333OnlyHalfEvil
Structural
Can engineers contract for an entire construction project if I hire all the appropriate licenses to do the work?
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Contracting for the Whole Job 1
- Thread starter 333OnlyHalfEvil
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SlideRuleEra
Structural
To do this, you will probably need a contractor's license yourself. See US Contractor's License Reference Site.
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HalfEvil.....keep in mind that if you have professional liability insurance (hopefully you do), it is based on gross revenue, not engineering net revenue so you might be shooting yourself in the foot by subcontracting such high ticket stuff as construction. Also, as SRE notes, you probably have to be licensed in your state to offer contracting. In my state, that is the case.
What we have done is team with a contractor and the owner has agreed to signed two contracts (one for construction and one for professional design services and construction phase services (contract management, special inspections, etc.)). The owner knows upfront we are working with a specific contractor i.e. initial engineering scoping meeting) and we let the contractor know upfront that our responsibility is to the public and the owner, not to their bottom line. It has worked well in that we learn better construction techniques and make better designs for more economical projects that are Code compliant. We also have the architect as our subcontractor and we as the engineer lead the design side of the project. The vast majority of our projects are industrial and it has worked well. This can help avoid some of the issues discussed above with respect to licenses and the extra E/O premiums. The most important thing is that you as the design professional recognize that your responsibility is to the public safety and to the owner (in that order) and not to your contractor partner's bottom line. Obviously don't do unnecessary things to hurt your construction team member. Often we work with a multitude of contractors that the Owner likes (some owners like a specific contractor while others prefer another) and we all get together and work through the project from day one with the Owner saying this is what I need and you two (contractor and engineer) get me what we need/want. Obviously this doesn't work in every case and we also do the standard design/bid/build work but it is never as smooth for us. We are very lucky to have clients that appreciate the team approach and work very hard to keep those relationships.
To answer your question it depends on the state and licensing requirements but do you really want to be holding the entire bag for the project unless you are a large EPC firm (AMEC, Flour, etc.) with deep pockets? Can you make good on unforeseen conditions or changes that the owner won't pay for? I used to work for a company that designed and built pulp mills (an OEM) and we had 3 different construction companies under the parent holding company and leaned a lot about these risks. Really think about the risk to reward before you jump into this and there may be other ways to achieve the same goal.
I hope this helps.
Patrick
To answer your question it depends on the state and licensing requirements but do you really want to be holding the entire bag for the project unless you are a large EPC firm (AMEC, Flour, etc.) with deep pockets? Can you make good on unforeseen conditions or changes that the owner won't pay for? I used to work for a company that designed and built pulp mills (an OEM) and we had 3 different construction companies under the parent holding company and leaned a lot about these risks. Really think about the risk to reward before you jump into this and there may be other ways to achieve the same goal.
I hope this helps.
Patrick
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- #7
333OnlyHalfEvil
Structural
People talking about the contractor's license:
Yeah, I was looking at that myself but it seems like it's more to distinguish licensed builders from nobodys. General contractors and their employees can only do rough carpentry framing and they have to sub-contract out all the rest of the disciplines. As an engineer, I can already contract, why should it be a problem if I do the entire job and just license out all the appropriate trades plus carpentry?
I kinda just feel like I'm baby-sitting people and are dealing with a bunch of problems that wouldn't be happening if I had more control. It's a pain-in-the-butt dealing with everyone else's bottom lines too. I got people trying to build the whole project without calling me once and people lying to me. I feel like I'm basically carrying the whole bag for the project anyways since I'm the "engineer", and I hope judges uphold limited liability clauses. Also, I'm working with companies where people with no construction experience are managing projects/subcontractors.
Thanks for pointing out the thing with the insurance, Ron. I was hoping to increase my net by increasing my gross, plus I could market for many more trades/disciplines and just subcontract work and learn as much as i can about many different things. Also, it would increase the number of things I could market for. I could also only do the good/high pay/interesting projects myself. Do you, or anyone, know how much it would increase your insurance?
I'd be holding the bag for the entire project, but, would I really? Would I be anymore at fault if I just subbed out the engineering work and then handed his stamped set over to a contractor to build? if I did only the engineering versus if i did nothing and i was just the guy managing the project versus if I was the guy who did the engineering and built it?
