On-site Engineer/Inspector 6

[squir999]

Hi everyone. A client of mine is doing a project for an owner, and the owner wants my client to have an engineer on site full time for the duration of the project. (18-24 months). This person would be responsible for double checking materials and watching other inspectors (there are piles/pile caps, soil compaction, backfilling around a concrete culvert etc). There will be 3rd parties doing the testing, but the owner wants someone on site to "make sure that what is designed is what gets installed and that all the testing is done to specs". My client thinks that this person would really only be busy on the project 10-15% of the time and could work on other billable work while on site and not busy with site work. He asked me how much he should budget for something like this. My thought process was: Assuming a bill rate of $250 per hour, a year would be roughly $520,000.00. Also assuming this person would be local and no per diem or housing would be required, then maybe we could knock that down to around $320,000 per year (a bit more than half) since full time on a site would severely constrain the person's ability to do site visits for other projects, and if it's a solo person firm, they might have to hire an assistant/junior engineer to help with their other work, and increase their E&O insurance etc.

Do you guys think this is in the ballpark? And, if he ended up having to get a far away firm to send an engineer, that would increase the cost by per diem plus housing rate, right?

I want to make sure I am giving him a realistic number.

 

[jayrod12]

The client can't ask for both full-time and then also say only 10-15% of the time they anticipate being busy.

I do understand that your client and the building owner are different. But in my opinion if the building owner is asking for full-time, they're expecting full time. So quote them based on that. If they don't like the quote, have the discussion with them about more realistic expectations.

Those types of clients that are asking for full-time site review are often the quickest to complain/litigate when the most minor of things goes wrong. Tread carefully.

 

[LittleInch]

What's included in the "bill rate"? $250/hr or $ 2000 per day sounds rather high to me for what is basically a site Engineer.

I wouldn't go for anything less than 50% of his time being available for "other things". Part of being the "eyes and ears" is that you're actually watching and listening and looking, not stuck in a cabin for 7 hours a day doing other things.

But a budget figure of $250 to 300K for the full 24 months isn't out of the question and could be up to $500K if you're including accomodation, travel expenses etc.

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

 

[squir999]

It is in a heavily regulated industry, so it could possibly be regulatory. I have not heard of the owner being particularly litigious over projects, and they have done many large ones over the years; however, that makes sense. In light of that....I wonder if the $520000 number is more realistic?

Further context: the entire expansion project is slightly over 2 billion dollars. This piece of the project is a fairly small portion of that (relocating some stuff and building a large bottomless culvert/rerouting a waterway into said culvert). I know there are firms that send PE's on location to do this, I just don't know any of them nor how much they charge. This client's original budget number was $125k/year which I feel is way too low, but I'd like to be able to give him a number or range from someone with experience in this area.

 

[squir999]

@LittleInch, they're requiring a PE and they want someone with 15 years of experience. I was using what I bill people for my time, which is $250 per hour. But if people who actually do this kind of work use a different bill rate I will update--I'm shooting in the almost dark here as far as what the cost should be for them to plan on.

 

[Aesur]

I would assume full time, being remote in that setup and with the potential for constant interruptions without control means even if they think 10 to 15% being busy, it's going to be much higher and really impossible to say. I would start with a bill rate x hours + mileage if the mileage is higher than the normal commute. Their budgeted number is definitely low and is more in line with if they were hiring an engineer themselves with maybe 5 years experience as their budget would then need to cover benefits, insurance and taxes on top of the individuals salary. I would use the bill rate of the individual you plan on sending. If they want a reduction in costs, then they need to compromise on the individual and level of experience. I would think it's difficult to send a highly compensated employee as they typically have multiple roles.

If they insist on a reduction in fee based on actual time spent doing their work, I would maybe offer to have the employee keep track of time on other projects and discount their billed amount based on the amount of time spent on other projects, but overall they foot the bill for the on site person for a year. I would also require they provide utilities, internet, etc.. for the employee to use, else there is an increase in cost for that.

Locally, if I were to have someone on site for a year, I would be in the 250k to 380k range a year depending on who I sent, maybe more if Principal level. I would also state that this is subject to change every 6 months to a year depending on cost increases, raises, etc.. I would also want a min guarantee in the contract because chances are you will go after less work for that employee during this time period as his time requirements are unknown.

 

[LittleInch]

It's the time spent on site which is the issue "Full time on site" means full time on site, not an hour a day.

Massive difference. Everything else is irrelevant.

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

 

[udraft]

Quote- My client thinks that this person would really only be busy on the project 10-15% of the time and could work on other billable work while on site and not busy with site work.
Sounds like a great idea, but This is simply not done.

