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Structural Fee - Price this project

Structural Fee - Price this project

Structural Fee - Price this project

(OP)
Recently our firm put together a structural proposal for a 30 story office, retail, mixed use high rise in the US.  Total square footage is around 700,000 with about 100,000 of that being parking  The structure is rather high end – Post Tension Floors, Concrete Frame, Deep Foundations, high seismic, high wind, etc.  However, most floor plates are fairly uniform.

My questions is – not knowing  a construction cost, how would you price this project for the structural design.  For simplicity, assume site visits, inspections, etc are not included in the fee.  The reason I ask is because in the past our firm has typically been known as winning projects due to our very low fees.  However, we were told with this project that we were under-bid by a very large firm who does high-end work around the world.  I'm not sure I'm simply getting thrown a line or if we were really underbid.  If the ladder is the case – I am concerned that the economic downturn has dramatically shifted a lot of firms pricing methods.  

How would you price this project knowing only the above?  Where are your firms structural fees falling on the per sq ft pricing? I realize this varies greatly by building type, location, etc.  

All comments appreciated.  

RE: Structural Fee - Price this project

In my position, I would price the same way now I did last year and the year before. By what we believe it will cost us to do the work. I am with a small firm and believe our fees are reasonable.

I know of several large local firms that have indeed lowered fees on recent proposals. This after laying off staff. The larger firms are trying to survive. My guess is this large firm in your case is working for little or no profit.

We have seen the same in the construction industry, several recent jobs have gone to reputable firms for fees that were unbelievably low. They are looking at company survival, not profit.

RE: Structural Fee - Price this project

Once you lowball you're returning clients will want that lowball.  You can adjust a bit for the depression, but anything beyond that is a bad idea.  That's just how I feel engineering work is more valuable than working serving Big Macs.

Civil Development Group, LLC
Los Angeles Civil Engineering specializing in Hillside Grading
http://civildevelopmentgroup.com
http://civildevelopmentgroup.com/blog

RE: Structural Fee - Price this project

Engineering in the Building Services world has long ago become a "commodity" industry, not just structural, but mechanical and electrical building services as well.  What other profession will provide a fixed fee for an unknown amount of work??  Consulting Engineers in the Buildings Industry do it and we've all become prey to the low fee as the discriminator for services, since there is very little in the eyes of the developers and clients that sets any one firm apart from the others as we are all obliged by our professional duty to provide a certain level of service and code compliance.

As Brandoncdg has stated, once you lower your fees "to compete", it's just a downward spiral from which the industry cannot get back.  You either have to lower your standards and quality of service to be commensurate with the fee, just to break even, or put your imagination on the shelf and crank out stock design material and systems, rather than anything innovative.

RE: Structural Fee - Price this project

(OP)
Thanks for the input guys.  I agree with all of your comments.  Sadly this is where the industry has been headed.  

My post, however, was not necessarily to discuss this issue.  I was trying to get an idea of where firms are currently at with pricing. (Sq foot, % construction cost, etc) I found some old post in 2006 discussing this issue, but I don't necessarily think the fees now apply as they did then.   Recently I've seen everything from $0.30 - $1.95 sq foot for structural engineering services.

Anyone care to offer where they are at with pricing?
 

RE: Structural Fee - Price this project

Here in western Canada, for new work where the basic building design is already established (ie- minimal Architectural changes expected), the going rate seems to be around 6% of 18% of the total project construction budget (18% being the estimated structural cost, which can range from 18% to over 20% of the Construction Budget)but we also have a lot of seismic design to contend with as well.

However- I'm seeing a lot of "risk deferment" and more "performance style" structural packages these days, where the steel supplier is expected to come up with all the detailing, and provide detailed shop drawings for most of the stuff.  Note that I'm in the mechanical building services end, and am just providing an opinion on what I'm seeing locally.

RE: Structural Fee - Price this project

I really dislike sq ft pricing. I assume you're not actually pricing that way, just backing out a number as a comparison.

$0.30 is way too low. I charged more for side work, when I used to do side from home.

For residential I am averaging about $1.40 sq ft, for low to medium rise commercial about $2.10 sq ft.

RE: Structural Fee - Price this project

We do low-rise structures in Florida so our fees may not answer your question.

Generally, for 1 and 2 story structures with 140 mph 3-sec design winds not on piles we vary from $.35/sf on the low end to about $0.75/sf on the high end. For a structure with piles in a VE zone we would probably be between $0.75/sf and $1.00/sf. These fees are very low! We would have been more than twice that amount 5 years ago. I foresee us dropping our prices further to just put food on the table. It is definitely a survival mode.

On a side note, I took a course a few years ago (2007-ish) with a PE in the Miami area who told me a typical structural fee for for mid and high rise projects would be around $0.30/sf.

 

RE: Structural Fee - Price this project

The very large firms probably have access to firms with 400 engineering graduates of the Indian Institute of Technology (I'm a native born white guy but think IIT is probably in the top 5 schools in the world) who make $8 an hour. That might explain it. If you're designing high-rises, you're probably competing with those types of firms for detailing and CAD. There are probably 3 senior structural engineers in an office in Pasadena who review all the work and stamp it.

It's a brave new world out there. You might want to rent Roger and Me.

RE: Structural Fee - Price this project

That's probably a $150 million building.  At 1%, thats $1.5 million, including site involvement.  Should be at least that.  Care to share what you offered?  I wouldn't offer to do the job without site visits.

RE: Structural Fee - Price this project

30 story office building - 900K fee for 70 stories here in Seattle 30 years ago.  

In today's market, at .5% considering repetition, considering a design team of 10 for 6 months, with an anticipated high end project cost of 200 million, 1 million would seem light.  I would have to say 1.5 million as Hokie suggested.  I would also run the fees a couple of other ways too and compare the results.

Mike McCann
MMC Engineering
Motto:  KISS
Motivation:  Don't ask

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