×
INTELLIGENT WORK FORUMS
FOR ENGINEERING PROFESSIONALS

Log In

Come Join Us!

Are you an
Engineering professional?
Join Eng-Tips Forums!
  • Talk With Other Members
  • Be Notified Of Responses
    To Your Posts
  • Keyword Search
  • One-Click Access To Your
    Favorite Forums
  • Automated Signatures
    On Your Posts
  • Best Of All, It's Free!
  • Students Click Here

*Eng-Tips's functionality depends on members receiving e-mail. By joining you are opting in to receive e-mail.

Posting Guidelines

Promoting, selling, recruiting, coursework and thesis posting is forbidden.

Students Click Here

Jobs

Asked to "bid" for professional services
7

Asked to "bid" for professional services

Asked to "bid" for professional services

(OP)
It seems like the new trend for architects is to "bid" consulting services when putting together their teams; meaning they ask us to submit estimated fees for a particular project and then select the low bidder from several consultants.  I think this is HIGHLY dangerous for us as a profession to engage in.  It completely undermines the professionalism of our work and cheapens our services to commodity level.  We can talk until we are blue in the face about providing exceptional service but if architects are only going to base their project teams on "fees" then there isn't much we can do to demonstrate value to our clients.

Has anyone else noticed this trend?  What does your firm do to counter this threat?




PE, SE
Eastern United States

"If a builder builds a house for someone, and does not construct it properly, and the house which he built falls in and kills its owner, then that builder shall be put to death!"
~Code of Hammurabi

RE: Asked to "bid" for professional services

It is a common practice for architects to get fee proposals from MEP and other consulting entities when they are putting together a proposal to an owner/client.

Often the owner will choose, base on cost, but also experience.

We commonly provide fee proposals for differing teams (different architects) who are putting together a proposal.

Whether we like it or not, what we provide is a commodity and sometime the owner gets what he pays for when he picks the lowest bidder.

RE: Asked to "bid" for professional services

kylesito - I 100% agree that professional services have an inherently flexible scope, and the whole notion of bidding them out is gross. The implication is that you should treat them like a replaceable commodity too. Normally I go into bat for my architects or clients and defend them against all comers. If they are dicks, I will let the bus roll right over them. I don't care if its burns the relationship because the client hires on price alone anyway.

Also: you want to change the color of the door from green to blue where is says green in the contract, its going to cost you a million bucks.

I find that architects will get multiple proposals for big projects where the client is a developer and tight with money. In reality for me it only happens maybe a quarter of the time, but in previous firms it happened literally every time.

RE: Asked to "bid" for professional services

When I know this is the case, I either refuse to provide a proposal, or charge for my time for writing the proposal. I have found that frequently, they have a preferred engineer, and are just trying to get leverage for him to reduce his price.

However, it is the case, not only with Architects, but owners too, particularly the bean counter crowd.

Mike McCann
MMC Engineering

RE: Asked to "bid" for professional services

(OP)
True statements from both Pedarrin and Glass. The owner treating design services like a commodity is typical. Sometimes it's just their inexperience in knowing what actually goes into "design".

The issue I have is an architect solely deciding who to put on their team based on fees. I even had a architect recently tell me "just to let you know, we already have a number from another structural engineer and his was pretty low". In this specific case, I intentionally made our fee high knowing he wasn't going to pick up. We didn't really like working for him in the past anyway and I'm not playing stupid games. But now it seems even some of our more 'reputable' client architects are trying this and it just isn't setting well.

PE, SE
Eastern United States

"If a builder builds a house for someone, and does not construct it properly, and the house which he built falls in and kills its owner, then that builder shall be put to death!"
~Code of Hammurabi

RE: Asked to "bid" for professional services

This is a very common practice unfortunately and very upsetting.

I have a take it or leave it approach. You can shop around if you want but the price I give you is the one I will accept. I'd like to think my rate is very reasonable and I normally estimate based on how many hours I think I'm going to need to finish. This is a prime reason why I don't work on those patio roof additions / already built patio but needs a permit projects unless I'm doing it as a favor for a preferred client.

