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.

 

[dik]

That's why your initial price has to be good... You will not likely be able to 'back out' and might be sued... including any delays... not very good.

One of my first jobs (on my own) was a five storey apartment down the street from where I live. I gave the developer a verbal price, which I thought was too low after I gave it to him, and he told me that the price was too high... I doubled my original verbal quote, and he said he wanted my original quote. I told him it was too late, he'd lost the original price... I still got the job and did better financially. This was 50 years back... so times were a little different.

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

-Dik

 

[271828]

1. What happens if I'm halfway through drafting and design and reach a point where I feel I'm in over my head? Do I have the option to back out if I have to? What are the repercussions of doing so?

Presumably when you decide you're in over your head, much of the project schedule will have elapsed, so it's probably not realistic to back out. Before going into this, you should have a pretty good handle on everything you will have to do.

Also, hopefully you have some friends who could give advice or even step in and help some also, if necessary. If you're utterly alone, then I'd recommend reconsidering taking the project.

2. How is my fee affected if I did all the drafting and calculations, but had another PE review and S&S the drawings? Someone earlier quoted 10% for a typical review (and kindly offered a quick review pro bono, much appreciated Milkshakelake!). What about someone else S&S though? Does that mean that they would take the bulk of the fee since all the liability is on them, even though I am still doing most of the work?

What you're describing is having a PE who is not really in responsible charge provide the seal. That's an iffy practice at best.

https://www.nspe.org/resources/issu...es-and-position-statements/responsible-charge

 

[Aesur]

Just to confirm - given the sample elevation I reattached to this post, would you all still classify this as a "simple box structure", and not particularly complicated? XR250 seemed to think it was more complicated than the info I originally provided in the OP.

Given the elevation, I would say this is still a fairly simple structure and very similar to much of the commercial shops we do. Based on your responses, I think you may be over thinking much of the design, especially lateral load distribution. If this were me, I would go flexible diaphragm, distribute loading based on trib and pick either moment frames or masonry on the front side and not try to use both systems together. If you wanted to take it a step further, use EnerCalcs rigid diaphragm module to distribute loading to shear walls based on stiffness. CFS is extremely easy to design, and there are many off the shelf tools, including SSMA and AISIWIN.

1. What happens if I'm halfway through drafting and design and reach a point where I feel I'm in over my head? Do I have the option to back out if I have to? What are the repercussions of doing so?

I wouldn't recommend this for the reasons @dik mentioned above, but also because it may ruin your reputation. If you don't believe you can handle the project then either pass on it or learn what you need to know to do it.

2. How is my fee affected if I did all the drafting and calculations, but had another PE review and S&S the drawings? Someone earlier quoted 10% for a typical review (and kindly offered a quick review pro bono, much appreciated Milkshakelake!). What about someone else S&S though? Does that mean that they would take the bulk of the fee since all the liability is on them, even though I am still doing most of the work?

Be careful of the rules in your state, some states don't allow someone to review and then seal the drawings produced by someone who was not under their direct supervision. While this does happen, it may not always be legal nor ethical.

3. In my proposal, I want to set up incremental payments depending on the stage of the project. Any recommendations for this? So for example, for this project, we will have 3 submittals:

-A 100% Architectural Plans submittal, with Structural narrative (no plans required)
-A 100% submittal of all disciplines, no S&S
-Permit Submittal and beyond

I am thinking of asking for 10% upfront, an additional 10% for the Arch only submittal, an additional 60% for the unsigned 100% submittal, and then the remaining 20% for permit. CA fees will be separate.

A typical setup in my area is SD, DD and CD's with % milestones between DD and CD many times. Normally we invoice monthly for the % complete on the project. There is some variation on %'s, but you can think of SD is maybe 15%, DD is 50 to 65% and CD's is 100%, this can and often varies wildly so establish %'s with the client is the best course. Please also note that many times you don't get paid until the client gets paid by the owner, and this can sometimes take 6+ months, with the average seeming to be 3 months and increasing lately.

4. Any other design recommendations you can provide for me based on the sample elevations would be much appreciated!

Based on the elevation, I would anticipate 3 sided masonry with the front size being steel moment frames with the jamb columns extending to the diaphrgam. I would expect to have steel stud infill walls above the moment frame beams, these can act as shear walls to distribute loading to the moment frames. If possible, I would ignore the steel frames and add masonry at the two solid areas on the elevation and use those as masonry shear walls. A third option is 3 sided diaphragm. Support the cantilevered canopies/sunshades off the steel beams above the openings, make those members HSS to avoid torsion issues with wide flanges. I recommend avoiding CMU on top of the steel beams, but they may want that and it's possible, but I would add a note to remind the contractor to shore the CMU on top of the steel beams if they chose this option. For the interior, I would expect this building to have at most one line of beams and columns. Size one and done, you will be surprised at how little a baseplate changes in design when done as a pin connection with sim trib loading. I would spec steel joists based on tables and show mechanical locations and loading for the steel joist manufacturer to add to their calculations/design as deferred submittals.

