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RE: Engineering compensation

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When I attended a CSES meeting about a year or so ago (Consulting Structural
Engineers Society) in Los Angeles, they passed around a set of drawings and
scope of work with an anticipated value of the project. The average cost for
structural engineering services was closer to 1% of the full construction
cost and the groups emphasis was to seek a goal for structural engineering
services at closer to 1.5% of the gross construction cost.

Depending on the project, I would find the following to be accurate in my
area - a resort town of Palm Springs and surrounding areas.

For Hotels, shopping malls and other large scale projects, I believe the
engineering fees are closer to 1.5% of the construction cost, but can't say
for sure as this is beyond the abilities of one person office.

My bid to a local respected Architectural firm (roughly 30 employees) for a
25,000 s.f. convention hall addition to a local hotel in Indian Wells was
$12,500.000. I lost the bid and was told that my fee was too high. I can
guess that the cost of construction was approximately 3.8 million and at 1%
the design fee should be around $38,000.00. If the cost of construction was
even $100.00 per square foot, one percent would be twice my bid price.

Luxury residential custom homes - roughly 6000 square feet - cost a minimum
of $300.00 a square foot to build, less the property. This is about $1.8
million in construction cost. I have been turned down at $7,500.00 for my
design fee (structural only) which represents less than 0.5% of construction
cost. Again, I was under-bid on this project.

FWIW, those who have reviewed my work know that my package is complete and I
am not an overly conservative engineer - but I do stick to code. My
competition is generally willing to ignore full-compliance and design to
prior code standards and local building departments are willing to accept
it. I am sure that this has a bearing on the determination for who to hire.

One engineer in the valley - a close friend - has the clients who are
willing to pay higher prices understanding that they are obtaining quality
design work. Architects of this type are generally loyal to the engineers
they do business with and have a long term relationship to prove it. My
experience has been that when asked to bid my services to other
professionals (architects, designers and developers), I am not first in the
line of those they have contacted and can consider them to be primarily
price shoppers.

You can't take for granted the loyalty and history of a professional
relationship between a quality team of architects and engineers - it is
generally impenetrable from competitive bidding as the relationship is
developed over time and with a great deal of trust. When opening up your
doors in a city, you expect to take from the bottom of the barrel until you
establish your presence. After that, it's like rent control. There are few
chances at decent clients until your competition dies, retires or screws up!

Dennis S. Wish, PE

> -----Original Message-----
> From: George Richards, P.E. [mailto:george(--nospam--at)BORM.com]
> Sent: Tuesday, May 01, 2001 10:41 AM
> To: 'seaint(--nospam--at)seaint.org'
> Subject: RE: Engineering compensation
>
>
> ENTIRE project value.  Today many firms work for less than 1% of hard
> construction costs.
>
> George Richards
>
> -----Original Message-----
> From: Scott Maxwell [mailto:smaxwell(--nospam--at)engin.umich.edu]
> Sent: Tuesday, May 01, 2001 10:31 AM
> To: 'seaint(--nospam--at)seaint.org'
> Subject: RE: Engineering compensation
>
>
> I interpret George's remark to mean 6% of the ENTIRE project value, not
> just the values of the structural portion of the project.  I could be
> wrong...
>
> Scott
>
>
> On Tue, 1 May 2001, Caldwell, Stan wrote:
>
> > George Richards wrote:
> >
> > I dream of what I call the  SIX PERCENT SOLUTION.  The EOR should get 6%
> of
> > the value of the project for his services, for being responsible for the
> > health, safety and welfare of the public.
> >
> > George:
> >
> > Why settle for 6% of the value of the structural work?  Although we
> > occasionally settle for this, we frequently get 8% or 9%, and
> occasionally
> > get up to 14%.  In my opinion, anyone working for less than 6% of the
> value
> > of the structural work is doing themselves, their families, and the
> > profession a disservice!
> >
> > Regards,
> >
> > Stan R. Caldwell, P.E.
> > Dallas, Texas ... Go Stars! Go Mavs!
> >
>
>
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