Just starting out in consulting...how to price this job? (Florida) 10

[Boozie]

Hello,

I am a PE in FL with 8 years of experience in design. Job is in FL.

A colleague recently reached out to me and asked if I am interested in consulting on a small commercial project. They want a two-tenant 9,000 SF space, one story. I am assuming CMU walls with perimeter wall footings, steel joists with metal deck, and a slab on grade unless they tells me otherwise.

I have the experience to design this when I was working with an AE firm, but I currently do not have an LLC, do not have any laptop or software, do not have insurance set up, etc. I'll be starting out fresh.

I'm just looking for next steps and advice on how much to bill for my services, and how to set myself up for success.

1. Do I need to establish myself as an LLC in order to consult on the side and make money? What other options do I have to legally accept money for work? What are the steps, tricks, and advice you can give me for going down this path?

2. Do most consulting engineers buy an appropriate laptop or desktop, and then buy whatever software they need? Are there any tips to avoid paying the huge costs for the software?

3. Regarding billing, I've seen a lot of advice on this sub...typically billed at an hourly rate, or 1-2% of the total construction costs. For this type of project, based on hourly rates, this is what I am thinking to charge:

Hourly rate: $150/hour

Drafting
3 sheets for general notes and specifications: 8 hours per sheet, 24 total
2 sheets for plans: foundation, roof framing: 16 hours per sheet, 32 total
2 sheets for elevations: 16 hours per sheet, 32 total
2 sheets for sections: 16 hours per sheet, 32 total
2 sheets for fnd/roof framing details: 16 hours per sheet, 32 total

Total drafting hours = 152 hours

Engineering
Wind Design: 16 hours
Foundation Design: 16 hours
Column and Base Plate Design: 16 hours
Wall Design: 16 hours
Joist Design: 8 hours
Metal Deck Design: 8 hours
Misc. Features design: 12 hours

Total Design Hours: 92 hours

Total hours: 244, round to 250
Total cost: 250 hours * $150 = $37,500

Just wanted to determine whether that's a reasonable price to ask. I don't have the construction cost now, but I will try to do the 1-2% of the total cost and compare.

 

[jerseyshore]

I can't comment too much on pricing since I am a rookie at that myself, but I know $2-$3 per sq ft is a very rough average for pricing.

There may be ways to do it as a one-off style project that is easier, but if you are going to do this type of work setting up an LLC, then getting it licensed to do business for engineering (CoA if applicable in your state), then getting insurance is probably the way to go.

I got a decent laptop when starting off, but it really depends on the programs you might be using and demand.

For a simple building like this you probably don't need any 3D programs. Something like Enercalc or similar along with a drafting software would be your least expensive route and be useful in the future.

 

[XR250]

The price seems ok. Honestly, unless the Architect is unhinged, you could probably design this in 16 hours.

 

[rb1957]

Well, I'm in the wrong business ... $38k for less than 2 months work ?? $200k pa ! But it could be reasonable .. if 1-2% of the construction is typical. And if could be 6 weeks work could be followed by 6 weeks down (no work).

"Hoffen wir mal, dass alles gut geht !"
General Paulus, Nov 1942, outside Stalingrad after the launch of Operation Uranus.

 

[JoshPlumSE]

1. Do I need to establish myself as an LLC in order to consult on the side and make money? What other options do I have to legally accept money for work? What are the steps, tricks, and advice you can give me for going down this path?

No, I don't believe so. In fact, I'm not sure if an LLC is even a legitimate way to set up an engineering company. It doesn't save you from any liability. Most people I know do a DBA (doing business as). Then, if they grow much, they set up an corporation.

2. Do most consulting engineers buy an appropriate laptop or desktop, and then buy whatever software they need? Are there any tips to avoid paying the huge costs for the software?

Are you working "on the side" and are still employed by another firm? If so, then you probably want to ask them about their stance on your taking some side work.

If you're truly going out on your own and want to make a go at starting your own firm, then I don't see any way around buying a computer / home office setup that will allow you to truly make a go at it. As far as software goes, my thought is that too many engineers nickel and dime themselves into bad situations. Situations where they're unable to put out decent drawings or calc packages because they aren't willing to spend the money on the tools they need to produce the best deliverables.

Don't be afraid to buy the software that you truly need. If it makes you more efficient then it will be money well spent in the long term. Though my tendency is to suggest that you price the software you need for the job into the cost of the job. Then as you get different jobs you will be building up your software library. Hopefully in a way that is affordable.

3. Regarding billing, I've seen a lot of advice on this sub...typically billed at an hourly rate, or 1-2% of the total construction costs. For this type of project, based on hourly rates, this is what I am thinking to charge:

I'll let other people give you advice on this one. I only do "side work" on smaller jobs or for engineers / engineering firms that I know well. And, I do it for "fun" and to stretch myself on projects. But, I only accept work that is "worth my time" based on how busy I am with regular work and my personal life.

 

[structSU10]

Sounds high. I don't know how a single story building of that size is as complicated as you laid out there. I would think its about half that effort at best, maybe more like 1/3.