 

[Aesur]

Another question/consideration: What is the daily time commitment or weekly as many construction sites are running more than 8 hours a day and also working weekends. This could significantly increase your costs. Additionally, how would they want to handle vacation time, would you need to provide a replacement during that time, if so include some time to bring that person up to speed.

 

[met33]

I'll quote this part again: "My client thinks that this person would really only be busy on the project 10-15% of the time and could work on other billable work while on site and not busy with site work."

The feels like the classic disconnect between "managers" and "makers": Maker's Schedule, Manager's Schedule. In a nutshell, "managers" can slice and dice their day up into 30-minute or 1-hour meetings and it's perfectly normal to them. On the other hand, it's nearly impossible for many "makers" (e.g., engineers) to do good work if they are constantly changing tasks and being interrupted throughout the day. Unless they're working on something that doesn't require keeping tons of details in your head at once... I don't work on things like that.

The owner sounds like a manager. He/she might have a hard time understanding why using 10-15% of an engineer's time at random intervals throughout the day isn't practical, even if the jobsite were right next the engineer's office. The other 85% to 90% of the engineer's time wouldn't be fully billable in any meaningful or ethical sense, not even close IMHO. I certainly wouldn't bill one project while being constantly interrupted by another project, especially while being on-site at that other project.

Add my vote to the tally for "Full time on site means full time on site."

If the owner wants to pay for less than full time on-site, I would start the conversation with daily billing rates and a regular schedule of site visits. In addition to that, there could be a separate fee for being on call for random, unscheduled visits (simply being on call represents a significant opportunity cost for the engineer, so it should be billed accordingly). Then each unscheduled on-call visit would have a separate (much) higher additional fee.

 

[RontheRedneck]

To me it sounds like a huge red flag. If the HO is that suspicious, the project will likely be a nightmare.

 

[human909]

My thought process was: Assuming a bill rate of $250 per hour, a year would be roughly $520,000.00.

That seems to be a crazily high rate for a site engineer (18-24 month contract) for pretty much any country I can think of (Though I presume you are talking USA.). Of course if it is highly remote or highly specialised then figures can rapidly grow.

It seems you are applying a billable rate to what is a medium term contract role, which doesn't seem to be suitable.

$ $ $ BILLABLE RATE $ $ $ >> $ $ CONTRACT RATE $ $ >> $ SALARY RATE $

In my experience in my locality billable rates are at 2-3x salary rates sometimes even more. Contract rates are around 1.5x salary rates. I personally have a foot in both camps at either end of the spectrum. Salary and sole practitioner.

(Of course this can vary from region to region depending on local laws, entitlements and economic demand. But I'd expect than those rough rules of thumb still are somewhat applicable across localities.)

 

[Tomfh]

The billable rate for 1-2 years seems a bit over the top. I'd expect somewhere between the salary rate, and the billable rate.

 

[Heaviside1925]

OP,
Is this T&MNTE or lump sum? I think this would be considered affiliate support and typically I've seen it in the range of 1-5% of TIC. You mentioned 2 billion dollar expansion, I am assuming this is includes all the subcontracts not just civil. If you can access the TIC for the subcontracts they would be overseeing, then 1-5% of that should be justified. Would they be busy 100% of the time? No. Could they work on and bill to other projects? Depends on what they are contractually obligated to do. I've been in situations where they wanted you available the entire time you were on site and were willing to pay for that service. I've been in other situations where they only want you available on a part time basis but want you there for the project duration. Depending on where you are in the project cycle would dictate how tight of a number you need to provide.

Now I am rethinking things about where you appear to be in the food chain. I am assuming you will not be direct billing the owner but would be billing your client. If so, then your client has likely already done what I said in the previous paragraph and he's wanting to verify the number he came up with. If you want to be careful of over committing to a number, you could just provide him with the hourly rate you plan on billing along with a rate for expenses and let your client make the judgement of whether to assume full-time or whatever % they want use, since I assume this amount will be communicated to the owner through your client.

 

[JAE]

I work for a small to medium structural engineering firm and our engineer rates go from $150-$170 per hour.
That works out to $312,000 to $350,000 per year.
For less than an engineer - say a construction inspector who's not a licensed PE - perhaps 50% to 75% of that - but it varies.

BUT

The key issue to us for this type of request is that we are moving from structural OBSERVATION to INSPECTION.
There's a huge difference - both in what the two are focused on and in how your insurance carrier feels about you inspecting, vs. just observing.