No stress on my part and I can choose the projects that I'd work on. I know this strategy would not work on someone practicing with a big monthly overhead (i.e., payroll, rent, etc.). That is the key though, reduce your overhead as much as you can so you don't have that monthly cash flow problem then you don't have to play the game with the bottom feeders.

RE: Asked to "bid" for professional services

If you do work for money, then cost is a consideration, regardless of what your personal viewpoint might be. To assume that you should be somehow immune from cost considerations is, I think, absurd, given the fact that there are gobs postings in this website about salary, and "I didn't get the salary I wanted," "Will I get paid more for getting a PE license." Doctors go through a yearly battle to get paid more from Medicare.

Even in these examples of buildings and structures, the overall cost of the project is definitely a consideration, and while the lowest bidder might get chucked out, a lower bid is certainly more likely to win that a higher bid. Does everyone really expect the lower cost to be sucked up solely by the construction contractors and not by the "professionals?"

TTFN
FAQ731-376: Eng-Tips.com Forum Policies

Need help writing a question or understanding a reply? forum1529: Translation Assistance for Engineers

RE: Asked to "bid" for professional services

NEVER!!
I'm with Mike on this. Tell them no if you know you are in a bidding situation. Selection should be on qualifications, not price......and no, I'm not naïve. I've been doing this for over 35 years and have thus far avoiding bidding when I am the decider (which is all the time for most of the past 20 years). It really pisses me off when architects and others treat the engineering profession a sub/para professional. OK..I'm off my soapbox

RE: Asked to "bid" for professional services

I charge reasonable rates, and discount them for early payment. I do not bid, and I make it plain that I will not. I hardly even quote.

We've had clients opt for us when we've pointed out what we can do and what value we bring to them, and we've had clients walk.

I don't care about those that walk. Good riddance.

You can only be sold cheaply and turned into an Engslave if you allow this. I have been known to openly tell clients that they should understand they are hiring a Professional (W-expletive) and not a (S-expletive); I am talented, able, and willing... And I expect to be paid for every service, without exception.

While a very new firm, our approach has resulted in 100% payment for nearly a year now. Not near 100%. One-hundred-percent.

Speak plainly, and tell them no. Tell them what you expect, and what they can expect in return. Our pitch is that we meet our deadlines, speak truth to power, and will protect the Owner's money as if our own. In many ways it is; We will only get repeat business when we prove our value through merit and our superiour mettle.

RE: Asked to "bid" for professional services

@IRStuff - the better way of dealing with money for professional services is to work with people you trust and to negotiate a fair fee. This is my MO for the majority of my work, and my clients keep coming back. My clients do hire other engineers from time to time on other projects, so they have a sense of what the market rate is, and I know there is competition if I get sloppy.

The difference between a contractor and professional is that the contractor's scope revolves around the delivery of an object which can be measured against defined performance parameters. A professional provides a much more elastic service. Occasionally a client hires me to just run and black and white calculation, but far more often its more a matter of navigating them through a process.

RE: Asked to "bid" for professional services

I don't know about the structural business, but in Oil & Gas, more and more people are doing the whole "3 bids and buy" BS. When someone asks me to bid on something, I carefully calculate may expected hours, double it, add 20% to the inflated hours because I can, then multiply the inflated price times my hourly rate. And I tell the client that that is the price if he wants me to assume all the risk. If he's willing to share the risk, I am happy to do the work T&M and the final price will be less than half. I don't have appreciable overhead (cell phone, internet, office phone, etc, about a day's work/month total) and I have never failed to win a competitive bid. When they tell me I got the bid I offer again to do it on T&M and they say "no".

At the end of the job I show them how much extra the bid process cost them and they rarely reject my T&M offer again.

Discounting your time is a good way to drive the value of your time into the dirt.

David Simpson, PE
MuleShoe Engineering

Law is the common force organized to act as an obstacle of injustice Frédéric Bastiat

RE: Asked to "bid" for professional services

zdas04 - there is no shame in making a nice profit in a lump sum job. It is possible that there is a delta between your cost to provide a service and the value of that service to a client.

RE: Asked to "bid" for professional services

zdas04: I've heard many people complain about the fact that we offer an early payment discount, or pooh-pooh this and say that we're devaluing our service...