Another thought is to consider if there are any FM (Factory Mutual) requirements before starting the project, this may dictate some member designs, joist spacing etc. If you aren't familiar with this, FM is essentially a guideline for getting cheaper insurance by meeting higher standards.

I would be cautious of if your current employer allows moonlighting as legally they can get tied up in this if something goes south.

 

[milkshakelake]

Just to confirm - given the sample elevation I reattached to this post, would you all still classify this as a "simple box structure", and not particularly complicated?

Looking at the elevation, it's fairly standard. The only potential challenge is the front facade, which can be done with steel moment frames and honestly isn't anything special. Everything else is standard construction. It just looks like a box to me.

I am thinking of asking for 10% upfront

Maybe 30% is closer in line with what I'd do.

4. Any other design recommendations you can provide for me based on the sample elevations would be much appreciated!

Steel moment frame at front. Other sides, use either CMU, wood (if architect calls for a combustible type of construction), cold-formed steel, or steel. For the roof, use wood joists or wood trusses (again, if architect calls for it), open web steel joists, cold-formed steel, structural steel, or long-span deck. You might need a column or two in the middle, unless owner is willing to pay for long-span trusses. If I were building it, I'd use CMU and long-span open web joists to make a clear, rentable space, but then again, I'm not rich enough to build anything. For the roof deck, something like a 9/16" or 1" metal deck (or plywood) should be fine.

Please also note that many times you don't get paid until the client gets paid by the owner, and this can sometimes take 6+ months, with the average seeming to be 3 months and increasing lately.

I'd be contacting a collections agency at that point. What I do is not send out work until I get paid for that particular milestone.

 

[Aesur]

I'd be contacting a collections agency at that point. What I do is not send out work until I get paid for that particular milestone.

This is probably just the nature of project types we do and the architects we work with. We work on everything from a small house renovation to a 700+ unit apartment complex and everything in between. For our smaller projects, if they are homeowner, we are starting to collect up front or before sending out a sealed set, for our medium and larger projects, with the way financing works, it often takes time for the architect to get paid and trickle down to the consultants. Much of our work is repeat clients/developers which have built a reputation of paying.

 

[milkshakelake]

@Aesur Oh yeah, that's definitely true. For clients that I've built a relationship with, we send it out and get paid later with no issues. For new clients (like in OP's situation), it's all up front. There's nothing keeping them from cutting out OP at some point and getting a different engineer while using OP's ideas and work, and OP will be left with a measly 10%.

 

[dik]

I think in most provinces in Canada, engineers are protected (to some extent) by having lien rights.

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

-Dik

 

[dik]

Set up your contract so it's not dependent on whether the architect gets paid; that should be his problem, not yours.

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

-Dik

 

[Aesur]

Set up your contract so it's not dependent on whether the architect gets paid; that should be his problem, not yours.

I agree and we do, we only had two clients in the past that had a problem with this, one is no longer in business (they used AIA contract which says you get paid only if they do), the other insists we do contracts with the owners, thus far this hasn't been a major issue, but I am aware of other engineers having issues getting paid by his clients, so we may start turning his stuff away (already kind of do as they are usually a pain) or insist it runs through him and make him liable to pay us regardless of him getting paid.

With some of our larger projects, and multiple ones going on at the same time with the same clients, I can see it being difficult for the architect to write a check for a few hundred thousand at a time before they get paid, so normally we wait till they get paid to start pressing for payment, hence the 3 months min typically.

 

[271828]

This probably deserves another thread, but I'd love to know how any of you guys get around "pay when paid." Almost every client I work with -- architects, contractors, or other engineers -- works that way. Doesn't matter if the client is small or huge. I know lots of other engineers, ranging from one-man shops to big firms, and every single one of them says they must accept pay when paid. I've tried to push back on this a few times and it was non-negotiable.

Does this happen to you, and then you just lose those projects?

Is there some trick to getting around this?

 

[phamENG]

Most clients don't have the operating capital to support it. I'm okay with it as i also don't have the operating capital to hire consultants and pay them before i get paid, but I put a limit on it. After 90 days, it's due regardless.

Note the difference between 'paid when paid' and 'paid if paid'. The first is acceptable, the latter is a no go.

 

[milkshakelake]

@271828 I got burned on $200,000, most of it from one job. I resorted to legal action and lost. There are legal paths forward, but I question how much of my time, money, and sanity I want to waste chasing the bill instead of just getting new business. After that, I made my contracts iron clad and got a lawyer to review them. It cost quite a bit, but I haven't had any problems since. I use a modified version of the AIA contract.

