Accurate Quote? 1

[SteelPE]

Due to some recent problems, the company I currently work for is going to be no longer in a few weeks. I have applied for positions in other companies and have had a few interviews but nothing has really come through yet, so I am beginning to go down the path of self-employment. It’s this or unemployment.

That being said, after 12 years of working as an engineer (6 of which have been licensed) I have never really priced a job from an engineer perspective. I have the opportunity to price 3 separate projects with 2 contractors. I am doing the best that I can to figure out the amount of time that it would take me to complete a project and then place an hourly rate on that time. As a check, I have dug up a copy of the 2009 RS means which will give me the construction costs for different projects based upon the type of facility and the square foot of the facility. I was always told that structural engineering costs should run 0.5% - 1.5% depending on the complexity/size of the project. I have had other engineers say that 0.75%. Now, most of my projects will be 1-3 story office buildings, warehouses, retail plazas/shopping centers etc. (based upon my previous experience).
Is this a reasonable way to go about pricing a project…… what do others do?

Just to put everyone’s minds at ease, I have already contacted an insurance company and have spoken to my accountant about the possible switch.

 

[zdas04]

I've never worked on a project that could use a published table. It sounds interesting.

What you really need to do for a reality check is figure out ALL your expense (household budget included). PL insurance can be a really big ticket expense, but you have to go down to software and utility bills. Once you've got your first-year expenses listed, double them because you never really list all of the things a new business needs to spend money on. Then see how many of the jobs you're bidding it would take to cover that number. Also look to see how much of your time you have to work. If covering expenses takse more than about half of your time you are not charging enough.

David

 

[casseopeia]

Start putting your marketing list and collateral together now and maybe make a couple of meet-and-greet trips to potential clients to plant the seeds. Getting that first job is a hurdle. It will liely take several reminders.

If you have any friends or acquaintances in the business you can try to find out from them the ballpark where you should be. You don't have to discuss specifics.

If you do not immediately have paying work, go ahead and file for unemployment. It takes a couple of weeks to kick in. If you start earning money self employed and there is any overlap with unemployment, you can always return the funds if you feel compelled to do so. It's not what I'd recommend, but I don't feel like being stoned to death today. If you keep the money, it reduces your available unemployment the NEXT time you file, at least here in CA.

"Gorgeous hair is the best revenge." Ivana Trump

 

[JedClampett]

A way to do a sanity check is to calculate a percentage cost as above and then do a per sheet cost. If the project requires 50 sheets, use the per sheet cost of $2500 to $10,000 (I know, very wide range, depending on type of work and repetition of sheets) and check your number. Add in some time or money for non-productive time required for the project, like permitting or meetings, and get a total cost.

 

[FixedEarth]

This pricing part is the most difficult aspect of consulting, more so in our economic environment. No matter how long you research this, you will end up underpricing it just because you are a newbie. The question is how close should your number be to other firms?

It depends on your market. In CA, my structural colleagues charge $3 to $5 per square foot. In other States, it will differ. This makes sense to a client- why should your fees depend on their total development cost? Also some structural sheets are more involved than others, so why should you charge the same flat rate?

As a final check, ask the client what range are they expecting, as you are trying to stay competitive(#1 guess). Take the $3 - $5 psf (guess #2), take your total hours and multiply it by $150 (guess #3), and use a value close to the average. Good luck.

 

[SteelPE]

zdas

Actually I don't think I really need that much more stuff to start my office. I have a computer, a nice monitor, I already own the software I would need, I just purchased a copy of AutoCAD Lt 2012, I have an 11x17 printer/scanner. Not sure what else I would need. I know where to get large prints done... and how much they cose ($3.00-$4.00 /sheet depending on the size).

Cass

I have already begun the process of visiting potential clients. I have a few other meeting schedule in the coming weeks. Most of my work is going to come from clients I had through my current/STB defunct employer. It is actually amazing that it is happening this way. One year ago I sat and thought to myself "If I have to do this on my own I am screwed because I don't have any clients at all". Now I have a few in my back pocket.

I have checked with a few friends who said I should be around 0.75% of the construction costs.

