Engineering Services

[drktmplr12]

We have recently experienced local public entities attempting to reduce professional services (engineering) to a commodity. IE purchasing departments making rules and regulations to "spread the work around" to less qualified firms because "it isn't fair" that the experienced firms provide quality designs and, as a result, continue to earn work. Specifically, we are being told to lower our rates to compete what others are charging for crap designs. The public entities are trying to get us to race to the bottom but provide the same level of service. We are a consulting boutique with institutional knowledge of facilities and owners, not some fly by night engineering outfit. To put it another way. You get different pairs of jeans shopping at Walmart compared with Macy's.

In some cases its gotten to the point where our services are being line item'ed (wrote an email for 12 minutes, reviewed drawings for 45 minutes, drove to/from meeting for 18 minutes, meeting for 48 minutes, worked on drawing E-007 for 2 hours) and detailed time sheets are being requested for lump sum projects.

I'm curious if this this something others are seeing in their localities because it seems absolutely absurd to me. Public officials are supposed to be stewards of public monies and infrastructure. Purchasing departments are getting out of control and exerting too much pressure on their consultants. Something has got to give and its going to be the quality of the work.

/end rant

 

[Designer69]

I would increase my cost and provide less line items than before. It's the only way they learn.

 

[drktmplr12]

I would increase my cost and provide less line items than before. It's the only way they learn.

If only it were that easy. You can't always spit in the eye of your customer to prove a point. At some point they will stop asking you to do work for them. That said, there are many muni's we don't work for specifically because they have a reputation for paying peanuts and have a habit of burning your margins with nonsense.

 

[Jraef]

It's happening everywhere, and not just with munis. We are seeing in it industrials now too. Purchasing people are getting "certification" and three letter acronyms added to their business cards now, part of which implies that they are adept at saving money for their employer. That often comes with a general disregard for what production, engineering or maintenance wants. I've seen some real disasters as a result.

I was just part of one proposal for an industrial plant that is using control systems from one mfr, but just added to the plant and gave the $2 million project to a totally different mfr. So now the maintenance and engineering depts have to learn, support and maintain two control systems that are nothing like each other, and the new mfr has only one distributor who is 250 miles from the plant. They saved $100k on the initial purchase, the ownership costs for the next 10 years could run them 10x that much. But that PA likely got a pat on the back for a job well done from the CFO, who is an ex-PA.

 

[retirede]

It's happening everywhere, and not just with munis. We are seeing in it industrials now too. Purchasing people are getting "certification" and three letter acronyms added to their business cards now, part of which implies that they are adept at saving money for their employer. That often comes with a general disregard for what production, engineering or maintenance wants. I've seen some real disasters as a result.

I was just part of one proposal for an industrial plant that is using control systems from one mfr, but just added to the plant and gave the $2 million project to a totally different mfr. So now the maintenance and engineering depts have to learn, support and maintain two control systems that are nothing like each other, and the new mfr has only one distributor who is 250 miles from the plant. They saved $100k on the initial purchase, the ownership costs for the next 10 years could run them 10x that much. But that PA likely got a pat on the back for a job well done from the CFO, who is an ex-PA.

In my early days as a plant engineer, it was a constant battle with our purchasing agents. It was my job to prevent exactly what you describe. I suspect these days many industrials no longer have a real engineer on staff and the manager who eliminated the position got a nice bonus for reducing costs.

After a while, one of them finally got it and we developed a good relationship. Of course, it wasn’t long after he moved on to greener pastures.

 

[drktmplr12]

It's happening everywhere, and not just with munis. We are seeing in it industrials now too. Purchasing people are getting "certification" and three letter acronyms added to their business cards now, part of which implies that they are adept at saving money for their employer. That often comes with a general disregard for what production, engineering or maintenance wants. I've seen some real disasters as a result.

I was just part of one proposal for an industrial plant that is using control systems from one mfr, but just added to the plant and gave the $2 million project to a totally different mfr. So now the maintenance and engineering depts have to learn, support and maintain two control systems that are nothing like each other, and the new mfr has only one distributor who is 250 miles from the plant. They saved $100k on the initial purchase, the ownership costs for the next 10 years could run them 10x that much. But that PA likely got a pat on the back for a job well done from the CFO, who is an ex-PA.

Penny wise, pound foolish. Something all purchasing departments should strive for.


Something similar happened, only with the software package. Maintenance and operations was heavily involved in the selection, had visited demo centers across the state for all the major players in SCADA software. Months of work from many high pay grades to select the SCADA software. After the bid was accepted, the owner's purchasing wanted rights to the source code of the SCADA software and unlimited licensing within the muni. The basis of design software provider refused, as they should. There was only one vendor willing to sign the agreement.

