In-house Contracts for Engineering Services

[lindbls]

I'm the engineering manager for a public works agency. Our department includes four teams that report to one director. I've been asked to create and use an engineering services agreement on projects with other managers. This would be a document signed by both me and the manager we are working "for" (basically the fund manager). Any changes to the scope and budget would be signed by both managers before proceeding with work. While I certainly understand the need for accountability,I'm having a lot of heartburn with this.

I do meet two times per month with each manager to provide an update on all projects. Projects are also submitted to each team for review at a conceputal design level, and again at 30%/60%/90% stage. The other teams also attend the final walkthrough with the engineering team and the contractor. Finally, I sit no more than 30 feet from the other manager and am available for any discussions beyond these.

There is a lot of background I'll not include here for the sake of brevity. If I need to fill in more details, I will if asked.

Has anyone else work with or been asked to create such an in-house engineering services agreeement? Has it worked? I see nothing but doom and gloom in doing this.

 

[jjf1]

Yes,
Yes
and yes; to your three questions.

Interdepartmental charges for support are common (in my experience); they do work and if not managed closely can be very difficult.

On the plus side, they do help spread the knowledge and keep key staffing from being lost as business demands rise and fall.

On the negative side they:
you don't always get the pick of the litter
you need to watch your budget closely for non contributors that park themselves on your project
you need to watch that the time charged to your project is actually worked on your project (this is especially crucial as the US accounting rules are very strict; post Enron)

The best you can do now (as you prepare for this impending change) is clearly define the ground rules (standards/scope/schedule/budget) and the consequences when these rules are not followed.

Good Luck

jjf1

 

[Senselessticker]

You mean there is another way?

For many of us young pups, what you have described is the only type of engineering we know... As to if it works or not, only time will tell...

I do believe this is a common shift in industry (in the US at least).

 

[Beggar]

Hmm. It seems a good way to ensure that everybody's in agreement about critical issues such as deliverables, schedule, and cost.

I'd imagine that this hasn't just come out of the blue but is in response to (perceived?) problems.

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How much do YOU owe?

http://www.brillig.com/debt_clock/

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[swertel]

There are companies that do this inter-department.

Basically, companies that have drafting departments or machine shops are starting to treat those departments like outside vendors. The department has to bid on the jobs (using the parent company's rates and overhead) and that bid is compared to an outside vendor. If the bid wins, the work stays in house.

Problem is, the parent company doesn't allow those departments to contract outside work. Also, specialist vendors can often perform the task for less, thus taking the work outside. Then, since the department has little work to do, their overhead rate goes way up. Next time they bid, the overhead kills them and they can't ever win a bid. Next thing you know, they are downsized for lack of production and costing too much in overhead. Now those disciplines are lost from the company and there is no one to verify the work coming in from outside vendors.

On a similar token, I have seen very large corporations, those that have specialty departments in duplicated multiple facilities across the globe, force the departments to bid against each other to see who gets the work. At least the work stays within the same parent organization.

--Scott

For some pleasure reading, try FAQ731-376

 

[Ron]

lindbls....as others have noted, this is fairly common. I worked for many years for a very large engineering firm with multiple offices in various states and countries. We used an interoffice services agreement for many things (though as engineers, we abhor the admin stuff, so sometimes we didn't bother....they were not too strict about it).

As much as I don't like additional paperwork, it's still a good idea to memorialize a "statement of understanding" between two groups. As with any contract, it's unnecessary until there's a dispute...then it's critical.

 

[lindbls]

Thanks for the great responses above.I admit I am surprised at how common it seems. If my boss does require this "Agreement", I will accept it and will be able to live with it.

One (of my many) concerns is that the scope of work will be so tight, there will have to be contract amendment after amendment. When dealing with the diverse neighborhood groups, elected officials and a "client" that has a corrections/accounting/psychology background (Not technical!), questions and issues that nobody can forsee. I guess I'll just have to include a specified amount of time for each group (i.e., "Task assumes 40 hours of outreach to homeowners association", etc.). Has this worked with others?

Now, if I'm held to strict timelines and budgets, how will we manage work performed for us by other departments or teams? Do we have contracts signed by each of these "subs?" Have others tried this with success?

While I certainly want to improve our process and team performance, my reluctance lies in large part to ending up with a "process is product" organization. It gives me shivers!

 

[rbulsara]

Brighter side is you can negotiate any part of the agreement that you are not comfortable with. You do not have to "live" with what you are given, but will also be able to get what you want (time, budget or schedule) or at least put everyone involved on notice.