Liability / Re-use Fee for Factory-Built Housing 9

[SIPengineer]

As an outside consulting structural engineer for factory-built tiny home manufacturer who needs stamped drawings to get state approved permits in all 50 states, what kind of liability exposure fee is reasonable, considering the tens of thousands of units they will eventually be selling each year ?

Units will be designed for worst case loading in each state where possible, with location restrictions where loading is higher than the units can handle.

 

[gte447f]

SIPengineer, what you are describing is a completely different animal to what most of us here are used to dealing with, which is one-off, site-specific, building designs, or at least that is what I am used to dealing with, so take my comments with a grain of salt. This seems like something of a hybrid between building design and product design. The sheer volume of buildings/products being talked about is quite unheard of for typical structural engineers (160,000 pre-orders and 10,000's units per year). If I were in your shoes, I would be seeking out the council of my insurer and of a good attorney to help me structure some sort of compensation agreement that would be appropriate. I don't think a simple re-use fee is really applicable here. It might be, but a lot of thought would have to go into it to make sure to capture all of the variables at play. The stock option that you mention is interesting. I was thinking that some sort of equity transfer as compensation might be something to think about. The $80K-$120K per year amount might work as some sort of a retainer for general engineering, but I would not accept it as adequate compensation for your contribution toward a potential $9.6B in projected future revenue (160,000 pre-orders X $60,000 sale price = $9.6B). Call me crazy, but just to do the structural design for a prototype for all 50 states I would think something on the order of $250K might be reasonable as a starting point, but I would want additional compensation on top of that for the extremely high volume of projected units sold. Instead of a re-use fee, is this something akin to a royalty? Like I said, seek the advice of your insurer and a good lawyer.

 

[Rabbit12]

160,000 orders and they can produce 300 per year? I pity the fool who waits 500 years for their tiny home.

 

[Warhamer]

SIPengineer, having been in the Factory Assembled Housing/modular/off-site construction (ICC likes off-site construction) industry for 10+ years, I keep reading some things that raise flags for me, so just going to toss out a couple of points as food for thought. I have been on the "State/regulator" side of the industry for most of those years.

If they are going into the residential programs in applicable States, you will not be sealing one set and done for each State. There are several States that require a plan submission for each and every site address in the State. Just the way the State programs do business. Some programs do allow the one set, build as many times as you want, until codes change, so that would be a new plan set every 3 to 6 years depending on the State Program. Then there are home rule States with no State program. So each individual jurisdiction may want their own site specific set of plans.

Also 19x19 sounds like a pain to transport. Most manufacturers do not go over 15' wide for transportation permitting reasons. So is this going to be a two section tiny home? Western portions of the USA 19 wide may not be an issue, eastern US there are locations where they cannot even do 15 and get into home sites.

As far as I have seen fee structures were a one time charge for a set of prints, used for approval with the program or jurisdiction. I have not been near the design side to know what common fees are in quite sometime so my information may be very out of date. I can not speak to the engineering insurance side of things, not been involved with it at all.

 

[ChorasDen]

160,000 orders and they can produce 300 per year? I pity the fool who waits 500 years for their tiny home.

This is what I've been thinking this entire discussion. Don't worry, I'm sure this is infinitely scalable. If they made 300 this year, and they somehow magically were able to work out all the kinks of increasing production to make 10x more next year, that would still take 53 years to get your tiny house if just signed up today. Is the claim that they are somehow able to rapidly increase the production from 300 a year by 100 times to 30,000 a year? It would still take 5.5 years to fill an order if placed today. Not to mention, you need to get an extremely robust supply chain, storage, accounting, etc. Also, trucking is still hard to find today, how do you increase your transportation infrastructure to get 100x tiny houses out of the production facility and delivered to their destination? Are you using a distribution network, where once a house is finished, it's sent to a third party distributor to then sell, or are you selling directly to the end customer? Seems something is off on what's going on here.

 

[Aesur]

I bet the guy delivering the house gets at least $250 to $500 profit for each delivery, maybe even more depending on the location.

Do these structures require some sort of foundation that will require a sealed drawing for each site? What about utilities etc.. someone has to design all that as well and guess what, they get paid for each and every site.

 

[SIPengineer]

Great info and tips everyone ! I'm new to this factory-built situation, so I'm learning a lot from all of you on the potential scope of what my involvement could and should entail, as well as appropriate corresponding compensation.

Aesur, these will require foundations, so I anticipate charging some kind of per unit fee for this, if they turn out to need sealed drawings at each site.

ChorasDen, Current production capacity is one house every 4 hours. They plan on building a super factory to turn out one house ever minute ! They are working on all the logistics for delivery. They have $millions of investor money to upgrade production equipment.

Warhamer, Great to know you have some experience with this.

SteelPE, Great advice on licensing !

 

[GregLocock]

At what point does this stop being a building and starts being a manufactured item?

Cheers

Greg Locock


New here? Try reading these, they might help FAQ731-376

http://eng-tips.com/market.cfm?

 

[XR250]

They plan on building a super factory to turn out one house ever minute !

I'm a bit skeptical.