I don't know Oil and Gas, but in Structural Engineering the "failure to pay" runs to about 30% of billable. Generalising you'll find that Ten to Twenty percent are late paying, into the 90 and 120 days, and between ten and fifteen percent simply never pay.

I saw an article (WISH I could find it again to link here!) which stated that Engineering firms typically spend close to $1.15 (If memory serves) for every $1 in aged receivables they eventually collect.

I base my required hourly rate on what I require to break even, times four (for design work - much a commodity in the eyes of clients), times five (for site work and value engineering) and times eight (for forensic & detailed investigative work). This is generous, so I am able to discount by twenty percent comfortably.

The firm is small, and we have made a business decision that works for us. No one with a bricks and mortar office can compete with our rates, and we prefer to be paid a little less if this means we don't do the unpaid/unrecorded/thankless chasing, etc, on unpaid bills. My business is far more profitable than any of the large engineering offices I worked in before...

Three bids and buy is far more likely to see rates in the dirt than simply discounting rates to pass along the savings of not having an office and not needing to chase bills. You see, in the final computation, our ENGINEERING rates are actually much higher than our competition's; We're just being smart about how to build a business.

RE: Asked to "bid" for professional services

No, No, No. If I'm getting something (like early payment or even better pre-payment) I offer all kinds of discounts. It is the discount-to-get-the-job attitude that makes me think some people are not acting in their own (or the profession's) best interest. Value given for value returned is a negotiation. "I'll give you 25% off if you'll just let me work for you" is desperation. I've had 100% of my invoices (eventually) paid and several times I would have rather given a discount than waiting 90 days for the full amount, but that was never on the table.

I had an offer to do a job that I REALLY wanted to do last week. They could only pay $55/hour (30% of my normal rate). One of my regular clients knew what this job was paying and was watching closely. If I had taken it, I would have defined my rate with my second client at a number I could not have tolerated and would have had to drop them. Didn't want to drop them so I stood firm on my rate. Now the job will be done by people willing to take $55/hour and is unlikely to be the result that anyone wants.

David Simpson, PE
MuleShoe Engineering

Law is the common force organized to act as an obstacle of injustice Frédéric Bastiat

RE: Asked to "bid" for professional services

$55/hour is an insanely low rate. I work our of a basement, with little computing power, no draftspeople, and effectively the minimum of everything and I won't work for $55/hour. That's a joke for any Professional Engineer.

Do you know who they did employ? Are they hiring a firm from somewhere else and getting the added advantage of a significant dollar conversion?

I don't think the average firm can pay salary, EI, insurances, utilities, rent/mortgage/maintenance/whatever, etc, and break even at $55/hour.

RE: Asked to "bid" for professional services

No, the people who end up taking this will be basically donating their time, so it is pretty certain that the people they hire will have an agenda. The US EPA has contracted for 5 peer reviewed white papers to be written on topics with pending regulations. These white papers will form the basis for the regulations. The contractor writing them is hiring peer reviewers for $55/hour. I'm betting that at that price most "peers" will come from the e-NGO side of the discussion and will all have their pay supplemented by the e-NGO. On the industry side of the discussion, the industry associations are being high minded and will not supplement payment for peer reviewers so as to "retain independence". I don't have much hope for the outcome, but I can't afford to work for $55/hour and expect to spend the next few years fighting the resulting biased documents.

David Simpson, PE
MuleShoe Engineering

Law is the common force organized to act as an obstacle of injustice Frédéric Bastiat

RE: Asked to "bid" for professional services

David...well said!
Ron

RE: Asked to "bid" for professional services

on the other side of the fence... evaluating bids from suppliers is not just a case of grabbing the lowest cost provider and making them stick to their quote (well, you can try it but that is a path to failure).

A proper bid evaluation includes far more than cost. If your architects aren't doing it properly then they will be ultimately out-competed by grown-ups. Perhaps you need to educate them.

Cheers

Greg Locock


New here? Try reading these, they might help FAQ731-376: Eng-Tips.com Forum Policies http://eng-tips.com/market.cfm?

RE: Asked to "bid" for professional services

(OP)
Thanks for the other perspective, Greg. I suppose it's reasonable to assume "bids" aren't always being based on the low bid. But it seems like this!