Yeah, I was looking at that myself but it seems like it's more to distinguish licensed builders from nobodys. General contractors and their employees can only do rough carpentry framing and they have to sub-contract out all the rest of the disciplines. As an engineer, I can already contract, why should it be a problem if I do the entire job and just license out all the appropriate trades plus carpentry?
I kinda just feel like I'm baby-sitting people and are dealing with a bunch of problems that wouldn't be happening if I had more control. It's a pain-in-the-butt dealing with everyone else's bottom lines too. I got people trying to build the whole project without calling me once and people lying to me. I feel like I'm basically carrying the whole bag for the project anyways since I'm the "engineer", and I hope judges uphold limited liability clauses. Also, I'm working with companies where people with no construction experience are managing projects/subcontractors.
Thanks for pointing out the thing with the insurance, Ron. I was hoping to increase my net by increasing my gross, plus I could market for many more trades/disciplines and just subcontract work and learn as much as i can about many different things. Also, it would increase the number of things I could market for. I could also only do the good/high pay/interesting projects myself. Do you, or anyone, know how much it would increase your insurance?
I'd be holding the bag for the entire project, but, would I really? Would I be anymore at fault if I just subbed out the engineering work and then handed his stamped set over to a contractor to build? if I did only the engineering versus if i did nothing and i was just the guy managing the project versus if I was the guy who did the engineering and built it?
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333OnlyHalfEvil said:
To some degree that is correct; however, that's a relatively important distinction. Being licensed comes with a duty to follow the law for contracting in the respective state. While states in the US vary in their licensing requirements, all provide some level of protection to the general public.
Many design and construction defects are never brought to light. When they are; however, you will wish you had followed the law, building code and plans and specs to the letter! Your liability can be tremendous. Don't consider that being a general contractor is necessarily a simple task.
This is not true. In most states, General Contractors can "self-perform" most of the construction. They are only required to subcontract separately licensed disciplines such as electrical, HVAC, plumbing and roofing. If they also hold such licenses, they can perform those tasks as well.
Again....not the case. An engineering license allows you to practice engineering, not General Contracting. I know of no state that allows a licensed engineer to serve as a General Contractor, unless the engineer also holds a GC license. If you offer to construct the project under a contract you are offering General Contractor services and if you're not licensed, you can likely be prosecuted for unlicensed contracting. That would not be good for your engineering reputation either!
I offer these items from the perspective of a licensed engineer who is also a licensed General Contractor and a licensed Roofing Contractor. Further, I teach Construction Management at a regional university in the southeast US and my primary engineering practice is structural and construction forensics....I know construction defects reasonably well! I do not offer General Contracting services nor roofing services as engineering is my primary business focus. I am a firm believer that each should be kept separate for better protection of all involved.
SlideRuleEra
Structural
Take Ron's comments seriously, he knows what he is talking about.
In the past, I was a General Contractor (Highway Bridge and Heavy Constitution) and worked exclusively as one for several years. However, was also a Licensed Engineer at the same time.. this was just a coincidence and had no impact on being a GC. As a GC, there are all sorts of duties and obligations that are your responsibility... even if you employ subcontractors for all work. Examples are:
1. Obtaining necessary permits and business licenses.
2. Workmans compensation (if a subcontractor's employee is injured on the job, in certain circumstances it can be the GC's problem).
3. General liability insurance (if the general public is injured... the GC's problem, too.)
4. Making sure that all workers' withholding tax, social security (including the employer's match), unemployment contributions, etc. are being deposited in a timely manner.
5. Coordinating subcontractor work.
Those are just a few items, there are plenty more. I spent about 50% of my time performing the administrative work required to run a small business - not in the field or other activities, such as bid preparation.
In the past, I was a General Contractor (Highway Bridge and Heavy Constitution) and worked exclusively as one for several years. However, was also a Licensed Engineer at the same time.. this was just a coincidence and had no impact on being a GC. As a GC, there are all sorts of duties and obligations that are your responsibility... even if you employ subcontractors for all work. Examples are:
1. Obtaining necessary permits and business licenses.
2. Workmans compensation (if a subcontractor's employee is injured on the job, in certain circumstances it can be the GC's problem).
