Structural Engineering Fees - is it broken? 20

[Enhineyero]

Hi guys and gals, do you think that the current level of our fees is where it should be? In my experience, structural + civil fee is usually no more than 2% of the total construction cost.

I've seen numerous debates about how real estate agents get 5% commission for what seems to be less responsibility and work, this is for each time the property is sold (imagine selling the property 10x over and benefiting from the capital gains!). Do we (engineers) just have it bad? or do they (Real estate agents) just have it soooo good?

If we have it bad, does anyone have a solution? Most engineers talk about this issue but no one really does something or tables a solution for it. I even saw a video of Ashraf (founder of ETABS) discussing this issue but, again, no solution presented.

 

[WARose]

Hi guys and gals, do you think that the current level of our fees is where it should be?

Not really. And I think a big part of it is (at the risk of beating a ) the offshoring/outsourcing issue. Until we take steps to address it (as a profession).....we can expect more of the same.

 

[TehMightyEngineer]

I do a lot of delegated design work for fabricators and contractors and I've found that they are willing to pay good percentages of the total cost precisely because of what KootK said; my work is almost always peer reviewed by the EOR or a sub-consultant of the EOR, and the fabricator/contractor knows roughly what an efficient design is. When they see a crap engineer get their submittals rejected repeatedly by multiple engineers and/or see poor engineering giving them a very inefficient design then they're not going to care as much about lower price because they see how much the lower priced engineer is costing them in time and money elsewhere. They will pay more for an engineer who knows what they are doing.

Ian Riley, PE, SE
Professional Engineer (ME, NH, VT, CT, MA, FL, CO) Structural Engineer (IL, HI)

 

[structuralCADspecialist]

A couple solutions/ideas I've been pondering that I didn't want to include in one of my already way too long posts:

Material Take-offs included with the design: The last thing many firm's want is additional accountability. Including materials with the design isn't that much harder than producing the drawings themselves. Most the firms I worked for wouldn't be able to do this for various reasons. But in years past, Engineers had no problem at all including a material list with their designs (some still do). A good client/contractor/engineer relationship could work out a low-accountability policy where two parties jointly share the responsibility of making sure the quantities are correct. This actually adds a lot of value to an engineers product and at the same times forces whomever does the quantity take-off to go through the drawings with a fine-toothed comb.

Marketing increased constructability: On recent projects I've seen anywhere from $100,000 to $1,000,000 million in lost time that could have been avoided with 'better' drawings. Not to say that those losses were the struct's fault, however, on your typical construction site you're only going to get a certain level of ingenuity/patience/diligence. Complicated details can rapidly turn a construction site into a giant mess. Delays and re-doing work are incredibly expensive. Many engineers, young and old alike, don't get things like that adding a bit of extra concrete actually saves materials, said and done, compared to trying to cut a bit of volume by making an incredibly complicated slab step. This is where the money is, especially with concrete buildings (maybe not so much with other structures). Adjusting design practices is the easy part. Convincing a client that your designs will save them $1,000,000 bucks... Hard sell unfortunately.

 

[dik]

@pham...
That was the time of Euler's buckling stuff and the beginning of Topology... mankind hasn't smartened up much since we left the caves...

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

-Dik

 

[dik]

I've noted before, that in hindsight, I should have gone into medicine... I think I would have had as much fun without the economic uncertainty of engineering. Don't get me wrong, I still have fun playing engineer... it's just my personality that makes up for the shortcomings of the profession... I don't know about the rest of the world, but in Manitoba, the profession has substantially gone downhill, substantially, in the last 50 years.

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

-Dik

 

[dik]

The first project I did for the NORR Partnership was Vista Cargo Terminal Storage building... when finished, I had over 1000 hours left in the structural budget... I wasn't looking for work... I'd gone to the firm to see if Gord Gilbert was back from Nepal, and the structural manager asked if I was busy...

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

-Dik

 

[WARose]

If buildings actually fell down I’d be driving a ferrari..

The real problem is there are no consequences for being a bad engineer. Which means, us good engineers (or at least I like to think I’m one of the good ones) get nothing more than the bad ones.

