Extremely Low Engineering Fees 16

[tdevries37]

What is the average structural engineering fee out there? I am getting quite frustrated in quoting projects & getting beat out by firms that claim to draw the structural drawings and seal them for $50 to $100, for something like a 24 x 40 pole barn for example. That's it, $50 - $100 total.
How can legit firms compete against that? We are located in Michigan and there is no way we can complete a project for that fee.

Any feedback is appreciated. Thanks!

 

[frv]

Somewhere, Adam Smith is turning in his grave..

 

[SAITAETGrad]

It's shameful that some people feel that someone who (within the regulatory requirements) finds ways to produce good work for less money discredits the profession.

Engineers work for the benefit of society and for themselves, not for other engineers.

If you develop some slick programming that lets you churn out a quality product for little more than your review time where your competition would take days or even weeks, you are an exceptional engineer and an outstanding citizen.

 

[frv]

Shameful? Yeah, that's a deep, thoughtful, nuanced analysis. Invaluable.

SAIT.. Your tag reads Aeronautics.. I'm sure there are areas within your profession that allow for new technologies or systems to expedite required work.. On another forum within this site another engineer commented that he was able to give a bid on the order of one tenth of what what other companies were quoting for a large database project because he knew how to do it in a different manner... These are perfectly legitimate, valid ways of conducting business.

In MY area, structural, there are several things that MUST be done on EVERY project. Simply inputing the data into a spreadsheet takes more than 1 hr. The lowest billing rate I've known for structural engineering is $100 per hr.

Now please, with all the profundity that your statement "you are an exceptional engineer and an OUTSTANDING CITIZEN (emphasis mine)" leads me to believe you have, explain how it is anything other than dog eat dog to charge $50-effing dollars to provide SIGNED AND SEALED drawings?

I know you guys outside of civil and structural don't really care about signing and sealing drawings; but, as I've repeated ad nauseam, it's a big deal for us because we assume liability every single time we seal something. That's why most structural engineers won't touch anything for less than $500 dollars. The assumed additional liability isn't worth anything less.

 

[SAITAETGrad]

frv...

If you have reason to believe that there are people acting unethically, gather hard evidence and file a complaint with your professional association. Apparently it may only cost you about $50 or so.

 

[GMcD]

SAITENGGrad: Right- I tried that back in the '80's when the cutthroat lean and mean building services consultants were undercutting each other to the point where the fees being proposed were 80% less than the "recommended fee guidelines" published by our Engineering Association. The response I got from the Association was that the fee agreement was a civil matter, and they could not enforce any kind of minimum fees effort, and their only mandate for enforcement was if a complaint was made for volations of the Engineering Act (Public Safety, etc.), and fees were not part of "The Act", just a businees/civil issue.

In fact, a recent clarification was published in our Association magazine to the effect that even if the Client doesn't pay his bills, we cannot withdraw services on a building project if we've already signed and sealed the Permit Drawings and the Letters of Assurance that put us on the hook to the City, that say we HAVE to provide Field Reviews and design reviews.

Talk to some other Building Design Consultants to see what other sectors of the engineering world are like.

 

[ajack1]

Firstly I would like to say I know nothing about structural engineering or American laws and standards, so I may be wide of the mark here.

If MDE327 is to be believed and I have no reason to doubt them then 15 minutes engineering and 30 minutes drafting can be charged out at a minimum of $100, so one engineer and two drafters can get $133/ hour each, okay not great but surely that is workable?

Frv then takes this further by saying “That's why most structural engineers won't touch anything for less than $500 dollars.” So the same engineer and two drafters now generate $666/ hour each. That seems incredibly high as a minimum given the current economic climate.

I do understand there are huge liability implications and any insurance in the good old USA is not cheap but if you compare the return against say a $750K machining centre, it look even more outrageous.

Anyone who is trying to “protect” a $666/hour charge out rate is in for a hard time and deservedly so IMO.

 

[frv]

ajack-

I think you are looking at this the wrong way.

There are a few things that an engineer can do by himself in an hour or less. Retrofitting a joist for an added MEP load comes to mind. At my company, for example, we have developed some spreadsheets that make this relatively straightforward and can easily be completed in an hour.

The 500 dollar minimum charge can be broken down roughly as $100 for engineering/drafting for one hour and a $400 dollars additional for the added liability.

If a job would take 3 hours, then we would still charge $500 and the surcharge would be on the order of $200. Once you get into larger projects, the liability is essentially worked into the projected hourly rate; i.e., the $100 / hr billing rate already incorporates liability, but it doesn't make any economic sense at fewer than 5 hours.

 

[mbt22]

Is liability not covered by insurance?

If they are doing something illegal, the problem is easily solved.

If they doing jobs so cheaply that that they don't cover their insurance premiums/profit, the problem goes away fairly promptly.

If the job is being done in accordance with the law and profitably, then as far as I can see the only option is to start lobbying for a change in the law to make whatever aspect of their business that makes the job so cheap illegal. If the business model is currently legal but undermines safety, it should be an easy sell. If it's legal and safe but "too cheap", that may be more of a problem.

Matt

 

[ajack1]

Sorry frv I am still at a loss with what you are saying, but as I said I am not American or a structural engineer.

Surely if you can do a job within an hour and charge $100 for it how is that any different to doing a five hour job for $500, to keep it simple if you work a ten hour day you make $1K?

Professional indemnity insurance, admittedly in the UK and not for structural engineering, is based on turn over so that does not alter the cost. Surely simple bread and butter work actually carries less likelihood of mistakes being made?