In a nutshell: If it's a trusted client, I don't enforce the contract because I know I'll get paid and I don't want to add negativity to the client relationship. If it's a new client, I make it clear in the beginning about the payment schedule and that I won't send work until I'm paid. It's caused some friction, but since then, the uncollected amount is $0. There are some stalled projects here and there that don't progress past a certain milestone, but there are no uncollected invoices. I give the client reminders of the upcoming invoice and how much they're up to. I decided that if a client plays games with money, it's not the right client for me. I'd rather be engineering and managing than chasing bills. I guess my advantage is that there is a lot of work in my area and my projects are relatively small/medium sized, so I have some leeway in choosing clients. For someone starting out, it's a lot more tricky.

 

[271828]

I'm not talking about little guys. I understand they could probably only do pay-when-paid. My issue is with large clients. Firms with 50+ employees and undoubtedly tens of millions of gross receipts per year. All of them "pay when paid." Some are hospitals. These are gigantic corporations.

Holy crap -- I can't imagine getting burned on $200k. In all the time I've been doing this, I have always eventually gotten paid, so that's not my issue. Relatively frequently, payment has been 3-4 months out, and it has been 6-8 months out quite a few times. I find it repugnant that a big firm would have a littler guy downstream to eat the expenses for months when they wouldn't even know the money was gone.

I've marked up contracts more than once to say Net 30, and every time it has come back with that marked out, and the following added: "We will pay when we are paid." What would you guys do with that? Push the issue further? I continue to get work from these guys. So far, I've decided it's better to have a larger number of slow pay projects than a smaller number of fast pay projects. But it really Ps me off.

Sorry, I'm probably just venting at this point. LOL

 

[dik]

I've never been 'stiffed'... I would suspect that if it's not a client you have been working with that you would receive 50% payment on release of the drawings, with some sort of schedule included. If you have lien rights, you may want to keep track of the timing of the payments.

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

-Dik

 

[dik]

In Canada, most provinces have implemented prompt payment legislation.

"Payment timelines for Alberta's construction industry, along with timelines for filing liens and rules for adjudication in the event of a payment dispute, are outlined in the Prompt Payment and Construction Lien Act, the Prompt Payment and Adjudication Regulation, and the Prompt Payment and Construction Lien Forms Regulation."

https://www.alberta.ca/prompt-payment-rules-for-construction-industry.aspx

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

-Dik

 

[Eng16080]

Clients will do what they can get away with. That's what "pay when paid" really means. I'll make an exception for somebody I've already worked with and have a good relationship with, but for the most part this is just BS. I can't understand how somebody has the means to construct a 20 million dollar building but is going to struggle to pay the relatively miniscule engineering fee. "Well, we're waiting for the bank ... blah, blah, blah, but we need the structural plans now." Yeah, great! Sign me up! Let me do a bunch of work with the hopes that your loan works out! Let me give you a full stamped set, just for you to realize the job is way over your budget. Lol!

Not long ago, I was about to start a fairly decent sized project. The agreement required like 1/3 of our fee paid up front. The client called to tell me that he was ready to get started but the bank wouldn't allow him to pay the 1/3 deposit. I said that I didn't understand why. He doubled down saying something about the bank not allowing an up front payment for work which had not been completed yet. I said ok, I won't do the project then. He replied, that he'd talk to the bank and have the money wired over. We had our deposit within a day or two.

 

[jerseyshore]

I'm just starting out doing work on my own, and one of the best pieces of advice I got from a friend was don't release plans until fully paid. Now obviously, if it's one of my core clients, I can send them a bill after completing, but new clients/ homeowners/ people who took a long time to pay previously, I won't release until I receive that payment. However, most of my jobs are small right now and I understand it's a big difference asking a client to pay $1500 vs $50k, but to me even more of a reason to be tough with a contract or payment schedule. I don't want to get stiffed out of $800 so I certainly wouldn't be risking 10 or 100x that.

 

[Euler07]

What I don't understand about "paid when paid" contracts is, how can you prove whether your client has been paid or not? Even I get payment from clients and I have to ask them which project it relates to since they didn't make it clear. How are you going to prove that your client received a payment from someone you don't know for your specific project? It seems more like a "paid when I feel like it" contract.

 

[milkshakelake]

@jerseyshore I think you're generally more likely to be stiffed on a small job than a large job. Larger clients have reputations to look after, though some don't care. But homeowners really don't care.

 

[JPSAMUEL]

Being in the business for 15 years...my calculation for a normal building like this..9000sq.ft x $200 (construction cost)= 1.8M.
Total consulting fee shall be 5 to 7 %. Assuming 5 %, total consulting fee = .05 x 1.8M = $90,000.
Struct, Civil, Mech and Elect takes 13% each. So Struct fees is 0.13 x $90,000 = $11,700
I will not go more than $15,000 for this type of project.

Regarding buying softwares initially will be very hard. Excel sheets (from friends or from current office) are the best way to go.
Always let your employer know about your moonlighting.