The whole project, including example SCADA screens and faceplates, was specifically designed for SCADA software A but instead must now be done with SCADA software B. In the end, maintenance and operations are not getting what they wanted in the slightest and the engineering team wasted hundreds of hours on both the front and backend of the design evaluating software packages and arguing with purchasing/lawyers. Not to mention the project was delayed for months while the plant had literally 0 spare parts for the old hardware.

But hey, on the face of it, the PA and the department looks like a hero to the commissioner, who also has no clue what it is they are buying. It's completely backwards. What a monumental waste of tax payer money it is becoming.

 

[drktmplr12]

In my early days as a plant engineer, it was a constant battle with our purchasing agents. It was my job to prevent exactly what you describe. I suspect these days many industrials no longer have a real engineer on staff and the manager who eliminated the position got a nice bonus for reducing costs.

After a while, one of them finally got it and we developed a good relationship. Of course, it wasn’t long after he moved on to greener pastures.

Many of the plants in the area do not have appropriate engineering representation and are held hostage by their purchasing departments. A few years ago one muni lost their primary advocate for capital improvements that knew how to stand up to purchasing and get things done at the same time. Once they were gone, things went amok, replacements were deferred and the plant suffered, maintenance costs accelerated. I'm sure the story is the same in many other places.

 

[petersonra]

Not much different than a lot of places. A lot of places have saved a lot of money by cutting out some of the gold plating that used to be so common with engineering firms. One has to make design choices that reflect the amount of money the end user actually has. That is very difficult for some people to do after a long time of buying gold plated stuff where silver plate would do just as well.

 

[drktmplr12]

Not much different than a lot of places. A lot of places have saved a lot of money by cutting out some of the gold plating that used to be so common with engineering firms. One has to make design choices that reflect the amount of money the end user actually has. That is very difficult for some people to do after a long time of buying gold plated stuff where silver plate would do just as well.

we design within the budget set forth by the customer. they have to go to the commissioners to request funds and explain why the improvement is necessary. asking for more money at the end of a design is a big no-no in this world.

btw, our grounding designs would probably drive you crazy, that is one item we do not skimp on! but grounding is a very small part of any typical work we do. everything is concrete encased except yard lighting and PA. all exposed is RGS or aluminum. that said, the environments we build in can be quite nasty. all major gear main-tie-main.

we understand it costs more, but for good reason. the owner has to maintain all of this stuff while keeping the plant running. how can you maintain gear if you can't turn it off and keep the plant running at the same time? class 1 reliability is a requirement.

 

[Ingenieur]

it used to be engineering, legal, accounting were considered professional services for governmental entities and did not ALLOW cost to be considered
that all changed over the last few years with a few court decisions

it could always be considered in private work

https://www.cs.cmu.edu/~bmclaren/ethics/cases/foundational/60-2.html

it is unethical by engineering ethics
but the $$$ calls the shots
if ALL engineers refused to submit when cost is a factor, or filed a complaint against those that did, this might go away
but greed is powerful

 

[Ingenieur]

THE NSPE Code of Ethics has been appended https://www.nspe.org/resources/ethics/code-ethics

As Revised July 2007
By order of the United States District Court for the District of Columbia, former Section 11(c) of the NSPE Code of Ethics prohibiting competitive bidding, and all policy statements, opinions, rulings or other guidelines interpreting its scope, have been rescinded as unlawfully interfering with the legal right of engineers, protected under the antitrust laws, to provide price information to prospective clients; accordingly, nothing contained in the NSPE Code of Ethics, policy statements, opinions, rulings or other guidelines prohibits the submission of price quotations or competitive bids for engineering services at any time or in any amount.
Statement by NSPE Executive Committee

In order to correct misunderstandings which have been indicated in some instances since the issuance of the Supreme Court decision and the entry of the Final Judgment, it is noted that in its decision of April 25, 1978, the Supreme Court of the United States declared: "The Sherman Act does not require competitive bidding."
It is further noted that as made clear in the Supreme Court decision:

• Engineers and firms may individually refuse to bid for engineering services.
• Clients are not required to seek bids for engineering services.
• Federal, state, and local laws governing procedures to procure engineering services are not affected, and remain in full force and effect.
• State societies and local chapters are free to actively and aggressively seek legislation for professional selection and negotiation procedures by public agencies.
• State registration board rules of professional conduct, including rules prohibiting competitive bidding for engineering services, are not affected and remain in full force and effect. State registration boards with authority to adopt rules of professional conduct may adopt rules governing procedures to obtain engineering services.
• As noted by the Supreme Court, "nothing in the judgment prevents NSPE and its members from attempting to influence governmental action . . ."

 

[drktmplr12]

Good points. To be clear we are not being asked to bid or submit estimated cost prior to a RFQ. Also, we are typically a sub-consultant. The prime consultant is being questioned by commissioners during a "all project review" session on why they use us, when another engineer may be hired because they don't "get enough work". The fact that the prime consultant has to defend their position is :jawdrop:.