3. General liability insurance (if the general public is injured... the GC's problem, too.)
4. Making sure that all workers' withholding tax, social security (including the employer's match), unemployment contributions, etc. are being deposited in a timely manner.
5. Coordinating subcontractor work.
Those are just a few items, there are plenty more. I spent about 50% of my time performing the administrative work required to run a small business - not in the field or other activities, such as bid preparation.
I believe in California, there is an exemption for work on property owned by the person that would otherwise need to be a GC, i.e., I could be my own GC for work done to my own house or property. There may be other reasons for wanting a GC, such as experience, and knowledge about what permits to pull, etc.
TTFN (ta ta for now)
I can do absolutely anything. I'm an expert! faq731-376 forum1529
TTFN (ta ta for now)
I can do absolutely anything. I'm an expert! faq731-376 forum1529
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- #11
333OnlyHalfEvil
Structural
I don't know. The sources I'm looking at seem to say it's okay:
Professional Engineers Act Section 6731 (b) and (f), and 6731.3
International Federation of Consulting Engineers
Contractor's License Board General Contractor
Professional Engineers Act Section 6731 (b) and (f), and 6731.3
International Federation of Consulting Engineers
Contractor's License Board General Contractor
Nothing in California's engineering law allows you to serve as a contractor. It allows you to supervise construction in an engineering capacity, but not as the contractor. You must still be licensed as a contractor to do so.
California's contracting law is about as poorly worded as I've ever seen! Read it carefully again...it only limits you to framing if you don't have at least two other unrelated trades involved. In a construction project you have numerous unrelated trades involved as listed in their subcategories. In any case, you still need to be licensed as a contractor.
As an engineer, you likely meet their qualifications for licensure. I doubt that you can pull a permit for construction without a contractors license (except for work on your own residence).
California's contracting law is about as poorly worded as I've ever seen! Read it carefully again...it only limits you to framing if you don't have at least two other unrelated trades involved. In a construction project you have numerous unrelated trades involved as listed in their subcategories. In any case, you still need to be licensed as a contractor.
As an engineer, you likely meet their qualifications for licensure. I doubt that you can pull a permit for construction without a contractors license (except for work on your own residence).
I agree with all of the opinions shared here advising that engineers offering construction services should be licensed as general contractors.
I would like to tag onto this discussion to ask for opinions on a pet peeve of mine, which is the inverse of the OP's question. That is, what about contractor's offering engineering services without an engineering license, or namely the common practice of design-build. I know it is "done all the time", but why and how is it not a violation of engineering licensing laws for construction companies to offer engineering services and then sub-contract the services to an engineering firm? How is it any different from a pizza shop or a dry cleaner contracting for engineering services and subbing them to engineers? As far as I know, New York is the only state that I am aware of that takes a firm stance against design-build, and doesn't allow it in the form that it is typically practiced by GC's that are not licensed to practice engineering.
For that matter, I have never really understood why architects are allowed to sub to engineers, unless this practice is presumed to be inherent to the profession and practice of architecture, which I guess is the case. Is the reverse true so that engineers are typically allowed to contract with clients to provide architecture services, and sub them to architects?
I would like to tag onto this discussion to ask for opinions on a pet peeve of mine, which is the inverse of the OP's question. That is, what about contractor's offering engineering services without an engineering license, or namely the common practice of design-build. I know it is "done all the time", but why and how is it not a violation of engineering licensing laws for construction companies to offer engineering services and then sub-contract the services to an engineering firm? How is it any different from a pizza shop or a dry cleaner contracting for engineering services and subbing them to engineers? As far as I know, New York is the only state that I am aware of that takes a firm stance against design-build, and doesn't allow it in the form that it is typically practiced by GC's that are not licensed to practice engineering.
For that matter, I have never really understood why architects are allowed to sub to engineers, unless this practice is presumed to be inherent to the profession and practice of architecture, which I guess is the case. Is the reverse true so that engineers are typically allowed to contract with clients to provide architecture services, and sub them to architects?
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