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RE: Engineering compensation

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I do agree with you - for sure. I am not sure what can be done to avoid the
wasted hours of bidding work that will be taken by firms who are moving in
and underbidding all projects to get into our clients door. At least three
firms in small to mid range moved into this area in the last year. One has
offices down in the Los Angeles area so you can bet that the fee is a
come-on for the price buyers.
You and I have discussed work out here and I would almost bet your fees are
also more than mine. I think one of the issues too is that in the resort
areas such as Palm Springs, owners of high-end homes are seeking
professionals from close to their homes and willing to pay for it. This is
difficult for the local's here as by the time we even hear about the home,
it is already designed and in plan check. This leaves us bidding against
locals and outside professionals who are soliciting to local developers.
Since everyone wants a piece of the action, low bidders are a way of life
and they are keeping our fees down.

Any suggestions? I've been doing more insurance work to get away from
residential design as it pays better since Insurance adjusters are not price
shopping.

Dennis

> -----Original Message-----
> From: George Richards, P.E. [mailto:george(--nospam--at)BORM.com]
> Sent: Tuesday, May 01, 2001 1:50 PM
> To: 'seaint(--nospam--at)seaint.org'
> Subject: RE: Engineering compensation
>
>
> Dennis, I take it then that you are seconding my motion that fees are
> commonly under 1% of hard costs.  Such fees are way too low.  We never
> charge less for a custom residence than the owner is willing to spend for
> the chandler in the entry.  We dream to charge what the sales agent gets.
>
> George Richards
>
> -----Original Message-----
> From: Structuralist [mailto:dennis.wish(--nospam--at)gte.net]
> Sent: Tuesday, May 01, 2001 11:46 AM
> To: seaint(--nospam--at)seaint.org
> Subject: RE: Engineering compensation
>
>
> 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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