PE, SE
Eastern United States

"If a builder builds a house for someone, and does not construct it properly, and the house which he built falls in and kills its owner, then that builder shall be put to death!"
~Code of Hammurabi

RE: Asked to "bid" for professional services

Engineering services ARE a commodity, subject to bidding on an hourly rates basis. We're all interchangeable widgets, don't you know?

There's a push for "qualifications-based selection" for engineering services on publicly tendered projects. That means the firm which can field the best experience list and resumes is supposed to get the work, irrespective of the price. They're of course free to put the "B" team on it after award, though. It can be and is used as a means for big firms to exclude low-cost competition springing up and eating their lunches.

Then there are two-packet evaluation processes, where price or rates and qualifications or technical proposal are sent separately. The old joke is that this just reduces the work of the bid reviewers by putting all the useless irrelevant information into a separate package that can go right into the shredder...But done properly, a truly "quality-based" rather than merely qualifications-based selection process at least has a hope of obtaining good value for money for services without resorting to a purely rates-based selection process or merely dividing the work up amongst the old boys club.

The best way to get paid properly for the true value of engineering services, in my opinion and experience, is to sell a solution or product rather than engineering man-hours. Incorporate work which embodies, and allows you to profit from, a portion of the savings that your efficient and smart design, selection and procurement etc., offers to your customer. Sell it on a fixed price basis with a defined workscope. Tougher to get screwed with non-payment that way than if you're providing only paper drawings and specifications.

Yes, you can get screwed doing this too. I've seen a detailed workscope I developed in previous employ, as part of a free bid for a fixed-price project, used by the "client" to direct the work of the lowest fee T&M bottom-feeder. Giving out free detailed proposals is a mug's game which in some industries is played by all participants.

My current business does "studies" on a reimbursable basis at reasonable rates, which define the workscope and give the client at the end of this work, a fixed price for the complete execution of the design. It takes us far less work, and far less of their money, to get to that point than competitors who follow the fee-for-service design, then multiple bid construction, model that is prevalent in our industry. It works well for our clients, who get a firm price for very little up-front investment of time and money, and for us in that we don't give our engineering work product out free of charge. We do respond to requests for free bids sometimes, but there are ways to draw the client into our more normal model even then, as seldom is their workscope for the project complete enough to allow an apples to apples comparison amongst bidders.

RE: Asked to "bid" for professional services

One of the large advantages of doing federal work is the Brooks Act. A-E services must be qualifications based. So if some branch of federal government is hiring professional services, say EPA, they are not selecting based on price competition. Once qualifications are established, requirement is to pay "fair" rates compared to market analysis. If peer review is performed at $55/hr, then I'd be asking to see the market research or question the appearance of violation of public law. The company that was qualifications based selection to the EPA sounds like the bad guy, having an A-E firm present qualifications, then bait-and-switch for lower standing. I've been in the bait and switch issue with unscrupulous A-E firms, and as a result administrative costs go up quickly, as every advertised position must be qualifications based, not just the firm, subconsultants, and general process. Even when an environment is provided to have all work qualifications based, by human nature there is always a firm/individual that will crap in everyone's mess kit to squeeze an extra nickel off of each dollar.



RE: Asked to "bid" for professional services

Sometimes, a lower fee is proposed so employment is continued. A $100,000 fee means work for several months, even if there is little or no profit accrued, especially if there are profitable (good fee) projects in the works, but not breaking loose yet.

If times are slow, and you want to keep your employees billable, the company may even take a slight loss (but not for long) just so their employees have something to charge their time against.

Also, a lower fee (or a loose scope) might be a door into a client who has future work.

It is all a juggling act - one in which I am glad I do not take a direct part in - but I see it a lot.

RE: Asked to "bid" for professional services

zdas04 - I heartily encourage you to not undercut yourself with fee, but I also understand the strong pull of a political project. If its some kind of environmental study for a new project or something of that nature, engineers should have a voice just like big business, the environmental and local community lobbies do. We all complain about politicians and the deck generally being stacked against us, so we need to step up and be heard more. And its a simple pitch: more engineering = better results. Maybe ASME should step up and subsidize you.

