Comparing engineering fee quotes – what’s really going on?

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  • Structural : Structural
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  • All : all

So you’ve got two fee quotes from two different engineering firms, and you have to decide which one to appoint.  Now what??

Just so we’re clear on the intended readership and our objective here, let’s state from the outset that what follows has been written chiefly for (i) architects or project managers who procure fee proposals and quotes from structural engineers on behalf of their clients, and (ii) home owners embarking on their residential building project – either an all-new house or an “alterations and additions” renovation.

Yes, there’s admittedly some self-interest and personal bias here, but bear with us and consider our angle – some of what follows is just common sense, but much of it is also learned experience and genuine observations gleaned from decades of providing structural engineering services in the sector we love most:  High-end, quality, architecturally-designed houses.

Partridge is in the consulting game:  People consult us for our services and expertise, and we’re often asked to prepare a fee proposal before we’re engaged or commissioned to do any work.  In many instances, our fee proposal (or quote, if you prefer) will be compared with another consultant’s quote, and we find ourselves in a competitive bid to win the project.   We’ve lost plenty of projects to quotes that were similar in value to ours, and we’ve lost more than plenty of projects to quotes that were significantly cheaper than ours.   We don’t mind it when the former occurs – that’s business, and you can’t win ‘em all.  No problem there.  However, we do raise an eyebrow when we learn we lost a project to a quote that was significantly less than ours.  Not because the client went with the cheaper quote (that’s perfectly understandable, if that’s all that’s going on), but more because the large difference in fee suggests that not all things were equal.  And it highlights to us that perhaps some explanation and guidance wouldn’t go astray…

When you embark on your building project, your architect or project manager will probably go out to two or more consultants to obtain quotes for each consulting discipline.  And this is where things get tricky.  How do you compare quotes from structural engineers, particularly if you’ve never had dealings with them previously?

One of the biggest misconceptions in our industry is that many people think structural engineering is a commodity.  That is, there is a mistaken belief that all engineers are equal and provide exactly the same service; all providing the same solutions and outcomes for a given problem, regardless of their individual experience or the fees they charge.  Nothing could be further from the truth!

Have we opened a can of worms here?  Strap in and buckle up…..

If you were in trouble with the law, you’d want a good lawyer in your corner, yes?  If you were seriously ill, you’d want an experienced, specialist doctor by your side, right?  In both cases, you wouldn’t want an average or run-of-the-mill operator looking out for your interests.  Society accepts that – for these two professions in particular – the more experienced, successful and effective consultants charge higher fees and will be more expensive than their less decorated peers and competitors.   In law and in medicine, the investment in a higher-charging consultant is considered to be “worth it” since you expect a better outcome.  Engineering (and architecture, for that matter) is no different, and yet the general public seemingly struggles to understand this – believing incorrectly that all engineers are charging and supplying the same service and will give you the same outcome.  If you’re going to compare apples with apples, make sure you start out with apples!

The fees that engineers charge are a reflection of their experience, expertise, skillset, resources, and – above all else – their quote is an indication of how much time they intend to spend on your project and how hard they intend to work for you.  Ultimately, consulting engineering is a time-charge business and profession.  No, thankfully we don’t have clocks going off every six minutes like our legal colleagues do.  Instead, prior to being engaged for a project, regardless of whether it’s a competitive bid or not, for most undertakings, we’ll be asked to submit a fixed, lump sum quote for our services.  This means having to predict in advance how many hours will be spent engineering your house; how many different team members will work on the project; how much involvement there will be from senior staff and junior staff; how many meetings we should allow to attend; how many hours it will take us to do our analysis, calculations, and designs for you; and how many drawings, specifications, certificates and reports we’ll prepare for you.

This is thus the first step in comparing and appreciating two different fee proposals from engineers:  The price quoted at the end of the document is not a set market price for a common widget, it’s an insight into how much time will be committed to your project and what will be produced and delivered.  If one quote is for (say) $10,000 and the other is (say) $5,000, is the first firm more expensive, or did the second firm underestimate what’s required?  Or did the first firm allow to deliver something completely different to what the second firm allowed for?   Let’s explore this further…

A higher fee proposal from one consultant is perhaps a reflection that they’ll prepare more drawings and details for you – meaning that your builder will have more information to work with.  This is very advantageous for you as (i) it means the builder doesn’t have to add fat into their tender price to cover for things they can’t see upfront, (ii) it reduces the risk of errors or omissions on site, since the builder doesn’t have to guess or adapt for discrepancies between the architectural and engineering plans, and (iii) it speeds up the construction process, since the details don’t have to be conceived and resolved during the build, and thus there are less delays waiting for instructions. This can also reduce lead times for materials – remember, one of the most expensive things on a building site is time.  (Not to mention other secondary costs associated with time and delays on site – for example, if you’re paying rent to live somewhere else during the build whilst also paying interest and finance on the construction!).

