Structural Engineering Services Pricing

[Antnyt23]

I have priced structural engineering services for work in different industries but we are starting to get into residential/commercial design.

Was curious on how everyone else tends to price jobs.

Normally I would base work on difficulty and put a price together based on a estimated hourly cost (telecom industry and other engineering consulting).

For residential and commercial buildings I'm assuming its a little more standardized. I have seen information based on price per sq foot etc. I was curious on how others do it and also situations where buildings will be used again or complexes where there are say 7 buildings but only a design of 3 of the buildings. I would assume you price the 3 buildings for design then some type of additional cost for the repeat use for risk factor?

Just trying to get some ideas for a starting point if anyone has any resources or information they can help me with that would be excellent.

 

[jdgengineer]

I doubt you will find a true consensus. For residential projects we typically tally up the estimated hours x our billing rates to come up with our fees (we are fixed fee until permit is issued and hourly during construction). On a sf basis our fees range depending on the architect / type of project between roughly $1.5 a sf - $5 a sf.

For commercial projects you'll likely see more of a trend based on estimated construction costs somewhere between 0.5% - 2%. This can vary depending on market conditions and complexity of project.

 

[XR250]

Most of my work is residential and light commercial. Everything I do is by the hour. I charge the same for engineering and drafting.

 

[Antnyt23]

Awesome thanks. Yeah I had heard a lot for residential in the area of 0.8$-1.25$ per sf for the structural design and drafting depending on difficulty. Then I have read on some other forum posts for large market tract housing they charge per elevation at a reduced cost... .say 5 elevations.... first one at 100%/75%/50%/25% accordingly.... and then when these designs are used repetitively they tend to get paid anywhere from 200-500$ per I'm assuming depending on difficulty(liability) and probably quantity.

I plan to document hours and trends to better my pricing as we go along just trying to figure out a point to competitively price from a starting point.

JDengineer:

Those SF prices above 1.5-5 are for architectural and structural work or just structural? I'm assuming arch based on how much.

 

[jdgengineer]

Just structural, but we only really work on high-end residential. We don't do tracts. Construction costs on new residential projects range from $2 mil - $20 mil.

 

[Ingenuity]

...and the realtor that sells the completed $10M residence gets 3%!!!

Sad.

 

[Guastavino]

I do commercial and light industrial. I try to price a few different ways:

1. Try to make a minimum of 0.7% of construction cost. That's the baseline for liability reasons, etc.
2. Try to estimate hours to complete, multiply by my hourly rate, (then laugh on the inside knowing it will take longer). I do try to accurately estimate by limiting my scope, saying this # of visits, this is the building size, etc. Doesn't work out exactly, but helps to limit in my proposals.
3. Gut feeling. If I know a project is worth 2000, and it takes me 8 hours to do it, it still costs 2000. If I know a project will only pay 1500, and it's gonna take me 30 hours to do it, sometimes I'll take it too.
4. If I'm working for a big corporation, double it, then double that, triple that, then take out $50, and double it again. But seriously, they can't seem to pay enough. Problem is red tape and redundant work as they pay you hundreds to save pennies (not being cynical here, it's just the way it is, and the folks involved on the inside know it too). But for residential and commercial, you likely won't have to deal with this too much.

With all that said, this is very difficult. I'm getting better at it, but it's not easy. It is easier as a one man shop, because it's just my time. I'm not literally going to pay someone else and lose money, but I may make minimum wage on some, and then gravy on another.

Also, keep in mind, I'm in the US. Which means that Construction Admin is minimal to non-existent (not for all of the US, but for where I am it is). Most of my clients don't want it, and I can't force it on them, so my fees are lower than some others on here.

 

[MrHershey]

We have hourly rates for principal/senior engineer/engineer/EIT/drafting. Will estimate hours and start there.

Then will subjective increase up or down based on:
- How much we want the work (or don't want the work)
- How much of a liability it is (condos adjusted up, for instance)
- Chances of unforeseen conditions (adjust up big time for renovations)
- Construction costs (usually will scale up if our estimate is below normal, just because we can work more efficiently than the competition doesn't mean our client should get 100% of the benefit)
- History with client (if trying to woo new client, adjust down; give fair price to current good clients; give inflated prices to bad clients, especially those who like to stiff you on a percentage of the bill)

 

[SemiPE]

...and the realtor that sells the completed $10M residence gets 3%!!!

Sad.

Now thats ingenuity!

 

[thaidavid40]

For pricing multiple structures built from the same plan (repetitive use), check out whatever state building commission website there is for your state. They usually give a schedule for what the state is willing to pay for repetitive use plans for their public projects. You can use that as a model for deciding how to price your work too.

Thaidavid

 

[Antnyt23]

Great information thank you.

