CONSULTING FEES

Background

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, manufacturing support/expediting, Due Diligence, technology transfer, business development, trade show man-power and sales/marketing capacities

Selection Process

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 National Guide to Sustainable infrastructure Best Practice Guide on Selecting a Professional Consultant (available at https://www.acec-nb.ca/best-business-practices.html). 

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.

 

Fee Arrangements

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:

  1. 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 labor 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 typically for "one-shot consulting deal" ~$1,500 for training ~$2,500 plus expenses, new training material ~$10,000-$15,000 per day (a firm quote can be supplied), training books $150-200 per copy,(PDF VERSION -NO CHARGE), travel (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. Management/Sales/Marketing/Engineering support is billed out at $3,900 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. Also we need taxi service to the local airports due to construction and limited parking space at the NY airports (typical $175 one way including tip) The retainer FEE for acquisition, merger, business related discussions are in the $50K -$75K range and we will quote you based on the level work as it varies with every scenario.

  2. 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.
  3. 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)
  4. Privately Owned Vehicle (POV) Mileage Reimbursement Rates
  5. U.S. GSA Per Diem Rates by Location
  6. 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). 
  7. Additional fees for trip time inside USA and for International travel may be employed for projects
  • A Combination of These Arrangements – may be employed for projects where a large part of the scope can be defined, i.e. fixed fee, but where additional services may be required, i.e. hourly or per diem.

    •  

    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 AVERAGE ENGINEERING FEE GUIDELINE
    (LOCKED IN TO 2020 COSTS IN USD)

    CONSULTING ASS0CIATION ENGINEERING FEE GUIDELINES-2022 EDITION
    ​

    Staff Classifications

    Profesional Services

    E1 Member-in-Training
    University graduate from an accredited engineering program.

    E2 Junior Project Engineer
    The individual has obtained professional status. Assignments are of limited scope and complexity. Work supervised in detail. May give guidance to technicians, technologists, contractor, and/or other employees, etc.

    E3 Intermediate Projects Engineer
    A fully qualified professional, independently responsible for varied assignments. Work not generally supervised in detail, however, difficult or complex issues are typically referred to a more senior authority. May give guidance to one or two other professionals, but supervision is not usually a continuing responsibility. This position may see the individual act as a Project Manager.

    E4 Senior Engineer/Discipline Lead
    First level of direct and sustained supervision over professionals or full specialization. Recommendations may be reviewed for soundness of judgement but usually accepted as technically accurate and feasible. This position may see the individual act as a Project Manager and may include marketing and business development responsibilities.

    E5 Senior Specialist Engineer/Program-Project manager
    As a specialist, may engage in research or advanced technical studies. May have authority over large groups containing professional and technical staff. Recommendations generally accepted except perhaps those involving large sums of money or long-range objectives. This position may see the individual act as a Project Manager and may include marketing and business development responsibilities.

    E6 Senior Consultant
    Has received recognition as an authority in a professional field. As a specialist, may engage in research or advanced technical studies. May have authority over large groups containing professional and technical staff. Work is reviewed to ensure conformity with policy and in coordination with other groups and functions. This position may see the individual act as a Project Manager and may include marketing and business development responsibilities.

    E7 Division/Branch/Engineering Manager
    A senior administrator responsible for the direction of groups containing professional and technical staff. The individual has achieved recognition as an authority in a professional field or is considered to be of major importance to the firm. Independently conceives of programs to pursue and actively manages resources to that end. Provides recommendations to corporate management on all matters and receives direction from corporate managers related to organizational policies and procedures. This position may see the individual act as a Project Manager and marketing and business development responsibilities are primary.

    E8 Corporate Manager/Expert
    Generally has authority over all classifications listed above as a senior administrator responsible for organizational policy and procedure development and execution. This position may also cover individuals who provide a high level of specialized expertise or unique consulting advice.

    Technical Services

    T1 Technician (Entry Level)
    Under close supervision, carries out straight-forward duties such as preparing uncompleted or repetitive drawing, maintaining drawing files and assisting with field surveys. Little independent judgment required. Performs according to standardized procedures

    T2 Technician/Technologist (Junior)
    Under close supervision, supports engineering personnel in field, design or CAD drafting activities. Performs clearly defined, straightforward tasks. Acts according to standardized procedures. Carries out straightforward computational work using standard accepted formulae and manuals.

    T3 Technician/Technologist (Intermediate)
    Under direct supervision, supports engineering personnel in field, design, drawing production or construction specifications and quality control. Performs a variety of defined assignments with some independent judgment required. May provide technical advice to less experienced technicians/technologists in same area of specialty.

    T4 Technician/Technologist (Senior)
    Under minimal supervision, completes design tasks or complex CAD assignments or performs field quality control functions. Analyzes, provides recommendations and makes decisions with related to technical problems. May provide technical advice or supervise the daily activity of less experienced technical staff concerning processes and procedures. Verifies accuracy and adequacy of their work. This position may see the individual act as a Project Manager.

    T5 Technician/Technologist (Supervisory)
    Has achieved recognition as a specialist in a technical field. Supervises directly or indirectly the work of less experienced technical staff while and undertakes independent project related functions on a continual basis. Prepares production and progress reports as required. Reviews and verifies accuracy of work performed by others. This position may see the individual act as a Project Manager and may include marketing and business development responsibilities.

    T6 Technician/Technologist (Manager Level)
    This is a responsible project managerial and administrative position. Work involves the supervision and review of complex technical assignments as well as the personnel executing the work. Work is assigned within broad guidelines and is not normally subject to rigorous professional review. This position may see the individual act as a Project Manager and marketing and business development responsibilities are primary.

    T7 Technician/Technologist (Discipline Lead)
    Independently represents the company with clients on an ongoing basis. Manages and supervises staff on a continual basis. Manages major projects. Typical role is that of Group Manager or Discipline Lead. This position may see the individual act as a Project Manager and marketing and business development responsibilities are primary.

     

    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:

    • local communication costs (office and cell phone, fax, PDA’s, etc.);
    • long distance phone expenses;
    • routine production of drawings and documents;
    • local travel expenses ;
    • courier and messenger services;
    • standard software and computer costs; and
    • general office supplies

    External disbursements are recommended to be charged at cost plus 5-10%. This may include:

    • non-rountine document reproduction.

    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 web site is under construction and some of these links may not be working so we have disabled them