First solo project 5

[AaronMcD]

It's small. Just an expanding a window in a first floor red brick bearing wall. It's below an existing window and will only receive one floor loads. Seems simple enough, and I am assuming a couple thousand should cover it.

But I have zero experience quoting projects and am worried. I guess only because it is my first quote. Do you think that amount will cover me? I don't mind being a bit screwed on my first quote, but don't want to botch it too bad and be working for weeks on this.

Thanks

http://www.hellodwell.design

 

[MIStructE_IRE]

You have no basis for that fee whatsoever there.

You have your set hourly rate I presume? Estimate how much it will cost you by multiplying that rate x anticipated time for initial meetings/design/checks/drawings/inspections/dealing with queries/admin/travel/expenses etc and add say 10% contingency.

“A couple of thousand” is nothing but a guess.

 

[fel3]

Figure out the tasks you will perform, then estimate the hours you will spend on each one (don't forget project management; coordination with client, subs, agencies, etc.; meetings and site visits; and so on). Then, add a small contingency, especially if your contract will be lump sum or time-and-materials with a max.* My last firm typically added about 5% for a contingency; my current firm doesn't have a fixed amount. Multiply the total hours by your billing rate, then add non-labor costs to get the fee. If you had several people working at different billing rates, the basic procedure is the same, but you multiply each person's hours by their billing rate before totaling everything.

BTW, some people estimate design fees based on percentage of construction, number of hours per drawing sheet, etc. These techniques are fine as a rough cross-check, but I would never use this method to come up with my actual fee. ALWAYS base your fee on hours required, at a minimum. In some cases, the value of your work will exceed the fee you calculate based on hours. If so, you would be justified in asked for the higher fee.

Non-labor costs might include one or more subconsultants (e.g. I sub out surveying work a lot and I mark up their fee by 10% to 15%), mileage and meals for day travel, air fare and hotels for long-distance multi-day travel, copying, etc.

Some tasks are pretty easy to figure out. For example, a typical project kick-off meeting with the client might take an hour or two depending on the size and complexity of the project (I've never had one go more than six hours, but that was for a 5000-bed state prison and the meeting involved more than a dozen people). A typical site visit might be a similar duration, but could be longer. For meetings and site visits, add reasonable travel time and possibly one or more meals.

Some tasks are hard to figure out. For example, how much time will you need to spend to get agency approval for your drawings? Unless you have a long track record with a particular agency, I would consider this question unsolvable. I always do this type of task on a time-and-materials/no max basis instead of lump sum. Another example: reviewing sloppy submittals during construction can take up to three times longer than well-prepared and accurate submittals. Here, I count all the submittals I expect to receive, apply an average number of hours based on my experience,** assume a percentage of the submittals will come for a re-review (per experience),*** apply a small average number of hours for the re-review (also per experience),**** then call it good. My protection if the hours go crazy is to specify that submittals that require more than two reviews get paid for by the contractor.

There is so much more I haven't covered here, but this should give you a good start.

========================
* Lump sum is the better of the two. BTW, I have had two open-ended contracts that were time-and-materials with no max, but that is very rare. In both cases, I gave the client non-binding estimates at the start of a task, which were typically nebulous at the start and we refined them as we dug deeper. Then, when the task was completed, I provided a full accounting and explanation for my time. It was similar to attorneys that work on retainers with no fixed scope.
** For my type of work, the average submittal takes 2.5 to 4.0 hours to review. Some submittals (e.g. pumps and welded steel water tanks) always take longer so I estimate those separately.
*** I typically use 25% to 33%.
**** I typically use 1.0 to 1.5 hrs.

==========
"Is it the only lesson of history that mankind is unteachable?"
--Winston S. Churchill

 

[AaronMcD]

"You have no basis for that fee whatsoever there."

No one ever has any basis for a fee other than what they think they can get/need for the time put in, even if it is calculated using an equation involving dollars per hour. It should always be "reality checked" with what the project may be worth to the client.

"A couple of thousand is nothing but a guess."

As is guessing on how many hours it will take and multiplying it by some arbitrary hourly fee. I assume that over time and many projects a person will have the data available to set an hourly fee such that, when multiplied by the hourly guess, it gets them enough to earn a living after expenses. But sure, any guess I make now is less accurate than the guess of someone with 100 quotes and projects completed and the data to back up future guesses.