Excellent point. But the fact is: there are failures.....but apparently they are not consequential enough to affect things.

I'll never forget some years ago where this guy I knew who was top level guy left this company, and I was trying to get him to send a resume to where I worked and I wanted my boss to reach out to him......no interest from my boss at all.

 

[phamENG]

At my last firm I suggested implementing some sort of system to track how much money we saved end users. Whether it was a measurable reduction in RFIs, better constructibility combined with better material economy in a way that actual resulted in a greater reduction of build costs, etc. Everyone thought it was a great idea. Then we couldn't figure out how to do it and it died before it ever got going.

If somebody could do that, then you'd have hard numbers to throw around in negotiations and in the exec. summaries of proposals.

 

[KootK]

Material Take-offs included with the design:

That's an interesting point. I used to work with a German architect who told me that's how it actually is in northern Europe. I guess the question becomes, with that scope included and the associated liability, is the situation:

1) You get paid more than that liability is worth and it improves one's margins or;

2) You get paid only what that liability is worth and only succeeded in taking on more production work to manage and be frustrated by.

3) You get paid less than that liability is worth.

I have no idea which description is accurate.

Marketing increased constructability

The trouble there is that virtually everybody already does market that. So, in the absence of hard to come by data, the sort that phamENG has attempted, this effectively becomes "reputation", in concert with the other things that might make up one's reputation and lead to the kind of success described by North2South.

I’m sure it took the senior engineer a while to build his reputation like that, but it sure seems like a great model.

There certainly are guys like that out there and they make for phenomenal mentors. My first boss was the human equivalent of a cup of hot cocoa. No matter the stressful situation, five minutes with him and you'd be calm as a hindu cow, whether you be an employee, an architect, or a contractor. It was amazing to watch. Unfortunately, at that time, I was too busy falling in love with shear walls and prestressed concrete to really exploit that as the mentoring opportunity that it could have been for me.

Word to the wise: start working on your own, personal brand the very minute that you start working.

 

[dik]

On major projects... such as the Cornwall Centre in Regina, Limeridge Mall in Hamilton and Vista Cargo, I prepared several framing schemes and sent them to a contractor for pricing... this included the fire protection for the Cornwall Centre... the savings for this item alone was nearly $.10/ft^2. I didn't ask anyone, except the developer for the projects, and let the contractors know that there was no obligation to use them. By chosing the least costly method, it did give them a 'bit of an edge'... but that was never discussed. Often the differences were only a few pennies per square foot. It's generally the structural system that's chosen that determines the cost of the work.

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

-Dik

 

[SwinnyGG]

Where's my solution: we need better words and phrases. We need language that people immediately recognize as important, but have no real understanding of what the important thing is. And they have to sound expensive, and there can be no compromise. The words also need to imply a threat.

Class I Div 1 comes to mind. That phrase deals with explosions, and people will pay a premium to make sure they don't explode.

We need things like that.

So, Client, you want to build a Mega-Tall? Well if you don't want it to fall over and crush everybody, you'll need a Grade 5 Sector 3 Big Chungus Brace. And it's gonna cost ya twice, because it's about to get complicated.

Respectfully, I think engineers need LESS of that, not more.

For context.. I work in construction management. I was previously a mechanical engineer, and I posted here under a different username. Some of you may vaguely remember an inquisitive industrial automation engineer asking you guys obnoxious questions and sticking my nose into structural threads where I didn't belong. That was me.

Anyway. I now work for a national general contractor. We're not the biggest but we're on the lists of the biggest, and we dominate a few specific markets.

We do quite a bit of design-build, especially in the market and which I live- and as a result we are intimately familiar with pretty much all of the local engineering and architecture firms, and we're also familiar with a few big boys who try to jump in on the occasional high rise.

My experience is obviously anecdotal and is tied to the specific market in which I work; but I can tell you that for us (when I say us I mean my statewide division of the GC for whom I work) the fee which shows up on the EOR's quote almost doesn't matter at all. In the grand scheme, .2% change in budgeted cost is insignificant. I think engineers (our local ones at least) are way too concerned about minimizing fee, and not nearly concerned enough about added value after the contract is signed.