RE: Asked to "bid" for professional services

The project is not (yet) on the radar of ASME or SPE. Both are letting API do the heavy lifting on it. API has a policy. The policy works for people who are on salary, but not so well for contractors. Anyway, the deadline was last week and I turned down their kind offer of minimum wage labor.

David Simpson, PE
MuleShoe Engineering

Law is the common force organized to act as an obstacle of injustice Frédéric Bastiat

RE: Asked to "bid" for professional services

zdas04 - I probably would have turned down the project too - my public service budget is only so big.

This is probably off topic, but letting the American Petroleum Institute represent engineers is not ideal. Doctors are very well organized with the American Medical Association, and would never let a hospital represent them even if their interest was the same.

RE: Asked to "bid" for professional services

" Doctors are very well organized with the American Medical Association, and would never let a hospital represent them even if their interest was the same. "

Not true in the least, at least for solo doctors. Their turf is being drastically eroded by nurse practitioners, who, with a scant 6 months of additional training, are allowed to diagnose patients and prescribe medicine, supposedly, "under physician supervision," but we all know how that turns out. My wife has tons of horror stories of NPs missing symptoms and misdiagnosing.

TTFN
FAQ731-376: Eng-Tips.com Forum Policies

Need help writing a question or understanding a reply? forum1529: Translation Assistance for Engineers

RE: Asked to "bid" for professional services

Basic calculations to a problem defined and controlled by someone else is a commodity, engineering itself is not. Any client who takes the attitude that their engineering is a commodity is throwing good money after bad... Deservedly so as well.

A good engineer is a value engine. The concepts applied, based on the experience, knowledge and skills of the individual Professional Engineer, are what a client should be purchasing. Those who do, profit. Those who don't are welcome to hire a crappy commodity for $55/hr.

RE: Asked to "bid" for professional services

We have sent out bids like this and price accordingly. They say no and I ask what bid are they looking at? I can't believe what prices people are willing to work for. I figured out I would make more working at McDonalds for one particular project. My thing is we aren't the expensive guys because I try to keep our overhead as low as possible, but we definitely are not the cheapest around.

I got into a conversation about this with my old boss, and the conclusion is that some retired guys might be really bored and instead of going for golf that week they decided to stay indoors and design something.

B+W Engineering and Design
Los Angeles Civil Engineer and Structural Engineer
http://bwengr.com

RE: Asked to "bid" for professional services

CELinOttawa: you're describing the professional services a client should be purchasing, rather than what many clients actually receive. Too often, engineers providing services only are motivated by interests differing in important ways from those of the client. Engineers need to be involved in the execution of their designs not only as a critical learning opportunity to make their designs better, but also as a means to keep more of the value they generate. If you find a new way to deploy materials to make a project safe and durable against the loads it will encounter and to do so for greatly less cost, and your only up-side is the opportunity to potentially win future business from the same client, you've left a huge amount of value on the table. And if your fees are entirely divorced from the cost to execute your design, there can be a tendency to over-design and little motivation to innovate.

RE: Asked to "bid" for professional services

moltenmetal + CELinOttawa- 100% correct about not defining your work as being a human calculator, and being involved in making the project a reality. An engineer should also be an entrepreneur.

One of the challenges in the above is in keeping your scope tightly defined so that you can make sure you execute efficiently. Its hard to say "I'm done, stick a fork in it" if you have an open ended scope. But at the same time, this is key to unlocking all these higher value things which we can do for clients.

One of my strategies is before the project even is signed up, is to push the client to do more with the engineering, and make engineering more central to the project. Do longer spans in a more exotic material for a good reason etc. Yes they could technically steal your idea, but it more frequently leads to fees multiple times more than the human calculator model. On the same job, I was paid $15k to plug and chug some calcs, or $60k to make the whole thing happen. BTW: these are real numbers on a recent project where I had two similar clients with very similar scale and scope of construction, but a much different scale and scope of professional service. Neither contract was subject to bidding, and the client who paid more was much happier with the service!

And there is no limit to how far you can extend you scope. At my old firm we went as far as helping clients with fund raising. We did presentations to donors to get the Seattle public library built.

RE: Asked to "bid" for professional services

(OP)
Moltenmetal...you made the statement that engineering services ARE a commodity.