This is engineering - there are guesses and more accurate guesses. In the case of my OP, "a couple thousand" is a guess based on a guess about hours and a guess about what someone might be willing to pay hourly, a guess on what someone might be willing to pay total, and a guess of what I will be satisfied with. Having not done this before, picking some hourly number and multiplying by an hourly guess is likely to yield a larger number, which may or may not be necessary for a first solo job when I'd rather have a happy client than anything else.

Just wondering what others opinions are as to my first guess.

fel3, thanks for all the info, I'll have to spend some time going over your list.

http://www.hellodwell.design

 

[NorthCivil]

AaronMcD

I don't see how you can ask for tips on estimating quotes, and get upset when offered advice, be it criticism or otherwise.

Personally, my method of giving a price:

1. Never offer a fixed price, but a fee estimate, based on the information available up to date X. i state this explicitly
2. include the breakdown of the price to produce a finished drawing
3. include X number of site visits (generally what i expect +1), additional visits charged at $x per visit.
4. extra design work will incur hourly rate of $X per hour

I include a note: work installed substantially different to the design documents produced will likely incur extra charges, both design hours and site visits.

i usually knock the price of the visits I dont do off the final bill, clients like that.

 

[AaronMcD]

Thanks NorthCivil.

To be clear, I love advice. I even asked for it. What I don't like is someone assuming I don't understand that rate x time is a thing, and accusing me of "guessing", when in reality it's always guessing.

http://www.hellodwell.design

 

[CANPRO]

Aaron, congrats on going out on your own. I took a couple year hiatus from consulting, but am getting back into the world of quoting projects, so I am in a similar situation to you.

In addition to the obvious (est. eng hrs) x rate + (est. drafting hrs) x rate, I strongly suggest adding in a couple hours of admin time to cover writing proposals/invoices. Can't really comment on the hours, as I'm not sure how extensive this window expansion is - but if you need to go to the job site to review and then again for an inspection, you could chew up the $2000 budget pretty quick depending on your travel distance.

It sounds like you're a one-man operation. I'd say price this very fairly - don't sell yourself short on eng/drafting time, add in admin time, etc...and you're still going to be more competitive than even a small consulting firm. I can guarantee that even the 2-5 person operations are adding in overhead, travel time, admin time, etc... at probably higher rates than what you're considering. I've found myself under-pricing my work and realized that I could be charging probably 50% more and still offer more competitive fees - and in my humble, unbiased opinion, better quality work as well.

 

[Ron247]

Here is my advice based on years of screwing up in some shape, form or fashion when I had to estimate cost.

1. You always estimate time, not money. Time is the estimate, cost is mathematics.
2. Next you estimate your competitions time. This one took me a long time to figure out. There are things you will are faster than the competition and things you will be slower than. There are some things I do that I am 3 times faster than my competition and some things I would be much slower than them. If I quote based on my time only, I may be charging $2,500 for a service others are getting $4,500 for. So once you figure your fee (time x rate), you compare that to what you think your competition may get for the same service. I tend to stay away from the ones I cannot be competitive on UNLESS I decide to invest some time into learning how to do something faster.
3. Consider some minor investment into learning on every project. It may be creating some standard details or making a spreadsheet for brick headers to be used in the future.
4. As already advised, include admin costs.

 

[ldeem]

Try to be realistic in the time it will take to do the project. In particular you need to consider long it will take you to understand the existing conditions - do you have accurate existing drawing? will it be all site visits? what about accessibility?, etc.

Then consider that if you have never done a project like this before you will need to draw up all the details instead of having a library of past projects to draw from. I suggest spend the time on this to draw details and file them in a way you can reuse them in the future. This will likely mean the project takes longer than you expect but the next similar one will go a lot quicker.

 

[Rabbit12]

AaronMcD, I think what the second poster is trying to say is we have no basis to know how far $2000 goes. If your hourly rate to cover insurance, computers, programs, etc. is $500 that $2k doesn't get you much. If it's say $100 it gets you a lot farther. Depending on where you're at in the country you're hourly rate can change dramatically.

Try not to be so defensive, that post wasn't that critical.

 

[glass99]

There other aspect to this is there tends to be an accepted market rate for certain well defined services, irrespective of your bottom up hourly estimate.

Also: you may have little experience quoting projects, though presumably you have done engineering before, so you have some idea of how long things take. About 12 hours seems reasonable to me for an opening in a brick wall, but you should have done something at least similar to this before that you can use as a benchmark. I like to just visualize all the actual things we will be doing. You make a little "movie" in your head of how the job will go.