 

[dik]

Based on Drawings:
3 sheets for general notes and specifications: 12 hours per sheet, 36 total
2 sheets for plans: foundation, roof framing: 20 hours per sheet, 40 total
2 sheets for elevations: 20 hours per sheet, 40 total
2 sheets for sections and details: 30 hours per sheet, 60 total
176 hours... $26,000

Based on Sq.Ft.:
18,000 sq.ft.: 18,000 x $2 = $36,000

Based on Building Value:
18,000 x $300 x 0.01 = $54,000.

I don't know what the cost of your buildings are in Florida or the level of complexity. I would think a fee of about $30,000 for a simple building ($25,000 if you're hungry) and about $40,000 for a complicated one. I don't know what the competition is down there.

That's an 180 x 100 ft building... which is a fairly good size.




-----*****-----
So strange to see the singularity approaching while the entire planet is rapidly turning into a hellscape. -John Coates

-Dik

 

[skired]

1. I see JoshPlumSE is saying that an LLC isn't a legitimate entity for an engineering firm but for what it's worth it's how my firm(and others I've worked for previously) have been set up. As far as how to reduce your liability, get insurance and speak to an attorney.

This website has the requirements for getting licensed as a firm in each state. Link

2. I don't have tips on the software other than to try to figure out what you "need" vs "want" and how much additional time not getting a specific piece of software is going to cost you.

3. I'm in JerseyShore's area not Florida but those fees seem high to me.

Is this for a 9,000 SF total building or 18,000 SF total?

Are you including Construction Administration (CA) in this fee?

 

[phamENG]

For a 9,000sf building, simple CMU box, that is crazy high for my area. That's the sort of job an established firm should be able to turn out in under a week. Doing it all from scratch, Engineering and drafting should be less than 80 hours. I'd be more in the $20k-$25k range.

Now, it could be more complex than I'm thinking, but I don't really know.

An LLC is absolutely a legitimate way to set up a company. In Virginia, it's a PLLC (professional limited liability corporation). There's more than one type of liability when you're in business, and a properly established, organized, and run LLC is still a valuable method of risk mitigation. Talk to your attorney about it. Don't have one? Don't even think about getting into this business until you do.

Yes, get insurance. Professional liability for design, general liability if you're going to be going into job sites. Talk to a good broker. Don't fall for the cheap online policies.

Do you really not have your own laptop or PC? What kind of crazy bohemian lifestyle are you living down there? You don't need much. AutoCAD LT can run on most computers easily. For what you're describing, you don't need software. In fact, it would be faster and easier to design a simple building like that by hand.

Get the work first, and then you'll have justification to pay for the software. The software should be a tool to speed up production. Unless you're doing some crazy specialized stuff, a few hundred bucks for Enercalc or Tedds is all the software you "need".

 

[XR250]

Based on Building Value:
18,000 x $300 x 0.01 = $54,000.

Do CMU boxes really cost $300 sq/ft?
Seems high

 

[dik]

Depends on the cost of construction and the complexity of the project... A CMU box can be a little more than four 8" CMU walls.
You might want some doorways and nice windows, etc., and lots of 'gingerbread'. If it's a complicated project, your fee should reflect the work and liability. Notice the fee was knocked back to $40,000 for complicated stuff. I usually use the three methodologies to determine initial value of the quotation and base my fee on what the values are... just as I did in the estimate.

If the area is half, the estimated values based on area are approx 1/2, but the drawing estimate stays pretty much the same. You're looking at a fee of about $25,000, then.

-----*****-----
So strange to see the singularity approaching while the entire planet is rapidly turning into a hellscape. -John Coates

-Dik

 

[jerseyshore]

If this is a 9000 sq ft building that's relatively simple to design, like hand-calc simple as pham said above, I couldn't imagine charging more than $2 a sq ft. Probably less if you want the job. You are in a slightly different spot than someone already established so you'd have a lot of other initial upfront overhead expenses, but I could see someone small charging $15k and knocking it out in no time.

 

[Aesur]

I need to start working in Florida, a 9000 sq-ft building on the West Coast would be in the $5000 (simple CMU like you said) to $6,500 range for design and maybe $1000 for CA and would take probably 20 hours engineering and 20 hours drafting. I am assuming with the numbers others are stating here that there must be some level of expected complexity, I just can't see how a CMU box with a few beams, lintels, one wall and one shear wall design (most likely), steel joists and steel deck could take more than 20 hours to design. The typical rule I have seen (and hate) is about 0.5/sq-ft, however for smaller buildings this falls apart and usually kicks in around the 9 to 10k sq-ft range, and then the expectation for say a 50k sq-ft building is that the fee starts dropping on a sq-ft basis. Now this is also compared to estimated hours and adjusted as needed, as well has has architect factors etc. So if you can get the fee you are talking, by all means do it!

EDIT: This is based on my experience as a small/medium firm competing in a highly saturated market against a lot of one man shops and with architects and contractors that shop one against the next, the landscape is starting to change though! We should all at least adjust for inflation (at least 50% increase) and we should all be trying to raise our value!