If so, then by the principles of economics I should be looking to solely maximize my profits by focusing solely on internal costs (overhead) since by definition a commodity industry is one where you cannot charge a price higher than any competitor without the risk of losing all of your customers. I have no control then over what I charge customers since everyone else could do the same job at a lower price.

I would disagree and adamantly argue that if our industry is in this state, or heading towards this state, we must stop it. If my profitability is solely measured by internal costs, then my priority is not the health, safety, and welfare of the public. And this is largely my argument against "bidding" for work. As a business, engineers cannot place both internal cost control and the health of the public at equal priorities. Eventually one will override the decision of the other. Choose safety and you may find yourself, and your employees, out of work. Choose profit and you run the risk of causing harm.

NSPE used to have a canon in their code of ethics addressing this very thing. They have since removed the language and I am very curious as to why.

If we are a commodity then we must not be held liable for the safety and welfare of our designs. If the health, safety, and welfare of the public remains in our charge, then we need to be compensated based on our ability to provide this safety more efficiently or to a higher degree than our competitors.


PE, SE
Eastern United States

"If a builder builds a house for someone, and does not construct it properly, and the house which he built falls in and kills its owner, then that builder shall be put to death!"
~Code of Hammurabi

RE: Asked to "bid" for professional services

kylesito, you missed the humour in my statement. My point was that to some, all engineers at a given level are interchangeable widgets and hence worth exactly the same hourly fee, ie..a commodity. I don't believe that for a minute, nor does any engineer worth their salt.

RE: Asked to "bid" for professional services

I was going to add to this thread, but I thought that what needed to be said was being done better by others.
But one point that I thought was important is that most firms do work for about the same amount. If someone can do it for way less, then they've probably got an unsustainable business model. If some retired guy wants to make a hobby of doing work for a few bucks, he can only do so much. And he needs to do his own CAD or hire someone. And, if you hire someone (assuming it's not some other old codger working out of his garage) now you need an office, a payroll department, and all those other expenses that drive up the costs. Or if he's successful, he needs to hire other engineers. And no one is going to work for less than the market rate, unless they're below market in talent.
Or maybe some firm has figured out how to do everything on schedules, without a lot of calculations or drawings. Don't you think the big guys are going to copy this? Or the drawings are so hard to build from that you have an unhappy client at the back end.
So my point is that we shouldn't be afraid to bid (although I think it's counter productive) projects. It's like that commercial, where someone opens up a $5 haircut place across from an existing barber shop. So the established guy puts up a sign, "We Fix $5 Haircuts" If you don't win this one, maybe you'll get the redesign. And don't be afraid to charge for that.

RE: Asked to "bid" for professional services

JedClampett,
There is another facet to this dynamic. If I can start with an anecdote:

I bid on a job a few years back. I had an excellent idea how I would address the problem (the key to success was data management, not hard-core engineering) and I bid $96k (which was over twice the hours I thought I needed). A couple of middle-size engineering firms also bid on it and both were right around $1.5 million and their proposals made it clear that they didn't know it was basically a data-management job. The big difference in this case was that they didn't have anyone in the bid process that had ever done a similar job (both companies had people who had done similar jobs, but they were too senior to be bothered with a pissant bid). As a one-man company I was better positioned to properly evaluate it and my final hours on the job were within 5% of my original estimate so I made twice my normal hourly rate. Overhead alone did not account for a 15 fold difference in expected costs.

The point of this story is that in addition to the obvious issues with larger firms, there is also a significant difficulty with trying to apply appropriate experience to each bid--the guys that know are too busy to participate in too many cases. Sometimes the $5 haircut really is a bargain.

David Simpson, PE
MuleShoe Engineering

Law is the common force organized to act as an obstacle of injustice Frédéric Bastiat

RE: Asked to "bid" for professional services

JedClampett: because we execute our own designs in our own factory, we require far less engineering to offer a fixed price on one of our projects than a competitive engineering company who will have to use a fabricator to build the unit. Sure, people can copy our business model, but the "big guys" never will, and those who don't, can't compete with us in our niche any more than we could possibly compete with them on a billion dollar project. We're not cutting corners by generating a shoddy design- we're more efficient, by design.