Jed

I have thought about the price/sheet number. The problem the last project I am completing with my employer is up to 25 sheets and I think we will still need to add a few. At $2500/sheet that would add up fast.

Fixed

$3.00/square foot.. that is a ton of $... of course you are in CA so there will be much more detailing required than I will need to do. The numbers I am getting are around $0.50-$0.75/square foot. That is figuring on an average completed price of $100.00/square foot according to RS means. I am helping a potential client now develop a 48,000 square foot two story office and am trying to give him a price.

 

[casseopeia]

Good for you SteelPE. Having a year to prepare for the event is unusual.

OT - What kind of printer do you have and do you like it? I've been doing some on-line shopping for myself, getting ready to do my own thing for awhile.

"Gorgeous hair is the best revenge." Ivana Trump

 

[tygerdawg]

for the OT-printer discussion:

After suffering through user-hostile support & generally poor quality that was HP for years I finally discovered BROTHER printers. For my home I have an all-in-one color inkjet/fax/scanner/copier. It just works, works very well with no trouble, setup is easy & flawless, and wireless throughout the house. Ink cartridges are separated into colors, you only by what you need, when you need it. I found the best price for printer was Office Depot, and for cartridges was NewEgg.

Having fired broadsides of derision & scorn at HP, they must have legions of dissatisfied customers and decided to do something about it. A recent purchase was a E-Size roll-fed color plotter, and it only costs about $1500 IIRC. That's an amazing price...you can almost justify this for a home office. It isn't suitable for 24x7 engineering house production needs, but is very nice. HP is trying to get me back as a customer.

TygerDawg
Blue Technik LLC
Virtuoso Robotics Engineering

http://www.bluetechnik.com

 

[SteelPE]

Cass,

The writing has been on the wall for a while. Over the past few years there has been a large influx of useless relatives who know nothing and produce nothing. It's kind of a bad sign when your boss/owner comes in your office and says "So, have you given any thought to you life after insert company name?" Currently I am their only licensed professional. They have started a new company which I will be a part of (but some relatives will, go figure).

I broke down a few months ago and bout an Epson Workforce 840 printer/scanner/fax/wireless. I was trying to find something that could scan directly to pdf's in large batches. It is slow in term of conversion but all you basically do is throw them all in the top feeder tray and let them go.....

Then they came out with the Epson Workforce 7520. This is the printer I was originally looking for uuurrrggghhh. It has two paper trays and can print/scan 11x17 documents. Have only had it for about a week or so. The price was $299. Everything works fine but the top feeder tray makes a weird noise when scanning prints. I exchanged it for another one (Epson was going to send me one in the mail, I thought this was easier). The new one makes the same noise. I was going to sell the 840 but I am figuring I will keep it since it uses the same ink as the 7520.

tyger

I was looking at getting a plotter. I like to print my drawings on 18"x24" sheets. I figured I would get a plotter to do the drawing reviews and then I would go to Staples or a local print shop when the client needed sets of drawings. I can't bring myself to spent the $1500 yet when I don't even have a job. My wife can use AutoCAD so at least that purchase will not go to waste if I can't make it on my own.

Which model did you end up getting? Are you happy with your plotter choice? If you had to do it again would you buy the same one?

 

[casseopeia]

I had an old HP print-scan-copy 2100, but it's too slow to use for scanning and I also want wireless. Maybe I'll check out the Epson's tomorrow.

"Gorgeous hair is the best revenge." Ivana Trump

 

[Ron]

SteelPE...best of luck in your new venture. Always a bit scary but well worth it.

As for fees, look at what the market will bear. You can use rules of thumb for ground truthing and you can figure what you absolutely have to have to live, but that will likely lead you to underpricing your services.

There's a reason most of us charge the rates we do. One common one is that if it is a standard engineering service requiring only average skill and diligence, then you will typically charge the "going rate" for such services. For common structural design, that will likely be in the $90 to $150/hr range most anywhere in the US. For specialty stuff, the rate can go anywhere you want it to go.

Don't underprice your services. It locks you into a position and perception you will ultimately regret.

 

[SteelPE]

Cass,

I am not saying that these things are lightning fast when it comes to scanning but it works and beats spending $1,000 on a faster scanner. There is a negative review on Amazon for the 7520 so make sure to weigh your options.

