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Re: $FEES, Capitalism, etc.

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While I am not proposing unionizing our profession, there is a lot more we
can do to help ourselves through various groups like SEAOC and CASE.

Bill Allen

> From: r marmaduke <avi(--nospam--at)>
> To: seaoc(--nospam--at)
> Subject: Re: $FEES, Capitalism, etc.
> Date: Monday, August 25, 1997 9:49 PM
> Bill:
> Here's a little brain-twister for you...appropo of your latest thread:
> Both commercial pilots and structural engineers are Board-certified and
> have to take regular "checkout" (CEU) flights. There are far more
> commercial pilots than structural engineers, yet commercial pilots make
> far more than structural engineers (for example, UPS pilots $150,000 a
> year, USAir pilots $180,000).
> What's the only difference between pilots and engineers?
> Pilots belong to a union. Ipso Facto.
> (Oh, and they don't have to pay E&O, and they don't have B.O.'s 
> second-guessing them either)
> * * *
> At 08:56 PM 8/25/97 -0700, you wrote:
> >Your comments appeal to me both in a general nature as well as
specifics. I
> >have little doubt that we can ably defend higher fees. Among ourselves,
> >that is. We are in a profession where the majority have a highly
> >background but, unfortunately, have not demonstrated that we are
> >in changing status quo. While we are famous for six different ways of
> >solving a simple technical problem, we cannot (or worse, will not)
> >methods for balancing the inequitable risk to reward ratio of our
> >profession.
> >
> >To illustrate my point, not long ago there was a debate here on the list
> >serve about who we felt were qualified to provide structural engineering
> >services. While it got very heated about civil engineers doing
> >engineering, there was no argument (sp?) that extremely few architects
> >qualified. In fact, all of my current architectural clients (most of
> >are very bright and successful) deny any capacity for structural
> >engineering. We are much more willing to debate whether we should have a
> >new seismic zone, consider 3Rw/8 for certain circumstances and ponder
> >much retained earth participates in ground motion during a design level
> >earthquake than review a single line of the California Business and
> >Professions Code which allows architects to practice structural
> >engineering.
> >
> >Further, it is the perception of the general public that architects do
> >structural engineering. It is not their fault. While they do not
> >promote this concept, they will not deny it either.
> >
> >There has been little by the professional organizations I have paid dues
> >in the way of any form of public awareness campaigns regarding the value
> >the role of a good structural engineer on a construction project. In
> >defense of the current organization I am now paying dues to, The
> >Engineer's Association of Southern California, they may argue that my
> >will not cover such a campaign. I for one would firmly support an
> >if I thought they were addressing the concerns of the PROFESSIONAL as
> >as the profession.
> >
> >My current SEAOC dues are $185 per year. A colleague of mine just
> >his AIA dues for $750. At one time, we in California had a governor for
> >eight years with only one good idea. He was considered quite a space
> >but he once proposed that architects do not need to be licensed at all
> >since engineers were signing most if not all of the construction
> >Of course, AIA got quite upset and the issue died (they have a slightly
> >better lobby than engineers).
> >
> >I don't really have a problem with engineers not making as much as
> >I would gladly take a pay cut for not being one ("my mother thinks I'm a
> >bartender in a whore house, don't tell her I'm an attorney"). The issues
> >lawyers deal with are much more on an individual, emotional level than
> >construction, and that's O.K. Same with M.D.s. I sure wouldn't want to
> >spend all day in a room with sick people.
> >
> >However, it should be obvious to both lay and professional people alike
> >that we are providing services with such an unattractive risk to reward
> >ratio. It is just frustrating on my part that we are not willing to do
> >anything about it.
> >
> >Regards,
> >Bill Allen
> >
> >----------
> >> From: BVeit(--nospam--at)
> >> To: seaoc(--nospam--at)
> >> Subject: $FEES, Capitalism, etc.
> >> Date: Monday, August 25, 1997 5:22 PM
> >> 
> >> Here are two previous postings that I find interesting:
> >> 
> >> Jeff Smith: <<An architect friend of mine just got two proposals for a

> >> $250,000 residential job. Both enginneers work primarily in this type
> >> work. 
> >> One bid was $2,400 the other $6,000. (excluding construction phase) I
> >> not feel percentages are not [sic] applicable to small jobs and they
> >should 
> >> be bid on a case by case basis.>>
> >> 
> >> Bill Allen:  <<I believe this is where we are today. It is a
> >> market. If we have a small backlog, we write tight proposals. If we
> >> a large backlog, we write fat proposals. Someone out there tell me
> >is
> >> not standard practice. I don't have a problem with this since I am a
> >> capitalist at heart (soul and mind for that matter). The only thing
> >> bothers me is that 
> >> we have to go too low to get the work and I believe this is because
> >> regulations permit just about anyone to do structural engineering 
> >> work.>>
> >> 
> >> I thank these two gentlemen for their input, and add my own 
> >> philosophical discourse on price:
> >> 
> >> Capitalism is too broad a topic for me to get into, but the part of 
> >> capitalism that is relevant to us is the part that states
> >that 
> >> the price of something is what the market will bear.  (This is 
> >> incidentally why real estate appraisal is an absurd endeavor.)  Thus,
> >
> >> "intrinsic" worth of something is just one of many considerations in
> >> price calculus.
> >> 
> >> I feel that too many engineers fall back on the idea that they are
> >> "worth" a certain hourly rate.  These tend to argue that they
> >> the hours it will take and then "bill accordingly."  But my question
> >> why isn't the hourly rate $225, as it is for my lawyer, instead of the