RE: Asked to "bid" for professional services

moltenmetal - if you get paid for delivering a built object rather than for designing it, the business model is pretty different. Design is only one cost among many, and not even the biggest one. Interesting that you are able to compete effectively with folks who outsource fabrication. These days everyone wants to build out of house like Apple not in house like Samsung. But maybe Samsung will carry the day...

RE: Asked to "bid" for professional services

"Design is only one cost among many, and not even the biggest one" well that's a sweeping generalization.

I've been on projects where the cost of engineering effort was far greater than material and assembly costs.

Posting guidelines FAQ731-376: Eng-Tips.com Forum Policies http://eng-tips.com/market.cfm? (probably not aimed specifically at you)
What is Engineering anyway: FAQ1088-1484: In layman terms, what is "engineering"?

RE: Asked to "bid" for professional services

(OP)
There is definitely an economy of scale with how much design plays into a job. Smaller jobs tend to have as much in design/engineering as materials. Larger projects it's a much smaller percentage. KENAT, since most structural jobs are 'big dollar', the statement does hold true that engineering is often minimal compared to overall cost of construction.

PE, SE
Eastern United States

"If a builder builds a house for someone, and does not construct it properly, and the house which he built falls in and kills its owner, then that builder shall be put to death!"
~Code of Hammurabi

RE: Asked to "bid" for professional services

Typical car project the car costs around 15k to build, , sells for 25k+taxes, and generates a profit of maybe 3k on a good day, and owes about 2k in up front engineering and tooling costs. So if you can sell twice as many that drops to 1k, or you can spend twice as much on the next one, which means it'll probably be both better and cheaper. This is the inexorable virtuous circle of bigger sales when selling in the consumer marketplace.

Cheers

Greg Locock


New here? Try reading these, they might help FAQ731-376: Eng-Tips.com Forum Policies http://eng-tips.com/market.cfm?

RE: Asked to "bid" for professional services

GregLocock -thanks for the automotive datapoint. On a typical commercial building project, total design fees including architecture, structural and mech engineering, landscape, lighting misc consultants will be approx 15%. Its variable though. Frank Gehry charges 20% just for architecture. The "classic" number for structural engineers on a building is 2% of the value of the whole building, and that structure is 20% of construction cost.

RE: Asked to "bid" for professional services

(OP)
You get 2% of the cost of construction as a fee?!!! We are lucky to get 1%.

PE, SE
Eastern United States

"If a builder builds a house for someone, and does not construct it properly, and the house which he built falls in and kills its owner, then that builder shall be put to death!"
~Code of Hammurabi

RE: Asked to "bid" for professional services

kylesito: I was just quoting the "classic" number. I don't really do much primary structures engineering so my comparisons are wrong. For a glass stair, my fee is approx 8% of construction, but varies considerably (2% to 30%).

RE: Asked to "bid" for professional services

I tend to think everything anyone buys is a commodity in a sense.

I go to buy a watch. Maybe I buy the cheapest watch. Maybe I don't. Maybe I buy the watch that looks the best, or has the best features, or has the best combination of looks and features for my money.

I go to hire an engineer. Maybe I hire the cheapest engineer. Maybe I don't. Maybe I hire the engineer that has the cutest intern, or that has the project CV closest to my project, or has the best combination of experience and cute interns for my money. In truth, the chances are I hire the engineer that I have the best confidence will get done what I need done, for a fee that's somewhere in my budget.

I think you guys are getting your knickers way too in a twist about commoditization. Yes it sucks and impacts your fees, but the best thing for the economy isn't to somehow uncomodotize your services, it's to comodotize everyone else's, so nobody's making any more money than you are, and the consumer saves.

I have a friend who works at GE. He talks about how they intentionally tell their clients that if the client puts the project out for bid, GE will tell them to take a hike and not bid it at all. They do it as a threat to keep the project on a no-bid basis, so they can rake a higher profit. This guy's department makes 30% or 40% pure profit on their projects, by the way, while I'm over here in civil making much less.

Well sure, I'd probably do that too if I was them. But I'm a strong personal believer in a free marketplace, and that's not a free marketplace. That's a cartel.