Undoubtedly the financial comparison is coming after selection and being compared between projects after negotiations. The muni's are exerting pressure for the prime to use another sub-consultant in our place. I suppose the muni's are within their rights to refuse to hire said prime because they are insisting on using us. Although I couldn't speculate a reason why. We provide quality services.

 

[Ingenieur]

Good points. To be clear we are not being asked to bid or submit estimated cost prior to a RFQ. Also, we are typically a sub-consultant. The prime consultant is being questioned by commissioners during a "all project review" session on why they use us, when another engineer may be hired because they don't "get enough work". The fact that the prime consultant has to defend their position is :jawdrop:.

Undoubtedly the financial comparison is coming after selection and being compared between projects after negotiations. The muni's are exerting pressure for the prime to use another sub-consultant in our place. I suppose the muni's are within their rights to refuse to hire said prime because they are insisting on using us. Although I couldn't speculate a reason why. We provide quality services.

politics, 'somebody knows somebody' or personal animosity
it is not always a fair process

 

[drktmplr12]

par for the course, i suppose.

 

[drktmplr12]

par for the course, i suppose.

rereading some of my posts i feel like i'm coming across as combative. not my intent. was only looking to see if other consultants are running into unusual issues with public purchasing departments.

thanks for all the comments.

 

[Besoeker]

A sort of related anecdote from many years ago.
A paper mill was having a severe sparking problem on the commutator of a very large DC machine. The mill engineers tried everything they could think of from different brush grades, moving the brush gear a few degrees at a time etc. All to no avail. So they called in a consultant. He put a chalk mark on the motor.
"Remove half a turn from the interpole where marked" was his instruction.

That worked. The consultant submitted his bill. £5 grand.
The mill manager wrote to Mr C thanking him for his work but commented that the bill seemed rather high and asking for more detail. He got it.
"£5 for making a chalk mark. £4,995 for knowing where to put it."

 

[pv_n00b]

A lot of reward systems are based on someone reducing CAPEX without regard to how it might inflate the O&M cost to the project. "What's the cost out the door," seems to be the bottom line.

We need to push for laws requiring qualification based bid reviews in government contracts. Removing unqualified bidders from the process before costs are considered is key to maintaining high-quality services. That will end the race to the bottom lead by cheap poor quality vendors.

 

[powersoft]

Could this have stemmed from change orders? Seems like the contractors were drawing a lot of extra cash out of jobs because of one thing or another or from not being on a set of drawings. That could have been from oversights for sure, but the industry is changing drastically right now with the advent of BIM and will eventually evolve to refute things that cost us all money. Just asking. I just hope it morphs into something we can all live with. I can't speak on how much grief there was 50 years ago.

 

[drktmplr12]

Could this have stemmed from change orders? Seems like the contractors were drawing a lot of extra cash out of jobs because of one thing or another or from not being on a set of drawings. That could have been from oversights for sure... I can't speak on how much grief there was 50 years ago.

I don't know this from experience, but I've heard more than one older colleague say that way back when, if there was a critical piece of a project that was overlooked, the contractor would give an honest price and do the work. It wasn't viewed as an opportunity to gouge with twice the labor is takes to do something. There also weren't engineers employed by the contractors whose jobs it was to find change orders. They are literally paid based on how much $ in change order they can generate. Contractor bids low to secure the job, engineer proposes (mostly) absurd reasons to request change orders, we refute them where we can. Like you said-things are changing. This landscape has caused us to present our documents differently, more like lawyers, but I can't speak to others.

...but the industry is changing drastically right now with the advent of BIM and will eventually evolve to refute things that cost us all money.

I don't foresee owners in public spaces transitioning to BIM anytime soon. Perhaps facility owners, such as universities or high rise commercial buildings already have, or are interested in "living, electronic as-builts". I personally don't think that we need to design electrical in 3D, but i have a feeling I will be getting a new mouse within the next 15 years. We are going to get the same fee as we do to design in 2d, too. More work, same pay.

 

[JoeStillman]

I don't foresee owners in public spaces transitioning to BIM anytime soon. Perhaps facility owners, such as universities or high rise commercial buildings already have, or are interested in "living, electronic as-builts". I personally don't think that we need to design electrical in 3D, but i have a feeling I will be getting a new mouse within the next 15 years. We are going to get the same fee as we do to design in 2d, too. More work, same pay.

I agree with you about the BIM craze. It's a solution in search of a problem. BIM is great for architects, but pretty much a white elephant for us. When it started out, we were able to charge extra because the client required it. It was like that with CAD at first too. I don't know how it'll ever catch on for small projects.

BTW, my firm does not generally pursue work for government entities for just those reasons stated by the OP. My favorite clients to work for are the electrical contractors. The new clients I work for are usually referrals from the EC's.