Questions about charging for design work...

jim lockard

a salesman punching numbers in to say a Wirsbo software program be considered a designer or would one consider it a preengineered product. Thanks J.Lockard

Mark Eatherton1

How...

How do you determine the charges?

Is it based on a cost per square foot?

Is it figured on a percentage of the installed cost estimates of the system?

Do you allow anything towards the installed costs of the system if they decide to use you for the actual installation?

What kind of reactions do you get from the consumer when you tell them you will have to charge them for the design?

Do you maintain E&O insurance to cover the inevitable/possible "OOpps"?

As a consumer, what are your thoughts/feelings about being charged for a design fee? Do you feel it adds value to the service versus a "FREE" estimate?

Inquiring minds want to know...

Thanks for your input.

ME

Unknown

We use a flat fee for the initial heat loads and quote work to keep out "tire kickers". We charge a rate far below the amount of time it takes us to actually do the loads and analysis and quotations, but we are comfortable with that because we have a very good closure rate so we're usually pretty confident that if someone comes to us, they will end up working with us. That may be due to the particulars of how we get clients though, so if you're following a more standard advertising model, that might not work out as well.

For full design work, we quote based on the amount of time we think it will take us to do the work. This is a number we know from experience, but generally it's loosely based on square footage, install types, and mechanical room complexity. We do hold firm to that quoted cost though unless changes are made by the client; we make the call and if we're wrong we're wrong, that's on us, not on the client. It's good incentive to figure out how long it takes you to do your work!

We offer a rebate on design fees if parts are ordered through us. I imagine a similar structure would work for installation services as well.

We do carry insurance against those possible "oops", however if you aren't willing to let someone push you into designing against your better judgement to save a buck, then we haven't found that to be a really big deal. For the small mess ups (mis-shipments, for example, or a poor product selection), we step up to the plate and do what we need to do to make it right, and the big ones we address in our designs in the first place. If someone wants a system designed they aren't looking for a cut-rate system anyway, usually, they want something they can have real confidence in. You just have to take the time to explain the features of the system you are proposing and why those features mean real value to the client. Of course, this means you have to be able to figure out what has real value and what does not, and you have to be able to talk intelligently about that decision making process.

I've designed hundreds and hundreds of systems for clients over the years, and I'll tell you, the design fee has been a problem maybe two or three times. Most of the time, people understand that design takes time and they are willing to pay for expertise. Again, that may be related to how we get clients though and a standard local advertising model may not generate results like that. Our clients come to us expecting to be charged for design, because that is what they are looking for.

Hope some of that is helpful for you; best of luck mark!!



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Jed_2

How does that all relate to

the "P.E."stamp. What is E&O insurance? Are non-certified engineers qualified to have the E&O Insurance. Where is this design issue going in these United States? Where should we be going? Doesn't Canada require a P.E. stamp on all residential radiant designs? It's been documented numerous times on this forum about faulty designs by Contractors, Wholesalers, etc. The Industry is getting out of control, vis a vis, the complexity and scope of "residential" heating/cooling systems these days. If I'm not an Engineer, and I design heating/cooling systems for residential/light commercial systems; and I screw up, it's my boss who has to take the hit, not me. But, I have pride and a desire to do the best I can to provide a good, workable system design for my Contractor base. I would welcome a regulated standard for system design certification. Maybe that would also open up certification courses for qualifying guys like me to meet the quals, or get out of the business. I continually seek design standards and methods, to learn and grow, but it's not easy.

Jed

p.s.: Mark, from the Engireered Spec jobs I see, they must charge on a percentage of the overall estimate, because they are way OVER-ENGINEERED.

Unknown

I'd like to see standard certifications, but I'd hate to see it tied to a generalized degree. I've seen work done by a whole lot of engineers out there that is just plain backwards. Hydronic design is a specialty, and as a specialty it should have specialized certification standards. There are plenty of plumbers out there that can design circles around generalized M.E.'s when it comes to hydronics, for example.

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GMcD

Speaking as a P.Eng.

That's one of the big issues that the Building Design Industry will have to wrestle with in the next decade.

Lets start off with how the Engineer calculates the fee: generally for larger work, the engineering fee is based on the building budget - either a percentage of the whole building budget, or a percentage of the mechanical/electrical/structural part of the building budget depending on the discipline. Most engineering fees are usually in the range of 6% of the system construction budget for relatively straightforward new construction, and up to 12% for renovations/rehabs of existing building systems.

