Subdivision Work - Pricing 1

[TORCHMAN]

Correct me if there is already a discussion on this, but I could not find it.

New client (good architect in my area) asked me to price work for a whole subdivision of 50 houses. There are only 2 designs and in each there is a lat. unsupported wall and 2 beams. That is to say, the work is minimal, but liability is high. The developer is not a big name in my region which may add a bit to the liability.

Pricing off total cost of project doesn't seem to work since the scope is so small.
Pricing per unit, I would usually charge $1k for this, but at 50 units, $50k is obviously too high.

I am thinking of going in at $10k to $12k.

Am I in the ball park? Anyone has experience with this?

 

[human909]

There is no simple answer.

Though your price seems somewhat on the high side in my opinion given that it is only a single design in a single area. I'd be thinking maybe 5x what you would charge for a single build. But charge what you think will win you the job.

I do agree you should charge more for taking on that liability. I have to make a similar decision soon on a recent project. A simple design, but with potential to be used in ~8000+ locations across the country in varying wind, seismic and soil conditions. In my case the charging will be as much for the time to prepare suitable documentation for such unknowns.

 

[XR250]

So no other work than to just size 2 beams and a laterally un-supported wall?
What does a laterally un-supported wall mean?
What is your work product/deliverable?

 

[phamENG]

These can be tricky. Most developers don't want to pay reuse fees, because they do add up. But, as you rightly point out, you're liable for the structural performance of each and every one of those houses.

When it comes to multiple uses, I typically charge 100% for the first, 50% the second, and 25% for each one thereafter. If you have 25 uses, you may be able to go a little lower still per use.

So your $12k might be a tad high, but if you think you can get it and they'll pay it, go for it. It's not overcharging if the client is willing to pay it.

 

[Eng16080]

I may be the outlier here, but $50k for the liability associated with 50 houses seems low. I'd really want my plans to be bulletproof considering the increased risk of each house being built 25 times.

With that said, I'm sure there's probably another engineer in my area who'd do each design for like $4k (or something stupidly low), so there's likely little chance of getting the job for $50k. I would tend to base my fee more on the liability rather than design time.

 

[TRAK.Structural]

I'm curious what your deliverable is like @XR250 mentioned.

Will the documents state that your scope is limited to the 2 beams and framing for the 1 wall? or are you stamping the entire house plan? Is the rest of the construction intended to meet prescriptive requirements of your jurisdiction?

 

[EZBuilding]

I think your fee here should be relative to the professional liability; but the terms and conditions of your contract should limit your civil liability.

Construction Administration services should be hourly, as those may not be repeated at each location.

 

[XR250]

I also wonder if there are any clauses in our PL coverage about things like this. Say you are using the same design for 1000 units and you only charge 20k. There is a disproportionate risk on the PL provider as they have a large exposure (up to your policy limits) but did not have the liberty to base your rates on what the billings should have been.

 

[human909]

I think your fee here should be relative to the professional liability; but the terms and conditions of your contract should limit your civil liability.

I agree with the former statement though the latter statement may depend on your jurisdiction. If you are signing off on the design many laws may limit the amount you can contract out your civil liability.

So in part the additional cost comes down to making you plans "bulletproof" as Eng16080 mentioned. At least you are limited to one locality and a known number. If you are extra conservative in design then you could also cover yourself.

Though ultimately if there is another engineer who is willing to take on the risk for a low fee then let them.

I also wonder if there are any clauses in our PL coverage about things like this. Say you are using the same design for 1000 units and you only charge 20k. There is a disproportionate risk on the PL provider as they have a large exposure (up to your policy limits) but did not have the liberty to base your rates on what the billings should have been.

A very good point and something I need to check if my 8000+ units project goes ahead! In my case I have the job and the customer is happy with my current fees (he seemed surprised at the low price and accepted it enthusiastically). Though my current fees only cover a preliminary drawing, so at this stage there is no risk for me. If I produce a drawing that could get rolled out nationally for 8000+ units then I'll need to consider all aspects.

(Structurally my job is super simple, <$1000 if it was a once off design for a regular client. But the scale and variance of conditions is the complication.)

 

[Euler07]

In my opinion, 12k is way too low. Is the builder or real estate getting less money for duplicate houses? Does the risk of an owner becoming disgruntled and sue you decrease for duplicate houses? Just give a max 30 % to 50% discount for the duplicates.

 

[SWComposites]

OP - why not ask the architect what his fee schedule is?

 

[TORCHMAN]

Hello Eng Community. Hot topic!

In terms of scope, the expectation is that I would produce 2 sets of details - one for each type of build - for the lat - unsupported wall. And Spec out the beams, post, pad footing. Stamp his drawing with a note that specifies the limited scope of my stamp to these 3 items (beam, post and pad footing) + the additional detail for the lat. unsupported wall. So very much a limited scope.

@XR250 By lat. unsupported wall I mean a basement foundation wall where sue to a long stairs running parallel to it, it requires add'l reinforcement/ an extended footing as for a portion of it, it acts as a retaining wall.

I had a tough time pricing but felt $13k was a good number that did not devalue the profession (going too low) but also did not completely price myself out of the market. Though I have a feeling, as many of you pointed out that someone out there will be willing to do it for $4k. I told him I have some room for adjustment if I truly had to. He is getting a price from one other engineer and said he will present to the client - developer - as is. I don't have much of a relationship with the architect so I didn't feel like I could ask him what his fee schedule is. But I will ask once he awards the job as I am curious.

 

[TORCHMAN]

These can be tricky. Most developers don't want to pay reuse fees, because they do add up. But, as you rightly point out, you're liable for the structural performance of each and every one of those houses.

When it comes to multiple uses, I typically charge 100% for the first, 50% the second, and 25% for each one thereafter. If you have 25 uses, you may be able to go a little lower still per use.

So your $12k might be a tad high, but if you think you can get it and they'll pay it, go for it. It's not overcharging if the client is willing to pay it.

I like your rule of thumb! I'll save that in my estimate sheet for sure!

By that metric, I should have gone at: 1*($1,000)+0.5*($1,000)+48*0.25*($1,000)=$13,500
Though if I go a little lower to 20% after the first 2 it becomes: 1*($1,000)+0.5*($1,000)+48*0.20*($1,000)=$11,100

While I find the 2nd price more reasonable, I also thought. This is a massive project in the $15M+ value so no developer worth his salt should be bickering over $2k.

 

[XR250]

meh, 12k seems too low for this. You could get thrown into a lawsuit on any of these houses while under construction or afterwards - even if it was out of your scope.
But like you say, some bottom feeder will likely do this for 4k.

 

[Eng16080]

This is a massive project in the $15M+ value so no developer worth his salt should be bickering over $2k.

I think there's a good chance they would just take the cheapest engineer, since to them this is only a "few calcs." and they're probably not considering the liability of 50 builds with 50 individual homeowners. This seems similar in a lot of ways to condominium projects, which is seen as a much higher risk by insurance providers. You may want to research that and provide similar language in your Agreement with the client to try to protect yourself if there's future litigation.

 

[GaStruct]

I have a rule that I either design the entire house or none of it. This is based off experience where a project went sideways and I was considered the EOR even though my scope was limited in the contract.

Like mentioned above, you could be listed in a suit if anything happens at any of the houses. Even if it had nothing to do with your design.