 

[phamENG]

Plans are great. But they have to face a pretty harsh reality - capital is getting more expensive (assuming they took $1,000 deposit for each of those pre-orders, $1.6M is a drop in the bucket if they want that kind of productivity), and worsening skilled labor shortages are extending lead times and driving up prices on materials and manufactured goods. How many of those pre-orders are going to cancel when they find out that the price is either going to double or they have to wait 30 years to get their product?

At best, this feels grossly over inflated. It's common amongst entrepreneurs to oversell, especially to investors, to get that influx of capital. Some 'serial entrepreneurs' even do it just to get access to VC to float them until they pitch their next 'big idea' and do it all over again. It's not fraud, exactly, but it's ethically dubious. Not saying that's the case with these guys...but the whole thing stinks of something.

 

[gte447f]

Yes, this whole thing sounds very pie in the sky. I would have next to zero confidence that any of these claims will ever come anywhere close to fruition. Which means, as an engineer, or any service provider, being asked to make a contribution toward getting this project off the ground, you have to strike while the iron is hot, and get your slice of the pie up front. Do not allow yourself to be suckered by false promises of lots of repeat work, because its not going to happen. A project of this scale obviously has to have major investor money behind it, so there is no reason why they can't pay handsomely for essential services to get the project off the ground. If the money is not there, then you don't want anything to do with the project, because, obviously, that would mean the project is all smoke and mirrors anyway.

 

[ChorasDen]

Current production capacity is one house every 4 hours. They plan on building a super factory to turn out one house ever minute ! They are working on all the logistics for delivery.

I'm still struggling with the logistical reality of this claim. I am making a bit of a generous assumption that you can fit (2) tiny house per flatbed truck. That would mean they would need to go to a distributor who then ships to a customer, rather than shipping directly from the the production facility to the customer. That means you need (30) flatbed trucks in and out of the site every hour to match the claimed production capacity. This is in addition to the local traffic at the production site. In my experience in logistics, I would say that 90ft of 'road space' is the minimum required per truck, so if you need 30 trucks per hour, they won't all magically appear at the perfect time, and generally will have a build-up of vehicles waiting to be loaded. Assuming you have 30 trucks on site waiting to be loaded (1 hour of trucks is not unreasonable), then you need 2700ft of road space for these trucks, is there half a mile of empty road space on site for the trucks to pile up and wait to be loaded?

Perhaps they have a rail spur and they are instead loading flatbed railcars with these tiny homes? If they are going that route, where are the homes going? Might be worthwhile to better understand how logistics works for this project.

How do you load onto trucks or railcar (1) tiny house a minute? How do you get this product out of the facility in a timely manner? How do you build the transportation system (highway and local surface roads) to accommodate this traffic? I'm not saying this is in any way impossible, but I would suggest investigating if these claims are realistic from the company owner.

 

[Aesur]

This sounds very much like Boxabl, cool concept, but still, I don't see making 1 a minute being a reality, at least not at one location.

 

[LittleInch]

That looks like it.

Basically starts at 8 feet wide then unfolds to get to the 19 feet wide bit onto a pre prepared concrete slab by the look of it.

Stackable looks interesting!

But I would take as much money as you can up front - I think this could very easily collapse as fast as it grew. To get to that scale of supply they are oging to need 100's of millions of dollars.

And they are on sale apparently for $50,000

https://www.boxabl.com/

https://en.wikipedia.org/wiki/Boxabl

Plenty of sceptics out there

Remember - More details = better answers
Also: If you get a response it's polite to respond to it.

 

[Aesur]

I read through their stock offerings and found that they are increasing price to 60k due to inflation. Shipping is by customer, they are producing for 46.6k each and anticipate getting costs down to 30k. (see page 51 at this link: Invest in Boxabl). Page 50 has information on their inventory and customer deposits, at the time of their posting this, it doesn't look like much.

 

[phamENG]

Hmm...I might be willing to believe it after all...Link

 

[Rabbit12]

Interesting. Based on what I read they don't have 160,000 orders they have "inquiries" or something along those lines so there has been no obligation to buy. The investor information is clear they are and have been operating at a loss and are relying on investors to keep the company afloat. It's very possible they may never turn a profit and the company will fold.

Similar to investors in this company you could provide this service for stock options and could end up very rich.

 

[XR250]

The units are 375 sq. ft. Still need a foundation, shipping, crane and all the other stuff that goes with a normal house. By the time they raise the price to 60k or more, it may not be any more cost effective than stick building it.

 

[Rabbit12]

Modular construction has been around for years. This is different though in that you can change configurations with the same modules (at least the way I understand it).

On one hand, it could end up being cost-neutral, but there is a labor shortage so an automated system to do the bulk of the work could still make this viable.

On the other hand, the two leaders are smooth talkers. Do they really think this will succeed? Seems to me like it's almost a scam. They are taking a TON of money from people with no obligation to return it.

 

[XR250]

Clearly, the CEO spends too much time doing curls at the gym rather than concentrating on the business

 

[LionelHutz]

They don't seem to give much info on how the roof works. It seems to be a folding flat roof, which is shit for many areas in N.A. and likely won't be a great long term solution. They do show a peaked roof "just dropped" onto the building in a few animations. It seems that a peaked roof would require more than one shipping "box".

Also,

13. Already built 300+ houses!

That doesn't seem like a great argument for giving them a $1 billion to build their zilla factory.