Now let it be known that most of these fees are calculated on nothing more that budget numbers and a "Request for Proposal" - no design drawings, just some text descriptions of the proposed project with areas desired and budget numbers. I'd say 99% of all RFP's have more building described than budget to build it all, starting the process off behind the 8-ball before pencils have even been put to paper. So, the engineer is expected to provide a fixed fee for an unknown amount of work - who knows how the rest of the design team will work together, who knows how many architectural changes the building design will go through, how many budget checks and redesigns might happen, how many Building Code requirements and equivalencies have to be dealt with, and then it gets Tendered....usually the whole package has to go out at the same time, and the engineering team usually has very little time to play catch-up to the inevitable architectural changes and updates that occur at the last minute as the architect coordinates his work with the other engineering design issues. CAD makes it so much easier to make, and transmit drawing changes to the whole design team....right up until it goes out for Tender....we engineers pray at the altar of the great god "Addenda".

And then the lowest bidders are assembled and who knows how THEY get along...If there was no budget challenges, then the job goes ahead without re-design to meet the tight budget, and hopefully the Contractors and engineers all get along, and the project gets constructed on schedule....right. Usually, by the time the project goes for Tender, the engineer sees how much fee is left after all the design effort, and realizes that there is very little $$ left to any kind of effective site coordination and reviews...

Now, take a conventional building design that we all have lots of experience with, and there ought to be few surprises in terms of design effort, budget costs, constructability, and contractor familiarity with the as-designed systems. Even these go off the rails more often than not due to circumstances beyond anyones' control- look at the inflation we had in steel, concrete and formwork over the last year - imagine how well the project goes if it got tendered prior to all that, and now you're in the middle of the job and most of your materials have gone up by 30%-40%.... Throw in the odd building inspector who has his own interpretation of Codes, and let 'er rip.

The new challenge in the coming decade will be that the way to properly design energy efficient buildings means to throw lots more $$ at the building envelope to reduce the energy requirements, and therefore minimize the amount of mech and elec systems in a building. Engineers will be asked to do more engineering in terms of building science/building physics, that will result in less costly mech/elec systems, thus the percentage fee will potentially be lower if it's based on the system budget cost like traditional fees are. The architect gets a bonus if he is on a percentage based on the building envelope - the engineer actually will be establishing the building envelope performance and the current fees calculations will not fairly reimburse the engineer for that work. We'll have to find different ways of calculating the fees to reflect the increased work that will result in lower mech/elec system costs.

There are many engineering offices that are merely "drafting services", cranking out stock designs at minimal risk, for maximum profit, that meet the minimum Code requirements. There are a few engineering firms that really do leading edge design and stretch the envelope, where the Codes are considered a minimum standard that have to be exceeded. Contractors are the same - lots of hacks out there and a few leading lights. Hacks don't read the Wall.

I think one of the big issues is that "design" is a very nebulous thing to define - what a Contractor considers "design" vs what a PE/P.Eng. considers "design" can be two wildly different things. The Building Code Authorities and Building Permit requirements have to do a much better job of spelling out just what level of "design" is acceptable to be done without a PE/P.Eng seal - it has to be clear and unambiguous so the engineer and the contractor understand just what each others' obligations and expectations are.

Ragu_2

Good Topic

Mark, thanks for bringing this one up. I'm very new at taking on the responsibilities of design work for my own jobs, but I can no longer totally rely on the supply houses for this work. It's my butt on the line anyway, regardless of who did the takeoff for the job. I've actually taken a new and deeper interest in my business since this development. To answer your question, yes, as a consumer I would willingly pay for design details as opposed to getting a "Free Estimate" from Joe Shmo.

Rob, I totally agree that hydronics design is a unique specialty, and probably deserves some type of accreditation.

Geoff, I sincerely think you hit the nail on the head with your comment regarding the priority of addressing the building envelope. In my opinion, monies spent on the design, procurement and installation of materials to enhance the building envelope are truly monies well invested. Additionally, professional specification of these materials (with required documentation of proper installation) would be a real assett to all concerned.

GMcD

Envelope vs techno-solutions

The point I wanted to make was that there is currently no incentive for the mechanical/electrical building systems designers to come up with smaller, more efficient building systems if the fees are currently based on a percentage of the installed system cost. The more a mechanical system costs, the higher the fees. Nice business if you can make it work. And we wonder why a lot of the more educated/experienced Contractors can make a lot of cost savings suggestions when they get into an "engineered" project....