 

[AaronMcD]

How about "not to exceed" quotes?

The internet warns against them, but in reality don't we always eat through the entire estimate anyway? So in reality wouldn't it end up being the same as a fixed fee the vast majority of the time? What about submitting an estimate, with a NTE amount as some percentage, say 135% to cover in case of mis-judging the estimate, but not so much that the client will balk? The main issue I see with this is if I quote like this and end up always charging the NTE amount, it might look bad.

http://www.hellodwell.design

 

[darthsoilsguy2]

Oh God... How i hate pricing little one-and-done things. i only like to do this for repeat clients i work on misc svcs with. no matter how many i mess with i don't feel comfortable where those small new projects will go until i'm about $500 in, and more if it is out-of-town. Designers joke about Contractor Misinformation a lot... but i feel like we don't joke about Owner Misinformation enough. (But that won't stop me from returning a call Monday to someone with a condo who has HOA drama )

$2k seems locally OK or maybe even Market-Low to me for a one-and-done project like that. in my locality (my 3br house mortgage is $1100), i would imagine $1k being the top unless there is an architectural element to the structural design. Good Luck with the new business.

 

[KootK]

How about "not to exceed" quotes? The internet warns against them...

As do I. I learned this same thing, far too late, by way of those PSMJ project management seminars. And, now that I'm on my own, I that thank the powers that be for the revelation almost weekly. Some of what I'll say here will ruffle feathers so just imagine there being a perfunctory "in my humble opinion" in front of every damn thing.

1) Hourly not to exceed sucks because you've basically given away all upside and assumed plenty of downside. Kick some ass in terms of hours? Too bad, you just get your "fair" rate which is only fair if you don't ever loose money on any of your other jobs which, of course, is false probably 1/3 of the time. Get slaughtered in terms of hours? Tough, you'll eat them anyhow. It's not as though just failing to complete a project is ever a viable option and most clients will perceive "not to exceed" as "I'm getting it done for that much unless somebody gets hit by a comet". No doubt this is what you read online.

2) There's only one real pricing algorithm in effect and it is this: WHAT. THE MARKET. WILL BEAR. The end. Everything else is just an indirect exercise to arrive at this. As mentioned above, when you calculate your effort x rate, what you're really doing is estimating your competition's likely fee. Like everything else in the world of economics, your fees are really a reflection of supply and demand. If you were the only SE in town, you'd be tripling your rates to get to doctor/lawyer numbers in a heart beat and you know it. As would I. So, often, I don't screw around with trying to carefully estimate effort on small projects. I ball park it and multiply it by 1.50 or 2.00 and go for the jugular. This has the advantage of not having to spend a lot of time sweating over your fees.

3) Engineers, by their very nature somehow, are hopelessly optimistic with their hours pretty much without fail. And this only get worse with time rate jobs in my experience. When I do lump sum on little jobs with scary, ill-defined scopes, I find that this happens:

a) It forces me to not undervalue my services because I want CYA for contigencies. I routinely come up with numbers so large that I'm embarrassed to present them.

b) 95% of the time, nobody bats an eye at the numbers that I'm embarrassed to present.

c) 2/3 of my little jobs work out great financially and, frankly, outperform my larger jobs by a huge margin.

d) 1/3 of my little jobs still go south but that's okay because I still garnered the upside from the 2/3 that didn't.

e) I have fairly happy clients because, often, clients value cost certainty as much as cost itself. They'd rather pay me more and not have to worry about me making a play for extras later. And this, conveniently, is s service that I can provide. Ultimately, all business is about trading risk for profit. And this is that. If you're just trading effort for hourly, that's called having a job, not being in business.

 

[KootK]

My comments above all point towards what is often termed value based pricing. Hours x rate is mostly a sucker's game unless your working a professional monopoly which, sadly, we are not. What you really want to do is determine what value your service truly holds for your clients. Along these lines, also consider the need for speed. For many of my smaller jobs, the main lever for customer satisfaction is simply how fast I can get it done. I do construction engineering with a local contractor who's basically told me:

1) I don't need to charge them less than $2,500 for anything involving a stamp. A car ride and a tire kick is still $2,500.

2) If I can't come to see the problem within two days and have it dealt with within four, I shouldn't bother returning the call.