Hydrology, Drainage Analysis, Flood Studies, and Complex Stormwater Litigation for Atlanta and the South East - http://www.campbellcivil.com

RE: Asked to "bid" for professional services

beej67, carrying your logic to the ridiculous, they could decide not to hire an engineer at all, just look at other buildings and tell the contractor to build one like it.
There's different disciplines in this thread, so there's some confusion. I'm a structural and I design structures. So let's say the client uses the engineer with the cutest intern. Will they put a sign on this building and say "Design by Hot Intern?"
The entity making these decisions will be one of many users of the facility. If they choose wrong, it might affect (kill) people who had no input in this decision, but simply entered the building.

RE: Asked to "bid" for professional services

If you get three prices, you are tripling the chances of your low bidder not understanding how difficult the job was going to be.

RE: Asked to "bid" for professional services

Glass: I can't decide if that's a confusing bit of misreason, or an argument contrary to fact... But I get what you're trying to say.

RE: Asked to "bid" for professional services

Bid mistakes are a classic, much beloved by general contractors. The key is to really rush the bid. "I need your price tomorrow!"

RE: Asked to "bid" for professional services

Been there ... 99% of my business is repeat customers. I treat them fairly without exception and I get the repeat business. But then there's "that guy" ... The one who asked for a quote on something, let's say my quote was $7k. I hear nothing for three months. Then a panic phone call inquiring whether I could start the next day and as it turns out, I could. "But I can only give you the job for $6k because that's what the other guy quoted, but he can't start the work for another week." Sorry, no can do.

And then ... a year later, wants a quote on something else. I realized that the project would require reworking a considerable portion of an existing system. Let's say my quote was $4.5k. Didn't get the job. Someone else quoted $2.5k. "No way. Does he realize that you are going to have to do this, and this, and this?" Not my problem. Sorry ...

The cheapskate clients get the service that they deserve. If they learn, perhaps you will get the next job. If they don't learn, they're probably not worth having as clients anyhow. I sure didn't lose any sleep over not getting either of the two jobs described above.

The cheapskate firms who undercut everyone have a fair chance of a hard ending, too. If they underpay their employees, they will only get inexperienced ones who will leave when they get enough experience (and once upon a time, I WAS that underpaid employee-engineer). If they have no profit margin, they won't survive. If they shortcut the work, we all know where that ends.

RE: Asked to "bid" for professional services

The same customers asking for professional bids would probably not go to a low bid heart surgeon.

RE: Asked to "bid" for professional services

In fact, the opposite is true in medicine: Doctor who are less qualified, and charge more, get more clients than ones who simply charge fairly. Ironic, but factual.

RE: Asked to "bid" for professional services

That's true in plenty of fields, CE... people often equate high price with quality, and therefore make uninformed decisions based solely on price.

Dan - Owner
http://www.Hi-TecDesigns.com

RE: Asked to "bid" for professional services

Insane, but you're right of course... Such behaviour is just nuts, but probably has an evolutionary explanation.

RE: Asked to "bid" for professional services

CELinOttawa and MacGyvers200, I can share an anecdotal story that supports your point about the perception that pricy is better. Many (many, many) years ago I worked for a company that built radar systems for general aviation aircraft. They decided to get into the heavy iron world of business turbo props and business jets. To make their radar operate properly at the higher altitudes, they redesigned their existing radar with a better high altitude magnetron and a few other minor circuit board changes. The total cost increase (without burden) of the changes was about $200 per unit.

At that time their general aviation radar was priced as a system at $15,000 but marketing said there is no way the heavy iron would accept a $15,000 radar as "good enough" to be installed in their aircraft. So marketing priced the system at $30,000 because that was in the range the heavy iron drivers expected to see.

I thought you might find this interesting.

RE: Asked to "bid" for professional services

For $50,000 I'll find it interesting-is that priced for enough cachet?

Red Flag This Post

Please let us know here why this post is inappropriate. Reasons such as off-topic, duplicates, flames, illegal, vulgar, or students posting their homework.

Red Flag Submitted

Thank you for helping keep Eng-Tips Forums free from inappropriate posts.
The Eng-Tips staff will check this out and take appropriate action.

Reply To This Thread

Posting in the Eng-Tips forums is a member-only feature.

Click Here to join Eng-Tips and talk with other members!


Resources