Structural % Of Construction Fee for PLI Carriers

[Guastavino]

All,

I'm curious if your PLI carrier likes to see a certain minimum % of construction cost fee for various projects. Repetitive designs are great because we can lower the fee, but there is a happy medium to find when the construction cost begins to soar. Obviously, the higher the construction cost, the higher the risk taken by the PLI carrier. Based on my experience that seems to land around 0.5% of the construction cost for the structural side. Is that what you all are seeing? what do you see as an absolute minimum?

I've got a repetitive project coming up, but I also don't want to set my fee too low. I'm just looking for ballpark figures as my client got a sticker shock to my first number. I'm OK not taking the job, and I know I can beat the estimate I gave him based solely on hourly work, but the liability is great due to repetition.

Thank you

PS - I posted a similar thread on here and it got deleted. Maybe I posted it in the wrong spot? If so, my apologies. If there is something else I am doing wrong please let me know. I don't want to cause problems.

 

[glass99]

My insurer does ask about percentage of construction, though it would seem to be a sensible thing to ask.

When you say a "repetitive project coming up", I hope that does not mean "prototype design" because that is a scarlet letter to insurers.

 

[Guastavino]

Glass,

Thank you for the reply. And great point, but thankfully, it's not a prototype. Just some apartments where a few of the building units repeat or are mirrored. It would all be on one site and I would be the EOR for all of them, but I would know the construction cost (plus or minus) before getting into it. Thus the question, I know there is repetition, but there is value in my design being used more than once, and that value needs to be paid for regardless of whether or not it takes me more time. The question I'm struggling with is where to cap that limit. I don't want to ask for too much, but I also don't want to take on 3 times the liability because they use the same building three times and not get paid something for it.

Hope that clears things up.

Any other thoughts?

 

[glass99]

Fee's for repeat/similar designs is a very good question, and one which I struggle with myself.

An E+O insurer will price your premium for structural work as a percentage of your fee which should be a raw baseline for you. If something does go wrong, you will also have significant losses in respect to your time, legal fees not covered by insurance, your insurance rates going up, and your reputation. I think these "soft costs" actually are the bigger slice of a repetitive design.

Additionally:
- You do need to do some work for the second build. Make sure there are no interference with mechanical, review the shop drawings, etc.
- One of the big differentiators for insurers about whether something is a prototype design is whether you have CA services.
- You should put a greater degree of effort into developing the first design knowing that it will be repeated. You know, optimize the member sizes, really vet out all the connections, specify what kind of primer on the steel, draw large scale details, etc.

btw: I made a typo: My insurer does NOT ask what percentage of construction my fee is.