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RE: The Myth of Inadequate Structural Engineering Compensation

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Typical Texan response. Totally neglect the current economic climate. Sorry, I had to say it. Although I do agree with some of your points.
-----Original Message-----
From: Stan Caldwell [mailto:stancaldwell(--nospam--at)gmail.com]
Sent: Thursday, July 30, 2009 9:53 PM
To: SEAINT Listserv
Subject: The Myth of Inadequate Structural Engineering Compensation

SEAINT Readers:
 
Let me start with an admission.  I make a very good living and I always have.  It is more money than I need and more than I can reasonably spend (my wife would disagree), so I routinely throw a lot of it away in the stock market.  I am not unique.  All of the licensed professional engineers on my staff annually make more than $100K, and I know dozens of structural engineers in Texas and around the country that annually make more than $200K.  The idea that structural engineers are not well-compensated is simply a myth.  Any structural engineer who puts his/her mind to it and applies themselves should be able to achieve annual compensation of at least $[3xAGE]K.  If that engineer is lucky enough to live in Texas, he/she pays no state income tax and probably bought a big brick house with a pool in a desirable neighborhood for less than $100/sf.
 
How about your compensation?  Are you where you expected to be?  Are you where you want to be?  If not, go take a long look in the mirror.  You are probably looking at the primary problem.  That person you are looking at will need to make some changes.  The changes might be uncomfortable, they might be difficult, and they might not be successful.  However, to quote an old saying, "nothing ventured, nothing gained".  You will never achieve what you do not attempt.  If you really do want to build wealth as a structural engineer, here are a few techniques that have worked for others:
 
1]  Force yourself to become a rainmaker.  Sales people are the folks that keep the world turning.  Network far beyond your engineering comfort zone.  Nurture friendships and respect with people that make engineering procurement decisions.  You will find them at church, at your kid's soccer game, or at a charity event.  They are far more receptive in those settings than if you make a cold call to their office.  Once a friendship develops, you can eventually talk shop.  Be prepared to offer something beyond your structural engineering expertise.  Perhaps you know others who could help them put a project together.  Perhaps you have dreamed up an original idea for a new project.  All of this is unnatural behavior for most design engineers.  Are you willing to humble yourself and earnestly seek out new projects before others become aware of them?
 
2]  Force yourself to take calculated business risks.  The old saying remains valid, "risk and rewards go hand in hand".  Have you ever considered being a part of a design/build team?  I never liked design/build and hoped that it was temporal, but it is here to stay.  Just this week, my firm won its first big design/build award.  Our part of the job is worth about $6M, so my views are changing.  However, this was not our first or second design/build pursuit.  Don't be discouraged by failure, it is a necesssary stepping stone toward success.  Are you willing to increase your risk tolerance and try new things?
 
3]  Develop expertise in something that matters (not, for example, in how many nails go into a plywood shearwall).  Begin practicing a specialty that will distinguish you from the crowd.  Niche markets will be a growth area in the future.  You do not need to have a Ph.D. to become recognized as an expert, but once you are an expert you can name your price.  In order to succeed, be sure to specialize in something that you really enjoy.  Have you found a rewarding structural engineering specialty?  
 
4]  Stop working for architects!  No one has ever built any real wealth doing that.  Instead, swim upstream and work directly for the owner whenever possible.  On many types of structures, no architect is required.  Those projects are best.  On building projects, strive to serve as the prime professional and have the architect work as your subcontractor.  This is entirely legal, it is immensely satisfying, and it probably is what God intended.  Are you ready to be the prime?
 
5]  Aim high, wide, and long.  Big fees generally result from large, complex projects.  If you mostly design single family residences or strip retail centers, you shouldn't expect big fees.  Much of what a structural engineer spends his/her time on is relatively fixed for every project and is more-or-less unrelated to size or complexity.  Thus, the bigger the job, the greater the opportunity for profit.  Do you consistently pursue progressively higher/larger/longer and more complex projects?
 
6]  Decline every request to "bid" your services.  Sell only on the basis of value.  Clients that choose their professional consultants based on price are almost always lousy clients.  If they don't value your participation, they don't deserve your time and effort.  I haven't knowingly quoted a fee to anyone in a competitive environment in more than 15 years.  Why bother?  If you are selling your services based on value, somebody else will always be cheaper.  Embracing that  mindset takes some time, but without it you will never be satisfied with your compensation.  Do you have the discipline to stop bidding?
 
7]  Last, but not least, routinely "fire" your bad clients.  This includes your clients that have unreasonable expectations, those that are litigious, and those that repeatedly find excuses to dodge your invoices for as long as possible.  Other, higher quality clients will eventually replace any void that they leave behind.  Life is too short to put up with bad business.  Do you have the courage to upgrade your clientele?
 
These seven techniques are offered in no particular order other than what popped into my head this evening.  I might add a few more in the future.  I expect and hope that other readers will share their ideas as well. 
 
Now think about what I have written.  If you like most everything about structural engineering except for the compensation, you will need to make some changes if you want to build wealth.  As Albert Einstein famously pointed out, doing the same thing over and over again and expecting a different result each time is futile (he wrote insane).  Your career is what it is, based almost entirely on your performance and your decisions.  Nobody else is to blame.  If you do not want to make any changes, that is just fine as long as you also stop complaining.   
 
Best regards,
 
Stan R. Caldwell, P.E., SECB
Plano, Texas