Thhaidavid,

Do you have a link by chance to where I may find that?

 

[IFRs]

In one engineering ethics course it was pointed out that charging subsequent clients less for the same design was not proper. You would be charging (or bidding) company A $100 but company B $50 for the same service, giving company B a competitive advantage. This is not fair or ethical. I use this logic unless the repeat work is for the same company in which case they can benefit from the work that they paid for in full previously. To the extent that I am "smarter" or can do the work quicker because I have done it in the past, subsequent clients can benefit from my education and experience but then again, why should I not reap all or some of those rewards?

 

[tempeng]

For small scale works (not a lot of drawings or anticipated revisions needed) We tend to bill based on an hourly rate. When the projects start getting into the 1M plus range, then we go for a percentage of the construction costs. This cuts the need for trying to guess how many revisions the design series will need and can give a more realistic figure if you need to go to tender, rather than the potential of selling yourself short.

 

[thaidavid40]

Antnyt23,
The Alabama Building Commission Manual can be found at this link:

http://bc.alabama.gov/AppendixE.htm

Dave

Thaidavid

 

[Teguci]

This is a tangent from the OP but wanted to respond to this -

In one engineering ethics course it was pointed out that charging subsequent clients less for the same design was not proper.

I will challenge that based on these 2 assumptions:
- the design/service in question is fully the property of the design firm.
- the price is for the exact same design/services.

It is completely ethical and fair/proper to charge a market rate for given services and products. This should fully include consideration for a design firm's experience on previous projects. Our ethical concern should not be the competitiveness of company A then vs company B now, but A vs B now. This is borne out time and again in a free market when a new product is first introduced to the market at a high cost and then, with experience, further prototype cost distribution and/or better manufacturing practices that cost is reduced.

Could you imagine if we had to charge a high prototype fee for every project without regard to competitive experience gained? That would be terrible for everyone.

 

[tdstructural]

@ teguci 'Could you imagine if we had to charge a high prototype fee for every project without regard to competitive experience gained? That would be terrible for everyone.'

But can you imagine that if all SE did this we might actually be making money? Hee hee - just kidding. It's a nice fantasy but I do see your point. And I suppose eventually the work would dry up because no one could afford to hire us

 

[WARose]

Usually I take about 3 passes at it......and go with the number that makes the most sense.

The first will be just a raw guess at what it should be based on previous experience (and a percentage of total cost like others have discussed above). The next will be a detailed breakdown: i.e. number of drawings, meetings, etc. And finally, I'll think about duration. I'll look at the issue dates of the schedule (if there is one) and consider X number of people on it for that time. For alliance work, that is especially important.

 

[Archie264]

Our ethical concern should not be the competitiveness of company A then vs company B now, but A vs B now.

There, Teguci, if you don't mind, I took the liberty of correcting it for you.

Last I checked Coke & Pepsi aren't particularly concerned whether the retail price of their product is the same for all consumers at all locations thereby giving the discount store shopper a "competitive advantage" over his neighbor, who's buying a soda at a ball park or airport. Quite the contrary, in fact. Indeed, the very basis of a supply/demand curve is differential pricing to allow supply to meet demand.

These people teaching "engineering ethics" ought to limit themselves to that actual topic, not delve into some misplaced idea of "social justice". This is not meant as an attack but, rather, a reality check of what's apparently being taught out there. An example of engineering ethics is William LeMessurier's famous example of admitting that he forgot to consider a wind load case.

http://www.theaiatrust.com/whitepapers/ethics/study.php

How someone prices his own time is no one else's business.

 

[Guastavino]

In one engineering ethics course it was pointed out that charging subsequent clients less for the same design was not proper.

My Hypothesis on this is that the ethics folks figure they can increase their business by saying something like this. Because the engineers will then say to themselves, "hey, I can justify charging clients more with this ethic's course" and so they will be more willing to sign up again for a new ethics course in the future. Maybe it's just me, but I don't know many engineers who will willingly sign up for an ethics course.

As for what's fair or ethical, I see nothing unethical in charging less the second time around. Might not make good business sense, but then again it might. And, in reality, this argument doesn't hold water, in my opinion, because we all do this. We all have typical details we take from previous jobs, and these help us remain competitive. If we started from scratch every time, we would have to charge so much more than we already do.

And, if I was in that ethics course, I would wait about a week, then I'd email the instructor and say I really enjoyed the course ask if I could send some of my other employees to it at a lower rate, since I already paid for one. And then wait and see if they were consistent in their response.

 

[jgailla]

I fail to see why an engineer shouldn't charge any price the market will bear. If you like a client, do it cheaper.
This has nothing to do with ethics. An ethical issue would only arise if you were not performing what you stated you would do.