So, what I'm trying to figure out is how to resolve engineering fees when it takes more engineering work to provide a better building with smaller/passive mech systems that cost less than conventional building approaches. Gotta de-couple engineering fees from the systems capital costs somehow.

Unknown

Invent a correlation to the inverse of energy usage compared to the square footage of a building

the lower the energy usage of the building per s.f., the higher the fees by s.f.. just don't make it so high you offset the ROI

I know, I know, easier said than done. but fun to think about anyway...

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EBEBRATT-Ed

As far as having a PE stamp or not to design my understanding of (Massachusetts Law)is that anyone can design a system if they work for the company that is doing the install.

If they do not have a stamp and do the design-and another company does the install then they are "offering there services to the public as a designer" and they should have a PE to do this.

ED

ALH_3

What defines design?

The first thing that would have to be defined is: What is considered a design? From what I've seen there are a lot of differing opinions on this, from pencil drawings on up.

And then every system is different. Design time is not necessarily connected with installed cost. Frequently a system that costs a bit more can be a lot simpler to fabricate and install. Sometimes not. It's really difficult to throw a rule at it. It also depends on the skill of the installer. With skilled field technicians, there are only a few parameters that must be specified on most jobs.

With the cost of the tools to generate a quality design (cad, plotting capability, cost estimating software, past job costing data, etc.) one really has to be charging the client whenever you're putting time into a project.

As far as estimates go, it really depends on the project size and scope. Past cost data, if stored in a database, should make quick estimates on all but the largest homes quite easy. Computers take an incredible amount of work out of the estimating task, making it

A little field experience would do a lot of engineers a lot of good. I've drilled a few holes and pulled a few feet of pex, as have most of us here, and it makes a difference in how I look at a design.

Of course I'm primarily referring to smaller projects; what Geoff is describing is a different matter.

-Andrew

GMcD

Design defined

Yep, my experiences are on larger projects. BUT - at what point does a project become complex enough to require a "design engineer" or a good design/build Contractor? I've seen many house system designs that are more complicated than big building systems, yet those complex house systems are generally designed and installed by Contractors - should they have a PE/P.Eng involved? I dunno - at what point does the building size or mechanical/plumbing/fire protection system size get beyond the Contractor's expertise and require a "design professional"? A house can require all of the same design effort required by a $20 million Classroom building or School project - the systems are the same, just the sheer magnitude of the systems are different. Whats the difference between a 1-1/2 inch max. pipe size heating system vs a 6" pipe size system? Bigger boiler makes a bigger bang, but the level of design expertise is pretty well the same, isn't it?

I think it's the level of risk involved - a Contractor design/build for a house usually only has one homeowner involved as the potential risk, but a School has all the occupants, as well as the School District Owner to consider in terms of risk/liability. Should we draw a line at the $$ value of a mech system to decide whether a design professional needs to be involved?

Tom_35

E and O, plus other comments

E and O is "Errors and Omissions" insurance. Most architects and engineers have this coverage, as do contractors that do in-house design. We've had it for years and thankfully have never had to use it. Not that we haven't made some mistakes, but they've been minor enough that we do the right thing to make the system work and go on with our business.

I absolutely agree with Rob concerning some PE's not having the background for hydronic work. There is not that much radiant heating done here in Arkansas, and the few plans that I have seen are not close to what needs to be done. The first job we did (we were totally green) was done by an engineer that should never had bit off the job. He was out of his league, we didn't know it, and the result was that we had pumps that were way too large, very expensive tube and shell heat exchangers as opposed to more reasonably priced flat plate heat exchangers, and no controls at all.

There are no ramifications for design work for residential jobs here, but commercial and industrial work does require a stamp.

Tom A

Brent_2

budget

geoff,
What really amazes me is the number of projects that come back over budget for the hvac. In my opinion if the bid comes back significantly over budget the design engineer should take some heat for it. A lot of times it seems that the engineer doesn't consider the budget when designing the system. (i'm talking about plan/spec work) A main culprit that I am seeing are the heat wheels, ERU, etc that are being added to take care of the outside air requirements. I'm not saying they aren't needed but they add cost. You can't just add a system like that and use the same sq foot number you have been using.

just my thoughts

Brent

Constantin

... then consider additonal complications....

