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Re: Engineering compensation

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Within the last year, I submitted a fee proposal (I'm an old guy, we never
say "bid") to an architect for a commercial project.  He called me upon
receipt of my proposal, "Your structural fee is $1600 more than my entire
fee!"  I restrained myself from laughing.

Now that I think of it, he hasn't called back.
__________________
John P. Riley, PE, SE
Riley Engineering
20 Oakwood Drive, Blue Grass, Iowa 52726
Tel & Fax:  319-381-3949
jpriley485(--nospam--at)peoplepc.com
----- Original Message -----
From: "Structuralist" <dennis.wish(--nospam--at)gte.net>
To: <seaint(--nospam--at)seaint.org>
Sent: Tuesday, May 01, 2001 6:09 PM
Subject: RE: Engineering compensation


> 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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