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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[IRstuff]

None of our proposal work is charged to the customer. The money comes out of the Business Development budget. We've spent upwards of $1 million on big proposals.

TTFN

 

[SomptingGuy]

So IRstuff, you ultimately spread your proposal costs among your existing and future paying customers in the form of "overheads", pro-rated according to contract size.

 

[MrMojito]

My current employer was repeated hired by various clients to investigate potential building rennovation solutions. We would issue reports with our recommendations, paid for by the clients. The clients would continuously ask for more detail, so the reports would grow significantly. On many of these projects, we would not be asked to do construction drawings. Turned out that the clients gave our recommendation reports to contractors, who went ahead and constructed the new work on the sly. So the clients ended up paying for reports, but got to use them as construction documents.

 

[IRstuff]

Effectively, indirect costs are amortized over all working hours. By law, government contractors are not allowed to directly bill the cost of writing a proposal. In most cases, a proposal includes a preliminary design, performance predictions and analysis, functional requirements allocations, work breakdown, etc. The shortest proposal I've ever worked on lasted 21 days with about 8 people full time.

The OP's case of a few guys for a day is relatively small by comparison. Nonetheless, to ask to be paid after the fact seems to be not strictly kosher.


TTFN

 

[Ashereng]

I think the fact that the owner (controlnovice) called them (the electrical engineering consultants), the expectation is that they would be paid.

If the electrical engineering consultants called on the owner to put together a proposal to do work, then the expectation would be that this would not be paid (business development, marketing, sales, etc).

"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
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[BJC]

Maury
Been ther and done that. I suggest wording on drawings and reports like "These drawings are for the use of XYZ company in evaluating the leaky roof problem. They are the property of US and not to be used for any other purpose."
I know that sounds lame but you can get the ideal" Hire a lawyer to get it right.

 

[MintJulep]

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

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.

 

[MintJulep]

Opps, hit send too soon...

You have a problem. You call a consultant to help you solve it. "Please come out an take a look at our problem."

If the consultant comes out, pokes around for a few hours and says "Well there's your problem right there! The flizbot on this hysterfactoid is out of line. Lend me a hammer..." and your problem is solved you happily pay the bill, right?

In the case at hand, you didn't get an immediate solution. However the consultant did do some work towards generating a solution. Whatever was seen, touched, learned goes into the knowledge base to work the problem.

Clearly a gray area in regards to billing. Not unethical, but probably not best buisness practices either. Is it possible that there was not a clear understanding - on either side of the table - of the intent of the original meeting.

 

[MedicineEng]

As said before, pick up the phone and speak with them and let us know how it went.
It is not the first time that an overzealous accountant sends an invoice bypassing the technical department.

 

[wes616]

We had a plumber come out to the house recently, charged us $90 for the estimate. If we hired him, the cost of the estimate was amortized into the cost of the work. It's a crappy way to do business. Next time, I'm going to make sure that the estimate is free.

Wes C.
------------------------------
When they broke open molecules, they found they were only stuffed with atoms. But when they broke open atoms, they found them stuffed with explosions...

 

[Ashereng]

Hmmm, I seem to be in the minority here.

If you hire me to do an estimate, I will only do the work for pay.

Guess I won't be getting much work from most folks here.

"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
Have you read FAQ731-376 to make the best use of Eng-Tips Forums?

 

[IRstuff]

"If you hire me to do an estimate, I will only do the work for pay."

Well, of course. But if neither party verbally acknowledges "hire" then the demand for payment will not get honored.

And we've certainly have hired companies to do that type of work, when the scope is sufficiently demanding. But, that's a rarity.

Normally, because of FAR, we're required to solicit proposals from a number of companies. We could't afford to pay 10 companies their proposal costs and either select only one or none, if our bid doesn't win.

TTFN

 

[Ashereng]

On the bidding front, I have recently experienced several companies who have declined to bid, citing that they were too busy. However, they do have a price list of the various packages currently sitting in their yard that they are more than happy to sell.

In my case, I don't know whether they just did not want to enter into a bidding situation, or that they didn't want to put a bid package together in response to our invitation, because they no longer wish to "eat" the cost of putting a bid package together, and end up not winning the work.

"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
Have you read FAQ731-376 to make the best use of Eng-Tips Forums?

 

[BJC]

Ashereng
Sometimes you get ask to bid a job so the owner can keep "someone honest". They know who they are going to give the contract to. You get to bid so they can keep them "honest". however if you make a big mistake on your bid you may get the job.

 

[Ashereng]

And antics such as this, I think, may be in part driving many vendors to decline bidding without compensation.

"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
Have you read FAQ731-376 to make the best use of Eng-Tips Forums?

 

[controlnovice]

Yes, it was my plan to talk to the firm, and I did.

They gracefully withdrew the submitted invoice and said that once (or if) the job was awarded to them, they would then apply it to the project.

More than fair. I have learned to be more clear next time.

Thanks for all of your replies! Looks like we can all learn from this one.

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[MALK]

It all depends, estimates against a clearly defined scope should not be invoiced, being asked to develop a scope of work can be. I and my friends and colleagues have fallen victim to the 'get someone to develop an outline solution for free and pass it on to our lowest cost supplier' approach. However, as a supplier you should be clear up front that you will charge for this.