A higher fee proposal might also mean that that particular engineer intends to spend more time on your job and value engineer it.   This means that instead of simply sizing the structural members off a chart or slapping a conservative (i.e. expensive) design on the drawing that they know will work with minimal thinking, the engineer actually intends to work and chip away at your design to make it as efficient as possible.  They’ll analyse the structure in several ways instead of just one, in order to get the most accurate results; they’ll do calculations from first principles rather than just pluck conservative designs off tables; they’ll consider multiple different materials or solutions; and – most importantly of all – they’ve allowed time to liaise with and collaborate with the architect.  (You’d be surprised how many engineers don’t allow for this and then want to charge extra for architectural co-ordination or changing their drawings when the architect gives feedback!)  Value engineering is an important and beneficial process.  It can result in thinner concrete slabs; less steel reinforcement; smaller/lighter beams; and better detailing – all items that reduce the cost of your project!  It’s better to spend $5,000 extra on Engineer A if they give you a design that is $75,000 less to construct!  We’ve said it before, but the construction industry is definitely one field where you get what you pay for, and there are countless pitfalls and opportunities for false economy where trying to save dollars on consultants’ fees can cost you more in the long run.  Yes, we acknowledge that sounds like self-interest and a defence for higher fees, but the corollary to our comment above is pretty simple:  Don’t appoint an engineer who is (say) $5,000 cheaper than the other one if they give you a design that costs you $75,000 more to build!  And don’t believe for a second that every consultant practices or pursues value engineering.

If Engineer A is more expensive than Engineer B, it doesn’t necessarily mean they’re overcharging, or they have higher overheads, or they don’t want your project – all common misconceptions by the public.  If the difference in fee quotes you’re comparing is more than 25%, then it’s more likely to reflect the level of service and product you’re being afforded.   In fact, if the difference in the two quotes is more than 25%, then you’re probably not comparing apples with apples.

If we can make a comparable analogy here, imagine you went to two car dealers and asked them each to quote you for a new car.  If one quote was for $25,000 and one was for $45,000, would you assume both dealers were supplying you with the same vehicle?  No, you’d work out pretty quickly that you were being offered two different products.  It turns out that one was offering you the basic, entry-level model whilst the other was offering you the top-of-the-line model with the better engine, better tyres, and all the extra safety features, additions, finishes and inclusions.  The specs and performance of the two are completely different, which is justified in their different prices.  Suddenly, the difference in price makes sense, yes?  You’ll need to apply the same reasoning and logic when comparing engineers’ fees.  Because you’ll rarely find engineers are quoting you for the same vehicle.  😉

But how do you, the home owner or architect having to decipher and compare the fee proposals scrutinise and identify these differences?  If you’ve never used either consultant previously (or you’ve used one but not the other), how do you get down to commonalities where you can meaningfully compare?   Aussies love a bargain and love to shop around, so – like any other product you’re shopping for – do your research first.  Our industry isn’t quite on Trip Advisor or at the mercy of Google Reviews yet, but there are some fundamental things you can explore:

  • Have you actually viewed the submitted fee proposal documents for yourself, or were you just told the dollar figures by your architect/project manager? ALWAYS ask to see the full submissions and make sure you pore over them in detail.  If one proposal looks like it was knocked up in 10 minutes and the other looks like it took a few hours to put together, you’re already getting some insight into the time each consultant devotes to their work.  Do the proposals read and present well?  If one proposal is full of errors or typos and clearly hasn’t been checked or well-adapted to your project and particulars, is this a reflection of how their structural drawings might also turn out?
  • Ask to see examples of their respective documentation – that is, their structural drawings. When they last documented a similar-sized project to yours, did they prepare two A3-sized drawings with not much on them or did they prepare six A1-sized drawings that were choc-full of information?  Were the drawings fully detailed and resolved or were there items left to be worked out on site?  Are all of the details merely “Typical Details” that are clearly just generic and have been copied and pasted from a hundred other projects, or are they custom and bespoke for the specific project?  Look closely at the notes on the sections and details – are they complete or do they mostly say words to the effect of “To future detail” or “By builder?”   By reviewing the drawings for these traits (and others), you’ll quickly get some insight into how much effort and time each respective firm puts into their documentation.
  • Do one or both firms specialise in domestic structures?  Do they design 20 houses a year or 200 a year?  (For the record, Partridge commenced work on 340 new domestic residence projects in 2017 and we’re currently tracking towards doing 420 in 2018…all of them one-off, bespoke, architecturally-designed houses or “alterations and additions” domestic renovations).  The engineering of houses is a specialist field, and not many firms – particularly those that focus in other sectors – are well equipped or experienced to deliver efficient and economical domestic residence design.
  • Check out the websites of the competing firms and see what extra information you can glean about the companies that you’re not seeing in the fee proposals. You might learn how long the company has been in business for; the experience of the staff; how big each firm is, and perhaps be able to view some examples or case studies of similar projects to yours.
  • Get testimonials from architects and builders who’ve worked with both firms you’re comparing. An important question to ask is how they found the service and actions during construction.  Was the builder confident in the engineers’ advice and instructions?  Were the responses to requests timely or were long delays encountered on site?  Did the engineers adapt well to changes by the architect or did they seem inflexible?   With regards to fees, most lump-sum fee quotes from engineers are for the design and drawings only.  Once the project transitions to construction, most engineers are then on a do-and-charge basis at hourly rates.  Find out if one consultant or the other has a tendency to “load up” their fee at the back end of the job and claim extra fees during construction – thereby nullifying any savings you made by engaging them due to their lower lump sum design fee.
  • How many co-ordination meetings have been allowed for with the architect during the design phase? Some firms allow for several meetings and build this into their fee; others do not allow for any and will charge you extra if they have to spend time meeting other consultants or doing inspections.  Will both consultants happily absorb design changes, or will one charge you extra to change their drawings if you decide to make your kitchen bigger?  Some firms charge a higher fee up front but then readily absorb changes and amendments during the design phase.  Others charge a low fee up front, but will then put their hand out for a variation each time you or the architect changes their mind about a design feature, material, or the layout.
  • Most importantly of all: Interrogate what is included and allowed for in the design and documentation fee for the Construction Certificate.   Again, we confess to self-interest here, but we’ve noticed a trend for some engineering practices to quote a low design fee up front in order to win the work.  However, certain elements are then excluded from their scope or simply left off the drawings.  Or they put the basic information on their plans, but leave off the details and sections that would show all the steel connection details and other important information.  Once the project proceeds to construction and the builder requests this information, only then does the engineer do the necessary work during the construction phase – by which time their fee structure has typically transitioned to an hourly rates arrangement.  In other words, they’re getting paid extra by the hour during construction to do what the other engineer had actually allowed to do up front and included in their original design fee quote.  The money you thought you’d saved on the design fee is now being charged to you during the construction!

For smaller firms where the construction/site work is done by directors at higher rates because they don’t have more junior engineers available at lower rates, these extra costs during the construction phase can mount up and often cost you well more than you thought you were saving when you went with the cheaper quote.  It turns out those apples were actually oranges.

Please don’t misunderstand us – there’s nothing inherently wrong with any of the different scenarios and approaches discussed above and, no, we’re not crying foul.  All engineering firms and consultants are obviously free and welcome to run their business as they see fit.  It’s a hard game in which to make a buck, and we’re frequently at the mercy of the economy and the ebbs and flows of the construction industry.    All we’re trying to convey here is that when you receive two different fee proposals with vastly different fees, don’t assume all things are equal.  Think back to the car analogy we outlined earlier – if the two quotes are significantly different in value, dig a little deeper and make sure both firms are actually providing the same service.

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Oh, and if you’re keen for more reading and want to understand what actually makes a good engineer good…read this highly commended piece here.

COMMENTS

Just say Your opinion.

  • Kevin

    2 years ago

    Hi AD, Kev from van der Meer. How are you going? Hope you are well. Really enjoy reading your blogs. Great work mate. Keep it up! Should catch up for a beer one day.

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