I love it. And the value of my service has nothing to do with the size of my giga-brain nor the hours I that spend toiling away. It has everything to do with a) my having a stamp and b) my willingness to make time for somebody's emergency. I'm like the Ray Donovan of structural engineering.

 

[JoelTXCive]

I work for a medium size engineering firm.

Some people in my office do very intricate budgeting on the front end with fancy applications of overhead and admin fees.

Other people literally just do "$XXXX per sheet" and estimate the number of sheets required.

I fall in the middle of those extremes. I do believe in trying to get as much on the front end as possible, since going back and asking for more money 1/2 way through the project is always difficult; if not impossible.

 

[Ron247]

Thank you KootK for the sober statements on what I have called "Value Engineering" in the past, and you are calling "Value Based Engineering". The first time I defined it in a company (1989), I was somewhat laughed at. My example was this. You are so good at steel design, you could look at the original Empire State Building and specify every beam and column in 3 hours. You were so organized from previous projects, you could pull all the details needed to connect the steel components you spent 3 hours sizing in another 12 hours. At the end, you only charge 15 hours of engineering time? That is the opposite of value based engineering.

If YOU choose to only charge by the hour for what you do, you will inevitably perform $50,000 worth of work for $12,000 when you are really good at what you do, and lose every job when it is something you may not be good at.

Another comment on that direction of the topic is this. Sometimes you do $40,000 worth of work in 10 minutes that you do no get paid for (other than the 10 minutes) and later do $10,000 worth of work in 70 hours on the same project. Most of us have walked into a project where the Client has done their own problem solving, looked at their solution, immediately thought of a better solution and made less money in the end if we only charged by the hour. I have done this, and so have many of us.

 

[TLHS]

I basically have a minimum that I give as an estimate for one and done stuff for my clients. There's a point where it's not worth it for me to do it. I'm at a larger company, so there's a bunch of overhead involved with even doing a job, but the same goes for anyone.

All jobs have liability, paperwork, record keeping and similar. You're going to have to communicate with the client, and probably have some discussions back and forth after you've given them an answer. All work takes a minimum amount of effort in familiarizing yourself with the context of a problem. Some of that gets smaller with clients that you're familiar with.

That baseline cost will be different for everyone, but you should be able to figure it out reasonably quickly.

Above that number, estimate based on sheets and hours and whatever other number you want. However, it's almost certainly not going to be worth doing a one hour job for anyone. For some people, a four hour job might start making sense. For others it might be a forty hour job. That'll depend on how you structure your business. It'll also depend on your market.

I bring this up, because it's completely possible that this might govern the type of job you're talking about.

The other thing about setting realistic rates is defining your scope.

Set clear definitions on what you're doing and what you're providing. More importantly, clearly explain what you aren't providing, since that's what people tend to get stuck on. I'm not saying to cover your butt. That's not the point. Communicate clearly. If you clearly define your scope you can control your costs and you can give clients what they actually want. It also helps you plan and think through the project.

Also, label any risks. If you label risks, you can more easily ask for extra money if you encounter them. Risks should be things that are outside of your control and that can be clearly explained.

Regardless, you're going to screw some of this up. To some degree you're just going to have to feel it out as you go, since this kind of pricing tends to be very local.

 

[glass99]

The difference between not to exceed and lump sum is in principle that they will be a bit gentler with you on additional services requests with NTE. That said, I think they are a really raw deal for consultants. It should be either hourly with an uncapped estimate, or lump sum.

 

[AaronMcD]

Hey thanks for the responses. I've been crazy busy trying to keep my clients happy - that's priority number one at this stage I think. My wife and I both also came to the conclusion that I should have minimum fees. I'm thinking a minimum for single-issue/detail jobs and another minimum for retrofit/remodel/new stuff.

For now I'm helping this architect get a second story calced out (more urgent than the OP job). He doesn't want drawings and didn't like my proposal dollar amount. Instead he wrote me a check for a much smaller amount, and asked for calcs only for certain items (I feel I need a disclaimer on my calcs for this though). I'm happy to oblige at this point in my solo career, especially with the up front payment. He seems happy to pay hourly as long as the hours remain minimal, and he has other work for me after this.

I am spending a good third of my time finalizing my home office setup and getting my cad and computers set up, but it's pretty rewarding knowing that it's already paid for (this job is basically paying my major setup costs).

http://www.hellodwell.design