> >> $80.00 I bill at?  I literally had an hour-long, three-way discussion
> >with 
> >> a client and her lawyer the other day that went unbilled from my end 
> >> (hate to hit them with those pesky overs) yet cost $200 from the 
> >> lawyer's end.  And I swear the lawyer said three words the whole time 
> >> while I summarized the problem and the solution.
> >> 
> >> So hourly or percentage is a false dichotomy in the sense that they
> >
> >> amount to a flat fee in the client's mind.  They are both capped by
> >> market.  The main reason I prefer percentages over hourly is that it's

> >> easier to put a percentage into a context of overall cost: on a
> >> dollar project, ten thousand dollars is _only_ one percent of overall 
> >> cost.  We leverage much higher costs with the stroke of a pencil.  On
> >> hourly basis, ten thousand dollars is one hundred billable hours, and
> >> tends to stand alone.  It's ten thousand in a vacuum, that could be 
> >> shaved by putting price pressure on the engineer.
> >> 
> >> Now the interesting question is, why are they capped?  I tend to agree

> >> that competition (esp. with non-structural civils,
> >> etc.) is one main reason our fees are low, but I do think there's
> >
> >> important factor we're missing.  For example, the legal profession is 
> >> bursting at the seams with too many lawyers, yet lawyers still earn an

> >> average salary three times that of an engineer.  They are highly 
> >> competitive.  Yet Daniel Webster's aphorism still rings true.  When
> >> that there were too many lawyers already, he replied, "There's always 
> >> room at the top."
> >> 
> >> The difference seems to be this:  when you hire a lawyer, your rear
> >> is generally on the line.  That is, you are very directly, intimately 
> >> involved, and you want to win.  And you are generally competing 
> >> against another side.  Whether you are suing someone over a house 
> >> falling down or defending yourself against drug smuggling charges.  
> >> The fact that a defense is on the other side means you've got a
> >> different dynamic.  Being "good" takes on new meaning.  E.g., good 
> >> basketball teams can have a poor shooting percentage against good 
> >> defenses.  The same goes for doctors -- you want the best possible 
> >> chance against the cancer, regardless of cost, and cancer bests even
> >> best doctors.
> >> 
> >> In many cases, people choose a better, more expensive lawyer because 
> >> they want to win.
> >> 
> >> But with engineering, there is no client recognition of "better" 
> >> engineering.  There is no "rear-on-the-line" urgency, and no uncapped 
> >> "win" mentality.  From the uninformed client's perspective, engineers 
> >> are all equal, all a commodity, almost like a material cost -- X
> >> of white paint, buy the cheapest paint that serves the purpose.  Yes, 
> >> there's deluxe paint and crappy paint, but it's still just paint.
> >> 
> >> Some have suggested a niche, or specialty.  And this works in small, 
> >> isolated outposts of engineering, e.g., computer chip-fab plant design
> >
> >> very stiff, dynamically isolated, etc., and therefore commands higher 
> >> design fees.  But I'd like to point out that if the average goes up,
> >> would the niche market.  So we really should worry about the little
> >> 
> >> And I suggest that if we are to have these fees creep up, they will do
> >
> >> faster and more reliably from a percentage basis than from an hourly 
> >> basis.  This will help to tie fees to overall market project value,
> >> intrinsic engineer hourly worth.
> >> 
> >> I would really like solutions to this conundrum:  How do we keep fees 
> >> competitive, but increase them overall?  To get started, here's my
> >> tie engineering fees to cost savings.  Bid the cost of the constructed

> >> project, including the design fees, but don't bid the engineering
> >per
> >> se.  This tends toward design-build I guess.  If I save two-hundred
> >thousand
> >> in 
> >> steel costs, doesn't it stand to reason I should get some percentage
> >> this, as with a lawyer's contingency fee?  Right now we're not
> >> rewarded for this -- our reward seems to be that we get repeat
> >> (We get rewarded by getting to keep our minimum wage jobs....)
> >> 
> >> The best definition I ever heard for engineering is "do with one what 
> >> any idiot could do with two."
> >> 
> >> Let's get rewarded for it!
> >> 
> >> 
> >> 
> >> 
> >> 
> >
> >
> >
> >
> Regards,
> Robert Marmaduke PE
> POB 28995, Bellingham, WA 98228
> 360.738.0854 VOX/FAX
> avi(--nospam--at)