I've posted here before that Observation entails proving that your plans and specs are being properly understood by the contractor (via occasional spot checking of work).

Inspection - and what your owner is asking of you - is a complete play-by-play hovering over every aspect of the work to VERIFY each little widget of the project.
Your not specifically checking if they understand your plans - but whether they are doing everything required of the plans.
This suggests, and maybe demands, that at the end of it all you are somehow giving a guarantee, warranty, or certification that it's all correct.

That's an enormous risk and one that your insurance carrier may tell you to go pound sand.

 

[MintJulep]

You should ask for a detailed schedule with every inspection event identified, with the full upstream dependency chain.

Probably there isn't one, not to that level of detail.

The reality of such positions is that they are 100% reactive. At best there is a morning meeting where the day's expected events are laid out. Even then, they rarely go as planned hoped.

Yes, the person might be able to do billable work on other projects occasionally, but you shouldn't plan on it.

Present a budget for full time. "You asked for someone full time on site, to do whatever needs to be done, whenever it needs to be done. To be responsive to that request we can't count on using 'free time' to work on other projects. Possibly there will be 'free time' used for other projects; in that case we won't charge you for that time."

 

[Greenalleycat]

For an engineer of 15 years' experience doing an important role in a big project, $250 an hour is about right for here
But this is New Zealand and I don't know if there is any correlation between our charge outs and the USA's....

I think you $520k is an upper bound figure and the client's $125k is so low that it can represent a lower bound
Between those two numbers there will surely be a fair number
More nuance could come into the pricing as well depending on job location etc
Perhaps your engineer could do half days on site, or 2-3 days a week - something that would genuinely free them up to do other jobs too
However, if they are stuck on the client's job site full time then the client has to pay - part of what they are paying for is the RIGHT to acccess that engineer at all times, even if they don't utilise that right - they are denying other clients that right, after all

A few thoughts based on how it could be done here

- The advantage to you is that this is basically full time work for an employee with no effort, so a discount on standard fees is appropriate
- However, the work sounds difficult as it is a QA type role - so they need to be good, on their game, and careful of liability
- Your clients' dream of 15% time is unrealistic, that is just not how it works if your engineer is on site full time

One way that it is approached here is for the client to get an engineer seconded to them
They would typically pay 40 hours a week of the engineer's time but at a reduced rate - usually 70-80% of the full charge out
The liability falls with the CLIENT in this case, but they get the advantage of reduced rates + getting the designer on site to reduce their risk
So your 520k could become 350k/yr or similar

If your client is not happy with the full liability resting on you, then they need to realise that what they want will cost a lot more
They don't just want 'experienced eyes on the ground' they want a damn good reason to blame the engineer if it goes wrong
And that's fine, but that comes at a premium cost - nearer your 520k perhaps

 

[squir999]

Thank you everyone. Great feedback and I think the contractor has a number that will work. They do want me to do it, and I have a meeting with them later this week to hash out some of these details that are being brought up here to see if it can work for both of us...and if not, at least the number they have for their proposal will cover whoever they end up hiring. They did note that I would not be stamping anything--I would only be filling out QA/QC logs and maybe doing daily reports. I now have all of the documents (specifications, contract stuff, design docs) to review and see exactly what those say regarding this person's role and responsibilities, which will help me decide if this is something I want to take on. (Along with what my insurance company says after I figure out what the liability is from the contract docs).

 

[NorthCivil]

Am i the only engineer here that wouldn't even want this job if it paid full rates?

I dont think a 2 year on site rotation like this would keep a good engineer stimulated?

@Squirr999, I dont know what your business is like, but as a sole practitioner, this would really interfere with my business continuity and workflow.

My old mentor ran a team of 5 engineers total including himself. He had a rule, that any one client should never amount to more than 10% of total fees charged. this concept was to mitigate the ebbs and flows that arise from particular clients getting busy, or maybe firing you.

 

[Rabbit12]

We do this type of work regularly on our larger projects where we have a resident representative on-site full time. Most of the time it is not an engineer but a professional we hire specifically for this type of roll. Their responsibilities are to basically act as big brother and monitor construction. They will take photos daily and create a report, peddle RFIs and submittals, act as a conduit between the contractor and office engineers, perform special inspections (mainly rebar), etc.

These people go where the projects are so they travel/move regularly. To my knowledge we have never had an issue where we were blamed for something because our on-site person "missed something". In fact, I think it's been the opposite and our on-site people have helped our clients if disputes arise. The daily reports and pictures are helpful in a he said/she said scenario.

As far as fees if we are on-site the client is being billed. We've had no issues with 2 years of full time on our projects.