For the first time in 2 and half years I heard a government employee tell me something today that gave me the greatest sense of relief. I wanted to share the good news with everyone. But before I tell you, I want to let everyone know how this recession has affected my livelihood.
As many of you may know I live in Las Vegas, Nevada. Since 1983, for the most part in one or another I have worked in the engineering profession in this valley. Throughout that time I have designed just about anything you can think of in Land Development; residential, commercial, hotels, casinos, airport hangars, roads, sewer and water mains, and storm drains systems big enough you can drive a truck through.
In 2007, my business peaked with the biggest revenues and profits I had ever made. My projects for the next three looked extremely good. And the recession began in early 2008. I know the the government will say that the recession started in the mid 2009, but in Las Vegas it started much earlier than the rest of the country. First, the residential projects that were under design were halted by the developers, and by the middle of 2008 the commercial projects also began to cease. By the end of 2008 the design companies began laying off including my company. Things have not picked up since. Most of my colleagues have either the area or are working other jobs.
The story is pretty much the same throughout most of the country with some exceptions.
But today I heard good news, very good news! According to a government worker that works in Flood Control several Home Builders in the valley have recently submitted Technical Drainage Studies for 200 to 300 residential lot developments. According to him, they say that they are doing this now, because they believe the market for new residential homes will pick up again in 2011. Wow! It is about time!
Major Home Builders do not make a move like this unless they're market research clearly indicates a change in the home buy sentiment. I don't need know the exact reasons for the shaft, but I'm glad that the Builders believe that the market will make move.
Is anyone else seeing a shift in the market? Have seen any indications that things might be changing in Land Development? Please let us know.
This blog discusses topics about the business and management of engineering firms.
Monday, September 13, 2010
Monday, September 6, 2010
How Much Should be Your Engineering Fee?
Recently, I lost several contracts due to someone else with a much lower price. This has been extremely frustrating, considering my fees now are about half what they were two years ago, and I'm also having a difficult time finding these jobs. Certainly, I can lower my fees, but is it worth it?
A friend of mine recently placed a $1000 bid for a soil boring test. The client wanted a lower price. So they settled on $500, basically a break-even price. The client then wanted a proof of insurance certificate, which ended up costing my friend $250 to obtain the certificate from his insurance company. Needless to say he lost money on this job.
Times are tough and the number of available jobs are few. To top it off engineering fees are also dropping. Unless you are working out of your home office, you almost can not compete. With few jobs and lower fees it is difficult to maintain insurance, professional license, business licenses, and paying office expenses and sub-consultants.
As a hold engineers must hold the line on our fees. We must realize that we are a professional service business, not contractors. In that respect we are no different than lawyers and doctors. The client gets what he pays for. Not to say that our abilities diminish with lower fees, but our ability to deliver is restricted. Our fees should be insignificant to what the engineer can provide to the client. A good engineer can reveal several cost saving designs that can more than pay for the engineer's fees. I have personally redesigned plans that have saved the client hundreds of thousands of dollars, and my fees were quite a bit less.
No two engineers will provide the same set of design plans for the same project. Should an engineer with decades of experience in the industry be held to the same level as a young engineer straight of college. I would think that the experienced engineer is worth far more and his fees should reflect that experience.
What are your thoughts? Please leave comments.
A friend of mine recently placed a $1000 bid for a soil boring test. The client wanted a lower price. So they settled on $500, basically a break-even price. The client then wanted a proof of insurance certificate, which ended up costing my friend $250 to obtain the certificate from his insurance company. Needless to say he lost money on this job.
Times are tough and the number of available jobs are few. To top it off engineering fees are also dropping. Unless you are working out of your home office, you almost can not compete. With few jobs and lower fees it is difficult to maintain insurance, professional license, business licenses, and paying office expenses and sub-consultants.
As a hold engineers must hold the line on our fees. We must realize that we are a professional service business, not contractors. In that respect we are no different than lawyers and doctors. The client gets what he pays for. Not to say that our abilities diminish with lower fees, but our ability to deliver is restricted. Our fees should be insignificant to what the engineer can provide to the client. A good engineer can reveal several cost saving designs that can more than pay for the engineer's fees. I have personally redesigned plans that have saved the client hundreds of thousands of dollars, and my fees were quite a bit less.
No two engineers will provide the same set of design plans for the same project. Should an engineer with decades of experience in the industry be held to the same level as a young engineer straight of college. I would think that the experienced engineer is worth far more and his fees should reflect that experience.
What are your thoughts? Please leave comments.
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