How Engineers Get Paid

Consulting Engineers perform services on a professional fee basis. The term “fee” represents the total charges for engineering services, including all project expenses incurred by the Consulting Engineer.

Most engineering projects result in construction and have long-term operational ramifications. Accordingly, the cost of engineering services is typically a small percentage of the full cost of a project. The most cost-effective solution to a Client’s needs will not usually result from minimum or lowest cost engineering services, (i.e. cheapest usually isn’t the best).

There are two primary methods for determining a Consulting Engineer’s fee. These methods are:

Agreed Lump Sum

For those projects where a clearly defined scope of services is agreed to by a Client and the Engineer, fees can reasonably be established as a Lump Sum fee. In these cases, both the Client and the Consulting Engineer should be clear in their written agreement as to the scope of work and the extent and level of service to be provided. The Client should also carefully consider their desire for Professional Liability (“Errors and Omissions”) Insurance.

Time and Materials

Time-based fee methods are based on the premise that Consulting Engineers are reimbursed for their costs to deliver services plus a reasonable profit for their business.

Clients should be aware that these time-based fee methods provide an opportunity to overcome the many uncertainties that often exist at the start of a project. The critical concern here is that, unless the full scope of services can be established, it is nearly impossible to accurately estimate the cost of engineering services in advance of the start of a project. Significant financial limitations at the start of a project can restrict the Consulting Engineer from exploring options which may have an overall net benefit to the project. Similarly, the amount of time required to observe construction is largely in the control of the Contractor, not the Consulting Engineer. Accordingly, the type or quantity of services required may, and in many cases should, vary. Therefore, time-based fee methods are more appropriate.