Ron,

It is definitely a little scary. On a good side I like to think that I have been under paid for 2-3 years. I just stuck with it because there really wasn't much out there. Now I am hoping that I can make a slightly better living out on my own. I am hoping to get around $4,000-$5,000 / week but that may be to optimistic.

One thing I may end up battling is the fact that I may say something takes 3 weeks and end up putting 120 hours in one week and get the project done. Then I am going to have to sit on the work so the client doesn't think I pulled a fast one on them.

 

[berkshire]

SteelPE
17 or 18 hr days are how you get a new company off the ground ( sweat equity ), But you cannot keep that up for long.
B.E.

The good engineer does not need to memorize every formula; he just needs to know where he can find them when he needs them. Old professor

 

[Ron]

SteelPE....$4k-5k per week is definitely in the range. Cash flow is always an issue, so billing on a two-week cycle is sometimes necessary, provided you clear that with your clients beforehand.

 

[tygerdawg]

SteelPE, re: plotter purchase

That would be an HP DesignJet 510. HP sells direct, but our Purchsing Guy got it from someone local at a bit of a discount.
YES, I would purchase again.

TygerDawg
Blue Technik LLC
Virtuoso Robotics Engineering

http://www.bluetechnik.com

 

[fasboater]

SteelPE,

I think somewhere between $1 and $2 per square foot is closer to the correct number. However it depends on what your bidding and how large the project is. Obviously the smaller the square footage the larger your square footage cost.

When I got started I had a mentor of mine (he has been an SE for 30 plus years) tell me put a realistic price on your hourly rate. Take a stab at how many hours you think you will have invested meetings, phone discussions, changes etc and multiply that by your hourly rate and you will start getting work. Make adjustments in the process as you go. If you don’t quite make your hourly rate don’t sweat it your still making money, just not as much as you wanted. With that said he told me to start at $75.00/hr and I would stay busy all day.

For most of the projects I am working on today I bid by the square foot. But I have never got $3-$5.

http://www.bowerseng.com

 

[SteelPE]

fastboater

How long ago did you start your business? I would like to get off on the right foot, but I also don't want to under price myself because my clients will get used to that price and it will be impossible to increase in the future.

 

[fasboater]

I have been on my own for a little over a year now. I was lucky when I started. I had a fairly large construction crew that was well established in the Chicago area that was willing to help me out. They told me where they needed to be and how much money they had in the project for my portion of the engineering and I backed into from there. I do have a client that I still design for that I originally went in with the $75.00/ HR they are constant and I have got the work dialed in. Its good constant work.

As cass mentioned if you have a good relationship with these clients, simply ask them where you need to be. I don’t see any issue with that. Just don’t get into the weeds with XYZ bid this can you beat it.…

http://www.bowerseng.com

 

[ornerynorsk]

Over the course of 30 years, I have done the self-employment thing no less than 6 times. 4 of them were a "paid education" shall we say. 1 was marginally profitable, and my last venture is quite profitable. Hit me on the head with the obvious, and I eventually "get it", one might say.

I caught a tone from your postings and replies as to what I believe is potentially the most serious mistake you can make in business, and that is under-charging, or trying to be significantly cheaper than your competition.

All other factors aside, assuming that you are fully competent, can make the business connections, and can maintain your network (human network!), one needs to understand that there exists a mentality amongst decision makers that paying too little implies a lack of value or quality, even when it may not. Also, it is very difficult to change your pricing significantly in a short amount of time should you discover that you are way off the mark.

Don't cut yourself short. It's easy to say to yourself, "it shouldn't cost that much", but in reality, you are going to discover that your overhead and incidentals really add up. There are a ton of things that you have at your disposal at your employer that you maybe taking for granted, and they all cost real dollars to put them into place.

This is just my 2 cents. Best of luck to you!

It is better to have enough ideas for some of them to be wrong, than to be always right by having no ideas at all.

 

[Ron]

Would you guys stop "bidding" on projects!! That's for contractors. Convince the potential client that qualifications based selection is much better than bidding. Ask if they are willing to bid out their next medical procedure.

We're professionals....treat yourselves like it so that others will.