How do you charge for tract homes?

[alexlu168]

I normally do custum homes and additions, which I would charge it base on square footage. However, I just got a tract home (12 total homes, 3 elevations) for bid. I'm just woundering how do you normally charge for tract homes. Obivously, I can't charge it base on the square footage and multiply it by 12 times. Is there a percentage you guys charge per additional home?

Thanks,

Alex

Thanks,
Alex Lu, M.S., P.E.

http://www.geocities.com/alexlu713/

 

[pmkPE]

What are you offering in the way of engineering services? What would your "competition" charge?
I am assuming that you are providing structural engineering design for houses? Where are you located that an architect or a spec house contractor would require an engineer's services?

Please provide more info.

 

[alexlu168]

Yes, it's Structural engineering for the house. I have no idea what others charge on tract homes. I'm located in Corona, California.

Thanks,
Alex Lu, M.S., P.E.

http://www.geocities.com/alexlu713/

 

[pmkPE]

Try the fiollowing link which is used by many California SEs:

http://www.seaint.org/sealist1.asp

 

[boo1]

Consider charging your normal fee for the first house. The a smaller charge for changes and additional plan stamping.

 

[alexlu168]

Thanks

Consider charging your normal fee for the first house. The a smaller charge for changes and additional plan stamping.

Actually this is what I was trying to do. But how small is smaller charge? Because there're more liability involved. Is there a rule of thumb to charge a percentage of the normal fee for each additional house.

Man, this is making me crazy ;(

Thanks,
Alex Lu, M.S., P.E.

http://www.geocities.com/alexlu713/

 

[pmkPE]

Do the contractor(s) that you are working for charge less per house the more they Construct? Do you know what your liability is? What does your contract say? More importantly what does your contractor's attorney say if and when there is a structural failure?

 

[jheidt2543]

alexlu:

My suggestion is that you break your fee down into the man hours required for various functions of the work and price them individually, as an example maybe:

1st House 2nd House etc.
Code review
Loading definition
Foundation design
Framing design
Specifications
Drafting
Shop drawing review
Field inspection
Contingency

Then, see how this compares with your normal pricing. It should give you an idea of where you will be spending your time on the additional units.

Just a thought!

 

[boo1]

The liabilty is the same for all the homes.

jheidt2543 good layout, consider adding a line for liability and risk (to me is the biggest item).

 

[pmkPE]

Liability is the same, so why charge less? Do you have errors and omission insurance? Is this the only work that you do? (houses I mean). If not your insurance premiums can be affected by increasing your exposure to various higher risk type projects. What does your underwriter have to sy?

What is the reputation of the contractor(s) that you are offering your services to? How long have they been in business under the same name? Many contractors in my area after they complete a subdivision, dissolve the company and start a new one. (I wonder why?)

 

[boo1]

LAW SUITES

More lawers than engineers in the US

pmk, most builders would balk at charging the same for each job. We want to get the jobs, so some discount would be a compromise.

 

[pmkPE]

BOO,

We are our own worst enemies. When is the last time you or anyone you know negotiated with their attorneys or doctors over price? Imagine you are in an accident and you need qualified medical assistance - do you seek bids? Do you think Johnny Cochran gave OJ a discount because he could have shopped around?

Back in the '70s the Department of Justice made the engineering and architectural societies stop publishing recommended fee schedules. However, they say we can't talk about fees (some engineers I know think it is taboo). Look at the surveying profession, in my opinion, they have gotten to the point that they keep cutting their prices, now it is impossible for them to honestly provide the due diligence in their work to provide a deed for $125 - $250. That is the going rate in my area, We had a registered land surveyor in house and I know first hand that you cannot provide for $250 the services of a two man survey crew to survey a boundary, after obtaining the deed from the court house, and then writing and drawing up the required documentation while making a profit.

I know we all have to eat. But we need to stick together and not cut each others throats like our collegues in the surveying field have done. I am not even suggesting that you or Alexlu is but we need to have alternative reasoning to deal with people, contractors etc. that think of us as a commodity. We are NOT! We provide very important services for the safety, health and welfare of the public at large. Again, if a disaster occurs, is Alexlu covered even if the fault lies with poor construction?

 

[alexlu168]

pmk, most builders would balk at charging the same for each job. We want to get the jobs, so some discount would be a compromise.

This is correct. Normally, if the designer/architect/contractor wants to reuse the custom house I have engineered, I would charge them 50% of the original fee they paid for, since I'm not doing anymore work, and the 50% fee would to cover the liability and stamp & sign.

However, tract home is different. They basically only need one engineered plan and submitted to the city's building and safty department as a tract home. So that they can building as many as they filed for. I cannot justify billing them 100% for the 1st house and 50% for each additional tract. I will not get the job if I bill this way. But I can't just let them have the additional house for free (almost free), either. Since each addition tract they build, my liablility goes up more. Maybe I should just call around and see what others charges for around here.

BTW, my insurance company just asked our estimate projects per year. Because my 2 partners and I just started this structural engineering firm in late Feb. 2004, so the company doesn't have an actual amount of projects to base on from the previous years.

Thanks,
Alex Lu, M.S., P.E.

http://www.geocities.com/alexlu713/

 

[pmkPE]

Let nme add that OJ wanted the best defense that money could "buy". What does the contractor want? Perhaps a signature to spread the liability out, or just a seal that is part of the construction permit process? After all aren't all engineers equally qualified (like any other commodity)?

 

[alexlu168]

pmkPE

I really hope every engineers think like you do. We have a lot of "one man show" company, which most of them works at home or just a side job, there rate is rediculusly low. It's very hard to compete with them since we have a lot of overhead (rent, insurance, utilities,....) then they do.

I remember getting a bid to an architect, it was a 3 story 8000 sq. ft. custom home. The architect told me this guy gave him a quote of $1500 engineered and drafted. It is impossible for us to match that type of price. It's less then 1/4 of the fee for us to engineer it, which doesn't include drafting. It's very hard to compete if the difference is that wide.

Thanks,
Alex Lu, M.S., P.E.

http://www.geocities.com/alexlu713/

 

[pmkPE]

Alexlu,

sorry I missed your previous post that referred to "tract" homes. This is not my line of work and therefore I thought each design would be unique or at least have a variety of designs involved. Perhaps for the majority of your services you could charge lump sum ( plus whatever discount you think is warranted). However, I would recommend that services during construction such as inspection be based on an hourly rate so that you are not conflicted with budget concerns if and when you find they didn't construct per your requirements. This is therefore incentive to the contractor to do the job right the first time because not only is your time money but so is theirs!

Again, Good Luck!