It's hard enough to build a structure "to spec"... few structures are so well-thought-out in advance that no in-the-field changes are required later on. Worse, thanks to thoughtless architects, infrastructure tends to be crammed into impossibly small spaces where the submarine piping rules apply: The first to get a pipe in gets to put in a straight pipe. Every subsequent pipe has to be bent to accomodate the previous pipes.

Nevermind omissions, change-orders, and all the other things that can make commissioning a structure more than a bit hairy. Having been through some of these issues in my work life, I put my foot down within my own house to ensure that valves, manifolds, etc. are easily accessible. With the right carpenters on the job, some thought, etc. such access panels can be integrated nicely.

Even with all that, my wife looked at the tangle of AC ducts in the basement, shook her head, and stated that perhaps we should have omitted the AC system. With a radiant ceiling cooling system, we could have carved out more living space for ourselves, but try finding installers in the USA who have done multiple installs... Having had to fix a boat full of OEM defects (2,000+ hrs), I wasn't about to embark on a similar mission in my own home.

GMcD

Design vs Budget

Brent - don't worry - engineers DO get the heat - then what happens is that they do more "free" re-design work to get the project back down under budget, thus re-hashing old tried and true energy wasteful system designs, and allowing cheap equipment substitutions so that the Owner is getting a very low quality system at the end of the day. And the Engineer has even less $$ left in the fee to do the Construction Services portion of the work- usually relegating all the admin., site reviews, and shop drawing review work to the lowest paid intern he can find in the office to keep costs down.

The situations you've described above are a result of designers not being able to move beyond the "reactive" design methodology and continuing to add more belts and bootstraps to conventional HVAC systems. I would disagree that the heat recovery systems "aren't needed" - they should be used and encouraged as energy saving systems, but what's happening is that these are being tacked on as afterthoughts to a base system, without really doing the engineering - which is to integrate these systems properly within the budget.

Jed_2

Thank You, Geoff

for the great insight into the dynamics of Engineered Building Design. I now understand why some of the equipment and specialty specs (15000 sections)on many of the projects I see are so outdated, or in fact, obsoleted.

Should there be a revolution?

Jed

rb_8

This months ASHRAE Article - Recommended Reading

Setting Fees for Profitable GreenBuilding Projects By Tim McGinn, P.Eng., Member ASHRAE, Keen Engineering, Calgary

excerpts:

"How can design firms make green design profitable in an extremely competitive market? Green building projects can generate additional revenue and incomes if firms are willing to adapt. One key to profitability is knowing how to set fees for green projects."

"Green building design is not a flavor of the week but a fundamental shift in the way our industry designs buildings. New core competencies are necessary to stay marketable and competitive."


I particularly love this one with a heavy emphasis on ‘thermal comfort parameters’..."Specialty analysis software will be needed to dynamically model the building and systems and assess room temperature and thermal comfort parameters for this strategy."

Can you say “ENVIRONMENTAL ERGONOMICS”?

What could a professional "enviromental ergonomist" charge?

Some of the answers are in the article.

Mad Dog_2

Short and sweet

Yes, as the boys said - you need to keep out the tirekicker lookie-loos. I base it on the size of the project and how long it will take me to produce the data. It probably figures out to half our hourly field rate and that seems fair to both. When I am done, they can take what I spec'd out to another contractor or if we do the work, it is applied to the job total - again very fair. As a consumer, yes I lean towards people who charge, because - usually - they are the cream of the crop. I just paid a Landscape Architect $500 to design out hardscape and give us design ideas. Granted, it will be a color rendering with lots of detail. There were other companies who didn't charge, and I was not impressed with them anyway. When I told them I wanted a "period design" reflecting the Victorian Age, 2 of the guys actually said: "What the ^&%&**(*!!! is that?" LOsers! In general - one gets what one pays for. Pros cost money and the really good pros get top dollar. A tough world survival of the fittest - and I like it that way. Mad Dog

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ALH_3

Software

In my opinion, to be considered design work the person using the program must have knowledge of what the prorgam is doing. Is the salesman familiar with Reynold's or Bernoulli? Specific heat? Friction and minor losses? Viscosities? Pump and system curves? Heat transfer? Blindly trusting a computer program is dangerous in my opinion.

-Andrew