GM SYSTEMS follows the fee guideline developed by ACEC-NB to help provide firms and their clients with a remuneration reference for the provision of consulting engineering services. This is one of the only guidelines that provides this type of detail for consulting practices in the world. The guideline offers commentary on the process of selecting an engineering consulting firm; discusses various fee arrangements; as well as offers a recommended schedule of minimum hourly rates for the various levels of professional and technical staff commonly employed by consulting engineering companies.
The rates presented herein are intended as a guideline for consulting engineering services that GM Systems provides in a variety of consulting engineering, management, Due Diligence, technology transfer, business development, and sales/marketing capacities
Selecting an engineering firm should be regarded not as a cost but rather as an investment. Quality engineering can contribute greatly to the control of project construction cost and schedule as well as result in lower long term project life cycle costs.
Many clients have developed long-term relationships with consulting engineering firms and as such select their engineering consultants based on a “sole source” basis. This “sole source” process is recognized as a preferred method of consultant selection as it is primarily based on qualifications rather than price.
If a client elects to go the competitive route for consultant selection, then a Qualifications Based Selection process is recommended. Qualification Based Selection incorporates principles that helps ensure a competitive process that will achieve the goal of adding the greatest value for the client. This selection process diverges from price-based selection practices in that it allows the consultants to demonstrate how they can add maximum value to a client’s project rather than focusing on how to minimize their fees to ‘win’ an assignment. More information on Qualifications Based Selection is available in the
(ACEC-NB brochure Appointing Your Consulting Engineer Using Qualifications Based Selection ).
and the Federation of Canadian Municipalities National Guide to Sustainable infrastructure Best Practice Guide on Selecting a Professional Consultant (available at www.thebestpractice.ca).
Regardless of selection process utilized, ACEC-NB recommends that a formal client/consultant agreement be established describing the terms and conditions of the engagement prior to beginning the work.
The word "fee" is generally assumed to be the money paid for services rendered. Depending on the type of project, nature of the work, and the terms and the conditions of the client/consultant agreement, the following fee arrangements are commonly used:
- Fixed fee – a lump sum arrangement is recommended in situations when the scope of services and schedule can be clearly defined and understood. Fees of this type can be developed from the bottom up or derived as a percentage of product cost. In addition, when the Prime Consultant assigns sub-consultants to complete portions of the design, the fees for those services can range between 80% and 100% of the Prime Consultant’s fee for that portion of the design. The percentage fee may also apply only to the labour component of a fee with expenses considered extra. The consulting engineer assumes a risk to perform the work within the fixed fee offered. The consulting engineer’s return for assuming this risk is built into the fixed fee and therefore a breakdown is not usually provided.
Please note that the sIngle day consulting fee is $2,500 plus expenses (private jet or first-class air transportation for international locations, meals, miscellaneous expenses, (see Charges for Disbursements below) and hotel accommodations.) We do not bill travel time for a one day trip in the continental U.S.A. Sales/Marketing/Engineering support is billed out at $1,900 per day plus expenses (private jet or first-class air transportation for international locations, meals, miscellaneous expenses) (see Charges for Disbursements below) and hotel accommodations.)
- Hourly – a time and material arrangement is recommended in situations when the scope of services and/or schedule cannot be clearly defined (see Development of Hourly Rates & Charges for Disbursements sections for details). Rather than commit to an upset limit which imposes a fixed return for unknown risks, it is recommended that the consulting engineer monitor fees and provide the Client with regular status and forecast updates.
- Per diem – or per day fees is a variation on the hourly rate type fee arrangement whereby a cap on hours per day is effectively implied. (See link below for GSA Per Diem Rates for locations in USA)
- Privately Owned Vehicle (POV) Mileage Reimbursement Rates
- U.S. GSA Per Diem Rates by Location
- External costs include out-of-pocket expenses for mileage, meals, lodging, etc. as well as sub-consultants where applicable and these costs may be subject to a mark-up for handling costs (See Charges for Disbursements section for details).
- Additional fees for trip time inside USA and for International travel may be employed for projects
2011 DEVELOPMENT OF HOURLY RATES
Since the Consulting Engineer is a business person in professional practice, the fee charged to clients must cover pertinent engineering business costs and margin as illustrated in the Typical Distribution of Consulting Fees at right:
Each consulting firm has a unique mix of professional, technical, and administrative support staff with differing levels of experience, expertise, and responsibility. These individuals are grouped into various staff classifications accordingly. To enable the recovery of the costs associated with overhead and staff benefits, as well as to generate a profit, consulting firms typically develop hourly rates predicated on a multiplier of salary costs. The Canadian Office of the Information and Privacy Commissioner has advised that the practice of disclosing salary multipliers to clients is not reasonable if a less privacy intrusive practice can be used. Divulging salary information related to specific staff may contravene the Privacy Act in Canada and the security of such information may be at risk.
The recommended minimum hourly rates presented in this Fee Guideline in TABLE I below are predicated on staff working at a reasonable chargeability rate in a consulting engineering office. However, for unique assignments, a consulting engineer can revisit the rates examining the circumstances under which an employee is working. For example, a seconded employee’s benefits may be no different than those for an office based employee, however, the remaining elements may be different and may hold the potential to lower the hourly rate over the extent of the project. Similarly, if the work is highly specialized and/or high risk in nature and a consulting engineering firm has niche resources to do the work, then this may hold the potential to increase the hourly rates charged.
Staff classifications describing various levels of responsibility, experience and training are presented on the opposite page. Recommended minimum hourly rates for those categories are presented below. With some interpolation, most engineering and technical positions can be categorized to align within these classifications.
Lastly, note that since hourly rates are derived from the Typical Distribution of Consulting Fees, the rates listed in this Fee Guideline are subject to revision annually. GM Systems has held these rates since August 2011. However, for multiple year assignments, it is recommended that a rate escalation clause be included in the terms and conditions of the client/consultant agreement.
TABLE I 2011 FEE GUIDELINE
E2 Junior Project Engineer
E3 Intermediate Projects Engineer
E4 Senior Engineer/Discipline Lead
E5 Senior Specialist Engineer/Program-Project manager
E6 Senior Consultant
E7 Division/Branch/Engineering Manager
E8 Corporate Manager/Expert
T1 Technician (Entry Level)
T2 Technician/Technologist (Junior)
T3 Technician/Technologist (Intermediate)
T4 Technician/Technologist (Senior)
T5 Technician/Technologist (Supervisory)
T6 Technician/Technologist (Manager Level)
T7 Technician/Technologist (Discipline Lead)
Charges for Disbursements
Internal disbursements are recommended to be captured for invoicing in a single charge as a fixed percentage of professional labour. This will vary by firm, but typically ranges between 5-10%. Internal disbursements may include:
External disbursements are recommended to be charged at cost plus 5-10%. This may include:
It is recommended that the client and the engineering consultant review the projected expenses prior to the start of the project and agree on the applicable disbursements category and reimbursement method. Please note the CEC_NB WEBSITE (http://www.acec-nb.ca) is under construction and some of these links may not be working