If someone has developed a way of doing things very efficiently and can make the same money as the “industry standard” and is not breaking any laws why would anyone want to stop them apart from protecting their own interests?

 

[SAITAETGrad]

Gmcd: My comment to FVR was with regards to unethical technical work. If you feel that the work cannot possibly be done correctly for the amount someone is charging, then take them to task.

For my opinion on those able/willing to do the job for less, see my first post. I would just add that there are many legitimate reasons why someone might charge what may seem very low for a job- it's been done before in the same way many times before, it's limited in scope to one aspect of the actual job, as a flyer to help gain future business, the process has been made highly automated, or a combination of the above.

If there is something wrong with the actual work, you got something. Otherwise, aren't we just talking sour grapes? Why should someone turn down work if they can do it for less to ensure you feel you get what you feel you are entitled.

 

[GMcD]

SAITAETGrad: Yes, I DO know that the work that the low-ballers perform is not meeting standard based on direct observation (and have been part of the initiation of discipline proceedings), where the design and execution work does not comply with the Building Code Requirements and legal obligations of the local Engineering act. Some of these folks are being weeded out by the Association's Practice Review Process, but Practice Reviews take money and time, and only a fraction of the consulting engineers are being reviewed every year, and no one wants our Association fees to go up, so there is limited funding for the Practice Reviews and enforcement.

In the Building Engineering Consulting industry there are a myriad of Building Code Requirements and minimum basic standards that have to be complied with, and unfortunately, the Building Code Officials are not catching much of it (they are trying to avoid liability these days by not even doing building inspections, and relying on the Consulting Engineer to comply with the Letter of Assurance requirements), so the low-ballers' calculations, Code Compliance checks, and design reviews are not done to any reasonable industry standard. As a result of the lack of compliance and enforcement, it leads to buildings that don't meet the minimum energy standards, minimum operational and maintainability standards, and long term health issues (mold, legionalla risk, poor indoor air air quality, high operation costs, low building and equipment life expectancy, etc.).

On the other hand - I agree with you that if there are other consultants, developers, and the Public that want things done cheaper and faster, they will get what they pay for, and I won't have any sympathy for the owners of the leaky condos that deteriorate within 10 years of initial construction, requiring tens of thousands of dollars per suite to rectify. The problem with a lot of the poor building design and engineering practices in the buildings industry is that a lot of the problems don't show up until years later, with substantial costs to fix, and increasing risks to health and safety.

 

[SAITAETGrad]

GMcD, you have hit on something there. More money for proper oversight. Amazing how much people are willing to pay for insurance when the insurance rates are directly correlated to payouts for failures due to negligence. Maybe more money for enforcement means more money in the pockets of efficient and ethical engineers at the end of the day.

 

[csd72]

a few misconceptions here:

1. it is entirely possible to get sued without doing anything wrong if it is percieved that you should have done more.
2. For small jobs, the calculationns are often a very small part of the job. Talking to clients and formulating the problem usually takes much more time.

 

[glass99]

Consulting structural engineering is called "consulting" because it is a service business with all kinds of soft value added services. All the Indians can do is a raw calculation and drawing, which is different to actually being accessible to your client on the same time zone in the same language to deal with real world issues. Some of the big things you as a local can do are:
- Site visits
- Procurement support (do you know any local contractors?)
- Coordination with adjacent trades
- Attend meetings in person.

You only have to find one coordination issue that saves a day of construction time to justify your fee going from $100 to $3000. How much do communication problems cost your clients? We should all be emphasizing this to our clients.

 

[kalens99]

You must always compete with shoddy competitors and the customers stupid enough to use them. You have to make the argument when possible to the client that these guys are not only a waste of the money at the present but a waste of money in future sales losses or lawsuits from structural failures. Put the fear of God in them, but also know you will need to back it up. Find out who your competing bidders are (ask unless bidding needs to be confidential in which case I don't know what to tell you). Find complaints that can be authenticated and share them with the prospective client.

Kalen Smith
Engineer-a-Business

http://www.engineer-a-business.com

 

[BRGENG]

Become the prime and hire the Architect as your consultant. It is easier than you think. Why should SE's be second fiddle to the Architect? You bring enough work to Architects and you are good at SE then they will all want to work with you. Think about it, how many of your competitors bring work to the table? Do any? Ask the Architects? Become the first in your area and watch your business grow. Don't just wait for them to bring you work, put some skin in the game and bring it to them.

 

[glass99]

BRGENG -I totally agree! A practical example of engineers bringing in work is on design competitions with architects - Good creative engineering concepts can be the difference between winning and losing.

More broadly though, I think a more proactive approach in general is the right answer. Engineers should take ownership of the construction process. Construction is a part of engineering, not the other way round. Engineers need to think of themselves as leaders who make broad brush decisions and make things happen. If we allow engineers to be reduced to human calculators, we don't have much leverage in any of this.

I have always believed that the great engineers considered enterprenerialism as part of their engineering. Brunnel, Roebling, and Buckminster Fuller were all techno-entrepreneurs.

 

[Lion06]

BRGENG-

If the SE is hired as the prime contract and then hires the architect as a sub, does that put additional responsbilities on the SE?

I'm wondering what additional coordination responsibilities (or other additional responsibilities) this adds, both during design and CA.

 

[glass99]

StructuralEIT
Yes being prime is more work with coordination etc, but it'd also more control and a better fee.

In infrastructure work, engineers are usually prime.

 

[rbulsara]

Yes, that is the definition of being prime. Or you work out the scope of work and responsibilities with your sub and fees. Only you have the contract with owner, so you are holding the bag (of responsibilities and fees).

Rafiq Bulsara

http://www.srengineersct.com