We select from a small percentage of the available engineering resources at our disposal, and the reason those firms make the short list is entirely due to attitude and approach. They are transparent about decisions, they don't balk when we ask them to explain themselves at the client's request, they are open to suggestion; their responses to suggestions are most often no, but when they respond 'no' they take the time to explain why.

When it comes time to actually build the thing they give us timely and thorough RFI responses. They are willing to solve problems in the field and accept confirming RFIs, as opposed to requiring meetings and RFIs just to get started. When a substitution request is made on a submittal and rejected, they take the time to give a (most often very short, but that's enough) explanation as to why the substitution has been rejected. They never respond to anything with 'because I said so and I'm the EOR'.

In short, they act like teammates, and we are more than happy to pay the added fee we have to pay to get that out of them, because is makes our job as the GC easier, and it leaves our clients with better impressions of everyone involved when the job is done.

Now, I'm not accusing anyone on this board of being elitists, or a pain in the ass to your GCs, or anything else... Over the years I've posted here I've found the structural engineering subforum to be one of my favorite places, just because of the openness in conversation and the general attitude of people helping each other solve problems.

My feeling is that structural engineering is suffering because your trade is on the wrong side of the supply/demand curve.

I guess my ultimate point is that clients who look past the bold number at the bottom of the page on your quotes are out there, and they're out there in droves. But to justify that cost increase over your competitors, you have to be willing to roll all that stuff into your approach. You have to be willing to invest in cultivating relationships at all levels - with architects, with GCs, with prospective clients. And I think a lot of engineering firms disregard those things because they expenditures required hit overhead and don't appear to generate any profit, and in some cases because they don't feel there's any benefit at all.

 

[dik]

We noticed... but, we structural guys are quite forgiving...

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

-Dik

 

[SwinnyGG]

We noticed... but, we structural guys are quite forgiving... lol

Heh. If that's true I'm flattered, I would not have expected to have posted in this particular sub forum enough to be 'a name'. I only have 1 lifetime thread created in the structural subforum, after all.

 

[dik]

Once you get past our un-civil behaviour we're pretty good... like a brown rot fungus... we grow on people.

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

-Dik

 

[phamENG]

SwinnyGG - very good post. Thank you for bringing in the other side of the equation.

 

[SwinnyGG]

I appreciate that, thanks.

I'm afraid my post will put me under the wrath of Koot, who has tolerated my structural subforum interloping for a long time, but I hope not.

Just so we're all clear, as a GC, if half of the structural engineers (the bad ones) ceased to exist, and you all got to charge more and that new reality erodes the fee of certain credit-stealing, do-no-wrong, prima donna architects, it'll all be fine by me.

 

[KootK]

I'm afraid my post will put me under the wrath of Koot, who has tolerated my structural subforum interloping for a long time, but I hope not.

No sir. Your comments added some fine, new articulation but the crux of them is really old news, even within this particular thread:

1) Developers = contractors = lawyers = insurers = good clients.

2) Architects = bad clients.

3) Being contractor/developer friendly often = being decent to deal with and as technically permissive or more permissive than your competitors.

You know, broad strokes.

 

[glass99]

The way I understood 2% structural engineer's fee was that structure is 20% of the cost of the building and you should get 10% of the cost of the things you touch.

 

[EZBuilding]

In my market - 0.3 to 0.5% of the Construction cost is the estimated range for Structural Engineering fees. 2% is not realistic. Also interesting to note that difference between the Construction Cost and the Sale Cost that we were comparing the Realtor to. Construction cost does not include land acquisition cost, permitting fees, design fees, marketing costs or developer profits. When you add all of those items up it substantially increases the "sale cost" in relation to the "construction cost" further watering down the ratio of fees between the Structural Engineer and the Realtor.

 

[KootK]

Yeah, 0.65% construction cost is about what I'm used to. And we don't even have serious wind or earthquakes. At 2%, I would be struggling to find covered parking for the Ferraris.