Second Opinions - standard rate or upcharge? 3

[RacknRoll]

I have a client who wants a second opinion on an engineer report about some structural improvements they (the engineer) are requiring. I have read the report and disagree with much of what the engineer says. Now the client wants me to take over the job. No big surprise here, but with the conflicting reports there is additional liability that does not exist on a typical job.
Should there be an additional fee for this? What is your practice? Do i call the other engineer as a professional courtesy? (Why though? To tell him his report is junk? Lol.)
I was thinking of charging as i would an expert witness, but that seems overdone.

 

[phamENG]

The professionally courteous thing to have done would have been to inform the other engineer prior to the review. Has the other engineer been fired yet? If not, then you're on ethically shaky ground. See this report from NSPE.

Engineers in private practice shall not review the work of another engineer for the same client, except with the knowledge of such engineer, or unless the connection of such engineer with the work has been terminated.

This is sort of the 'bottom line.' I always inform the client first, of course, and if they are hesitant to let the other engineer know that the work is being reviewed, then I stop and walk away. If the client likes to do third party reviews as a standard, they should have informed the other engineer of that from the beginning. If they are looking to sue the other engineer, they should have fired the other engineer already and hired me to either redo the design or to review as an expert witness. Anything else is hiring me under false pretexts and I don't have time for that.

 

[dik]

I do it as a professional courtesy. One of my current projects is the review and re-sealing of a building addition. The reason is that the engineer is no longer in practice and that when a permit is applied for, a time lapse in excess of one year will have passed. First thing I did was to advise/inform the other engineer. He's a good engineer and I worked with him over 50 years back. It was a nice chit-chat.

A few years back, I did a 'lunch talk' to the engineers at a company I worked at. The topic was forensic reports. I did a critical review of the report prepared for the Algo Mall collapse. The report, IMHO, was terrible. Before doing this, even though it was an informal, in-house, discussion. I sent the engineer that prepared the report a letter letting him know that I was reviewing his report. The engineer was 'out of province', but informing him was a professional courtesy.

Rather than think climate change and the corona virus as science, think of it as the wrath of God. Do you feel any better?

-Dik

 

[EnergyProfessional]

I think the reason to talk to the original engineer is to hear why they concluded and what it was based on. Basically it gives them a chance to explain. Maybe they know something you don't.
You also don't know the exact scope of the original contract. For example, if you could determine a deficiency because the client paid you to do some X-ray, but the client declined to pay for X-ray for the original engineer, it is unfair to say the original engineer was too stupid to know. You also don't know the scope of the original contract. Was it a casual general assessment, a detailed one with actual design recommendations?

If you talk to the original engineer, they can tell you why their report is insufficient. Maybe they agree with you, maybe they don't.

You didn't detail how your report is different and why it is better. I'm playing devil's advocate here: maybe the original report stated expensive repairs are needed and that is based on conservatives judgment. Now the client is unhappy. You are very negligent (this is just an example to demonstrate!) and recommend really cheap measures. Client is happy until the building collapses. But that doesn't mean the original engineer was bad.

 

[RacknRoll]

Thank you all! Great responses and gave me a lot to chew on. I never considered the ethics of it. I will call the engineer. I may be a bit late, but better late than never.

 

[dik]

I never think of it as an ethical issue, it's just a common courtesy.

Rather than think climate change and the corona virus as science, think of it as the wrath of God. Do you feel any better?

-Dik

 

[Ron]

Going back to the OP's original question, should there be an upcharge for the perceived increase in liability.

No. There is no relationship between fees and liability. If you want to protect your liability, do that in the terms and conditions of your contract. If you charged more fees and still got sued for 10 times your fee, how would that help?

As for the other, I agree with dik...professional courtesy without regard to ethics.

 

[RacknRoll]

@ron
I am curious at your hard-line take on "no relationship between fees and liability". Care to expand on the thought? I have always considered professional liability/risk when providing a cost or estimate to a client.

I may be programmed to see things this way as i was initially trained in an engineering firm that was heavy in the construction management and construction bidding side of things. In bidding construction projects, we would always - always - consider risk. I'm not sure why general engineering would be any different. We would typically estimate all the jobs the same, but apply a markup based on any number of concerns, including interest in job, risk, liability, etc...

 

[phamENG]

I would say there is a relationship between fees and liability, but it's difficult to draw a direct line when pricing individual projects.

In business, you pay wages to compensate people for their time and rent to have a place to work. Those are the first two components of the final price of your product. The third component is profit. That is, essentially, payment for the risks you take. If you were selling widgets, you would be putting capital at risk by first purchasing (or making) those widgets. If the widgets don't sell, you lose money. So if they sell, you should make money. We don't have physical widgets to sell, but we do have services, knowledge, and expertise to sell. And our risk, rather than being tied up in physical stock, is focused largely on potential liabilities. That's why it's pretty easy to start up an engineering business - all you need is a calculator, a computer, a few pieces of software, and a place to sit to do the work. BUT...things get ugly and costly if you make mistakes.

So your fees should reflect this risk such that when you get sued, you'll still have profit left over. Most do this in a holistic sense and don't single out individual projects. You get insurance, and pass the cost of the insurance + your deductible along to clients with a markup. This is 'baked in' to the standard rates you charge. Doing otherwise can be very difficult, especially for a small firm. Exceptions may be on large projects where you need to get an individual rider from your insurance company to cover just that project. That's a direct influence of project specific risk on price.

 

[gte447f]

I believe Ron's point is that you cannot offset or, frankly, even begin to make a dent in offsetting your risk by raising your fee. Like Ron said, if you raise your fee and you still get sued for 10X your fee, how would that help? You have to use other means, besides your fee, to mitigate risk, mainly contract terms and insurance. I personally do consider risk when evaluating new projects, but it is more of a "go/no-go" evaluation. If I raise my fee due to the risk, it is more of a warm and fuzzy, feel good sort of a thing, because it probably doesn't really help to mitigate risk in a meaningful way.

 

[phamENG]

Maybe I'm misunderstanding the OP - are you raising your fee to mitigate risk, or to be compensated for the additional risk? They are not the same thing.

If you feel you should be compensated for more risk, then yes - I agree with you. But I also agree with ge447f that it will do nothing to mitigate the risk. You should use whatever means you have at your disposal to mitigate risks, and whatever is left over (because you'll always have some left over) should inform your compensation goals.

 

[Rabbit12]

The reason to notify the other engineer is to allow them a chance to defend their position. There is a very real potential to damage the other engineer's reputation significantly. If the other engineer isn't given the chance to defend themselves what happens when you're wrong and your client has spread the word of how bad the original engineer was? To be short, you don't know what he knows.

 

[IRstuff]

To be short, you don't know what he knows.

Second guessing a design entails a higher risk of making a mistake in the analysis, since you don't know what he knows and you don't know what he doesn't know either.

TTFN (ta ta for now)
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[MotorCity]

Yes you should charge more. High risk = High reward. This is why engineers charge 3x to 5x their normal rate for expert witness testimony. If you are designing a neighbor's deck, probably not using the same billing rate. Also, be very careful with offering a second opinion. Chances are the original engineer, assuming he/she is reputable and competent, spent a good amount of technical effort and due diligence to arrive at their conclusion. If you are forming your opinion based solely on the report and are not familiar with the details of the project, you are probably not seeing the whole picture. Not saying your opinion is wrong and the other engineer is right, just saying to make sure you have all of the information.