understood it, their deliverables, and estimate to help us troubleshoot the issues.

Now, we just recieved an invoice for several hours of work for them to develope their estimate!

A quick answer - This is ethical.

People get paid to do work. Visiting you, sitting down for an afternoon, developing a scope of work, list of deliverables, and estimate to help you troubleshoot the issues. These are activities that takes time, their specialised expertise, and experience. This is not the same as sending you a price list.

The size of the company should not matter, whether it is Bechtel or Joes's LLP. The fact that many companies roll this up into their price, to be paid later, once they get the work, doesn't affect the ethicalness of asking to be paid for work already performed.

I have also seen many companies ask for a "scope of work", "estimate", "deliverables", expecting it to all be free. Many companies also require drawings, technical specifications, and schedules in these proposals that they expect for free. Then, they turn around and give all of this "free work" to another company to execute. I have personally worked on an estimate that took over 3 months ... and yes, the client thought that they should have gotten it for free. I have been on both sides of this practice. This, I think is unethical.

Hence, the trend here now is that people are not performing these "free" estimates, quotes, what ever you want to call it anymore. They are asking to be paid, or they are declining the work. This, I think, is ethical, and FAIR.



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[BJC]

Your estimate is "their scope of work".
I would no be asking the question on this forum, rather I would call them and/or meet with them and ask them why and how?
The fact that there was a technition there indicates to me they did some poking around.
Can you hire the next engineer to fix the problem based on the information they provided? ( not how much it cost but what to do)?
I think if they gave you information other than cost you owe them. If I was them and knew you were going to complain on a forum I would have sent you a one line estimate for $ XXXXX. If I outlined what to do and out I provided information. Did you get information and did it have value?
I have met with clients that said "We want you to fix this system that XYZ said was messed up" I know that in some cases
I have also had companies insist on paying for estimates/evaluation because they did not want to be obligated to use the engineers that did the estimate. An estimate in these cases is more that money because it includes the work that needs to be done. Some are nethically cheap. If by some mistake I work for them I charge them for paperclips etc.

 

[Senselessticker]

Usually where I work it depends entirely on the size of the job as to whether we bill early for scoping, determining deliverables, etc....

Sometimes scoping can take an hour....and sometimes...like Ashereng said...it can take months and will become an entire project of its own. We usually make an agreement with the client from the get go about how the billing will be sequenced. BUT...the client (one way or the other), will pay for scoping.

 

[panduru]

Considering the alternate scenarios:

1. The firm providing the estimate eventually gets the contract. It includes the expenses in its final bill, even making a clear separate mention of it. It gets paid, with a smile.

2. The firm doesn't get the contract. Nothing's paid to it. The order is placed on another firm, which does not undertake a study and does not charge for an estimate. It gets paid only for the actual work (according to the client).

In the second instance, what was the first firm's fault, to have to forego the charges, even as it has lost the contract? Rubbing salt...?

On which side is the "ethics" issue, now?

 

[Maury]

We have been in a situation where we were asked for a detailed proposal for engineering work. The proposal had to include technical information that rquired many hours of work for which we wer not paid. The s.o.b.'s then sent our proposal to other consultants asking for prices based on the preliminary design work we had done. If a prospective client isn't capable of providing a usable scope of work description, then he should expect to pay for that service.

Several people have alluded to the real question: What was said and agreed to at the inital contact? In my opinion, if the electrical firm was asked to provide a Poposal, then they should not be billing for that work. If they were asked to develop a scope of work that might not lead to a contract, then they should be paid.

 

[IRstuff]

NOT FAIR.

If they intended to charge for their time, they should have made it clear from the start. The hourly rate, scope, etc., should have been clearly delineated beforehand.

To me, this is very underhanded. To charge you, it implies that there was a contract, verbal or otherwise. Did someone misinterpret something?

TTFN

 

[HgTX]

"People get paid to do work."

No. Not all work is inherently billable. For example, it takes weeks to develop a bid from a set of plans. If you didn't win the bid in the end, that doesn't mean that you have the right to charge the potential client for the work you spent developing the bid. It's called "cost of doing business".

Hg

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