Would this Fly? 3

[rquerin]

A couple of colleagues proposed and idea to me and I'd like to see if anyone here can shoot any holes in it:

The three of us are registered P.Eng's working in Ontario Canada. We are all currently full time employees with structural engineering firms which have Certificates of Authorization. None of us has stamping authority at our firms, and none of us has our own C of A. We all work under our employer's C of A. The proposal is this:

The group of us get incorporated and apply for a C of A. We would then do smaller side jobs in our free time (with the full consent of our employers of course) under the C of A of our 'firm'. This would alleviate the burden of each of us paying separate liability insurance premiums even though technically, liability ins. is not absolutely required to practice in Ontario. We would then pursue side jobs separately while sharing the insurance premiums and doing this under a common C of A as a business entity so that we would be somewhat protected from personal liability.

This seems a bit dicey on principles to me, although financially it would seem to be a more practical solution to the 'small, one-man outfit'.

Your comments on the viability or problems with this idea would be greatly appreciated.

Thanks.

 

[sc]

Just a couple of questions for you.

How does your employer feel about you going into "competition" with them?

Under you own C of A and Insurance can you work for 2 firms? I know that this is difficult in Australia.

If the work is there to provide a side line from your every day employment, why not express this to your employer and ask for a % ($) of any extra work that you can bring to the firm? This would certainly avoid the potential for your employer getting upset about you being in "competition" with them.



Regards

sc

 

[rquerin]

sc,

We wouldn't be in competition with them since we would be pursuing small residential-type jobs. Our employers stick to larger commercial/industrial projects and tend to reject the small nitty-gritty projects because they usually aren't worth the effort for what they have to charge the client.

I'm not sure if the C of A here precludes working for 2 firms. We have the option of bringing the work to the firm but as I said they usually reject these types of projects. In fact, there have been a few that my boss has given to me to do personally (although of course he has to have final review and seal any drawings under the firm's C of A). Luckily he doesn't charge me for it although it would be nice to do these myself fully since I am licensed and fully capable of doing the work and taking responsibility for it.

 

[RDK]

There are really two questions here. One deals with the Ontario rules regarding C of A’s and the other is the issue of working on the side.

You should contact the PEO (Professional Engineers of Ontario for those from outside Canada) regarding the rules of the CofA. If they do not have any problem with the set-up then it should be OK.

Once you get past the PEO rules regarding the CofA and have your current employers blessing to moon light, the next question is whether of not this is a viable business. You have to compare all costs, including a salary for yourself with the expected revenues.

Costs include business licenses, insurance, office space (if you are working from a home office there is still a cost component here), office supplies, equipment including computers, printers, software etc, travel, phones, fax, internet, legal fees, accounting fees, taxes etc.

Even if you have permission, be careful about using your employers resources for outside work. Senior management may over rule your immediate manager’s permission and leave you in a bind.

There is a reason why a lot of the big firms stay away from the residential side of the business. There is not a lot of money in it.

Commercial and industrial work is usually managed by someone who understands that your time is money and that you are entitled to fair compensation for your work. They include a budget allotment for this in their planning and their contract with you is backed by the firm’s resources and ability to pay. (This is not to say that they may not be tough negotiators who want value for their money, just that they have the money and are willing to spend it for necessary purchases like engineering services.)

Residential customers on the other hand are usually spending their after tax money, money that will not be available for their personal enjoyment, on services that they do not fully understand why the need to buy them.

Often the residential need for engineering services is caused by poor construction techniques by the original builder and the engineering costs are seen as something that the builder should have to pay as part of putting things right. They may expect you to carry them until the builder compensates them for the problem or tell you that you should just bill the builder directly.

They will then get Joe Carpenter (or Uncle John who once built a garden shed), who may or may not know the building code, to provide an opinion that differs from yours, and use it to “prove” that all engineers are idiots and do not know anything about buildings. The fact that this free advice is often worth what they paid for it goes right past them.

Be up front about your fees. In commercial and industrial work, you can often do a small job for a client and agree that “standard fees” apply. You then proceed to bill at the usual 2.5 times salary cost and life goes on.

In residential work, you have a lot of trouble explaining to a customer that this is a normal fee. The customer may not earn the same salary as an engineer, and then not be able to understand why you have to charge more than salary costs per hour. Just try to recoup your costs for the time to explain your fees!

In Manitoba the bulk of the complaints to the association are in regards to “excessive” fees for residential work. I often point out that my garage charges a shop rate that is 3 or more times what the mechanic earns and that I have the same sort of overhead costs, more training and more liability for only 2.5 times salary costs.

If your business plan survives my advice and you think that it is a viable business opportunity, then go for it. You may be able to graduate past the moonlighting phase and establish a viable full time business for yourself.

Good luck.




Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion

http://www.kitsonengineering.com

 

[Watermelon]

Hello:

Good response from RDK. I'd like to add some of my thoughts.

There are a few engineers out there who will produce a drawing and then never inspect the work. I think this practice is criminal. So my question is this: "How will you excuse yourself from the office to drive across town to carry out an inspection?"

Another question: "What will you do when your client calls you at the office and wants to talk to you for half an hour or more?" And this WILL happen.

 

[RDK]

Also
What would you do if offered a commission that was in direct competition with your current employer?

This offer might come from a client of your employer. Sooner or later a client will see that you charge less than your employer charges for your services and try to hire you directly.

The more I think about it the more I think that if you want to go out on your own, then perhaps you should make a break with your employer and go out on your own or keep working there and not moonlight.

You can always have your current employer as a client and still do some of the same work. You can even have a different rate for your former employer and for your new clients.


Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion

http://www.kitsonengineering.com