As for setting yourself up, you will need an EIN number, possibly LLC or Sole Proprietorship (this depends on the state, for instance I believe in California an engineer cannot be setup as an LLC, but in other states they can, Firm registration and insurance is recommended. You can most likely find an accountant that can set all this up for less than $1,000.

For software you may find it's not that pricy (if you don't use all that fancy FEM stuff). You can start with pretty simple software and use the free ones where you can. Forte for instance can do wood, Vulcraft has steel joists and deck (as well as their catalogs which are great), EnerCalc is a great value for it's relatively low cost and does a lot of different designs, to be honest this is probably the most commonly used software for the majority of structures a smaller firm would design, let's face it, most smaller firms don't get those large specialty buildings that require FEM etc..

I would recommend looking into Quickbooks (there are a few others as well) for invoicing.

 

[Eng16080]

I'm also in the process of starting my own engineering company. The following is my feedback.

1. Do I need to establish myself as an LLC in order to consult on the side and make money? What other options do I have to legally accept money for work? What are the steps, tricks, and advice you can give me for going down this path?

I believe you can legally accept money as an individual without establishing an LLC or other type of business entity, as long as you pay taxes on it. You might want to check with an attorney or accountant on that though. Where I work in the northeast, most small engineering companies are either an LLC or PLLC. In some states, LLCs cannot be used for professional services, only PLLCs. For a number of reasons, it would be beneficial to establish a business entity.

2. Do most consulting engineers buy an appropriate laptop or desktop, and then buy whatever software they need? Are there any tips to avoid paying the huge costs for the software?

Unless you plan on drafting the plans by hand and doing hand calcs. then yes you'll need a computer! If you already have an average desktop/laptop and are looking to keep start-up costs low, just use that. Most software that I use for structural design and drafting runs fine on an average computer. If you're planning on doing large projects in Revit or planning on doing site design using Civil3D, then perhaps a faster computer would be beneficial.

For software, if all that you're doing is simple 2D drafting, then you might be able to survive with just AutoCAD Lite, which is only around $500 or $600, last I heard. There is also a cad program called BRICScad which I haven't used, but have heard decent things about. As others have said, I wouldn't necessarily try to save money by getting the cheapest software for a given task. Get the software that you know how to use and which others who you might be collaborating with are using. Most software has a free trial period, so you should use that before purchasing it. I would not buy anything until you have a signed proposal for your first project. I recently purchased the AEC design suite from Autodesk, which includes AutoCAD, Revit, and about 20 other programs. In my case, by waiting until the one month trial was just about to expire, I got a discount on the yearly price.

3. Regarding billing, I've seen a lot of advice on this sub...typically billed at an hourly rate, or 1-2% of the total construction costs. For this type of project, based on hourly rates, this is what I am thinking to charge:

While the various ways of establishing a fee shown above are all useful, I think of the fee as really being a function of the market that you're currently working in. If you can really get $37,500 for a one story, 9,000 SF building, then get it! Also, let me know because I'm going to pack up my shit and head down to Florida! I'm guessing though that your price is too high. Unless there's a lot of complexity, I would be lucky to get $25,000 or even $20,000 where I'm located, and I bet somebody around me would be willing to do the job for under $10,000. If I was you, I would wait for a signed proposal and deposit on this job before spending too much time and money getting your operation setup.

 

[kipfoot]

1-2% of the total cost

For me, these are high end modernist second home on the water numbers.

 

[JoshPlumSE]

Regarding the LLC issue, this may be a California specific thing. But, you'll want to check your state laws:

There is no such thing as a recognized engineering limited liability company in California. When engineers start their own companies in this state, the only business entities that they are allowed to form are a sole proprietorship (individual), partnerships, limited liability partnerships, and corporations.

https://www.incorporationattorney.c...rements/how-to-start-own-engineering-company/

 

[XR250]

Honestly, I went about 20 years without being an LLC and 12 years without insurance. I wish I had been an LLC though as the tax savings in social security is a fair bit. (in the USA anyhow)

 

[canwesteng]

One week seems nuts... I think a lot of your engineering activities can be cut down quite a bit though. You might want to set up some smath or other sheets for the easy things (wind, lintels, wall design), and once those are just plug and chug, you probably have about 40 hours of calcs here at most. Some of the suggestions on drafting above seem absurd, but maybe I'm out to lunch. I just don't see how can push a drawing out the door in half a day.

 

[Eng16080]

I agree with canwesteng. The 16 or 20 hours suggested above seems crazy for this, even after some optimization of tasks. Most jobs, I've got at least a full day's worth of time just trying to get on the same page with the client and pointing out any red flags before diving into the design.

On the flip side, 250 hours also seems crazy.

 

[jerseyshore]

I think the design is a big factor here and we don't have any more info on that from OP. A simple box with bar joists and some beams can easily be designed in a week.

If it's a more complicated design with canopies, large openings, etc. then it could push that number higher.

Feel like we need more info to really give accurate pricing.