Engineering Design Consultancy Fees

Vivek G. Abhyankar, Structural Engineer, elaborates on the various aspects of Engineering Design Consultancy Fees, the agreements, do’s and don’ts, Indian as well as foreign consultancy practices, along with case studies, for the benefit of contractors, consultants, clients as well as accounts, tendering, and business development professionals connected to civil engineering.

Civil Engineering works are classified into various sectors, each of which are backed by parent disciplines (‘*’ as listed ahead). All these sectors have their own specific discipline-wide design requirements as per (1) type of contract, (2) type of structure/s and (3) as per desired stage (DPR stage, tender stage, detail engineering, O&M etc).

Each discipline operates in different individual styles, with different skill sets and resources; and different timelines to accomplish their assigned scope of work. Different creativity quotients are involved (as well as different risks too); apart from these, different machines, software programs & different team sizes etc. are involved, and hence each one of them charge different fees as per the ‘scope of work’ and desired quality of outputs. For example, an Architect charges 4% fees for planning, design and approval / liaison a building project, whereas a structural engineer charges 0.2% to 1% for structural design & drawings of the same building (depending on the magnitude of work, simplicity vs. complexity, repetitiveness or uniqueness of details, monopoly, resources availability etc.).


Often, the end-users / clients are not clear about the basis of quoted fees to them and hence get tempted to ask for negotiations (sometimes, keeping this tendency in mind the consultants may even keep their quotes a bit on a higher side); even sometimes when a consultant don’t want to get trapped into any specific work, they charge high (to get dropped out from short listing without hurting client) or if they have lack of any specific discipline/s they charge higher fees (to account for out-sourcing / external hiring cost); in mega / multi-mode / multi-discipline project often JV / Consortium is formed. Sometimes, consultant charges unexplainably low fees for certain projects (the reason could be to get entry into specific sector / improve cliental, credentials keeping eye on upcoming works in line etc.). Thus, there are different situations and different ways to estimate the scope, strategies and arrive at a rational number as ‘fee’ for each respective job, and further decide on the discount in fees. Inclusion & exclusion of certain items, logistics, taxes, monopoly in certain works / royalty, etc. also play a vital role in deciding this number (fees).

Important Sectors and Disciplines within Civil Engineering.
Sectors
There are various types of Civil engineering works. For ease of working, similar works are grouped together under sectors (often called as ‘business units’ or simply BUs in big corporate engineering companies), they are like - transportation & tunneling (rail, road, metro, mono rail, high speed rail HSR, TBM, NATM, bridges and culverts); hydro-power & irrigation (dams, barrages, gates & turbines, canals, pumping stations / lift irrigation, water conveying tunnels, surge-wells, breach sections, stilling basins, mixing chambers, fish ladders); water treatment, storage & supply (intake wells & tube wells, pipes, coagulation chambers, slow / rapid sand filters, aerators, tanks, pumping stations, testing laboratories) & waste water treatment; real estate (buildings, sky scrapers, factories construction, large auditoriums, malls, public recreation & assembly halls, theatres); heavy engineering; marine (quays, jetties, wharfs, berthing mooring dolphins) and off-shore / deep off-shore; industrial & chemical plants (sugar & paper mills, refineries, mounded bullets, conveyors, compressors, machine foundations, heat or sound insulation system); docks, ports and harbors break waters, warehouses; naval / shipbuilding docks; aviation (airports & runways, cargo, PHU, control towers); solar & other energy generations and supply / transmission / distribution (towers, masts, HT lines, Solar panels, wind mills, sea-wave rollers); power plants (nuclear), fuel storage (LNG tanks etc.), satellite / space launching structures, army / military structures / bunkers etc. – the list is really endless !

Parent Disciplines
The disciplines mentioned above in the abstract are – architecture, civil & structures (RCC, steel, timber, aluminium, plastics UHPC & other special materials, permanent and temporary structures), geotechnical, hydrology, MEP (mechanical – electrical – plumbing/piping, HVAC), QAQC (mix design, testing, material specifications), transportation (pavement designer, road geometrics, road furniture), surveying (total station, theodolite, drone, lidar), construction planning and monitoring and any special services in certain projects (like, sculptures / horticultures / audio & music / lighting experts / oceanography / mining / metallurgist / mineralogist / geologist / BIM / Geospatial (GIS, GPS, drone etc.) environmentalist etc.) are required.

Civil engineering is a vast and one of the oldest branches of engineering tree. It is like a dense fabric woven out of varying combinations of above sectors / parent disciplines / and requirements (stated ahead). This branch has a history of thousands of years! Right from a stone age man the field saw several social, economical, political, regional & religious, geophysical & environmental, scientific ups and downs, like wars & crises – victories – formation of new kingdoms – new territories – flourishment – sovereign states – insurrection, revolutions, struggles for independence – floods & famines, droughts, tsunami and earthquakes, typhoons – scientific researches – mass media, liberalization, industrialization, formation of companies, corporate cultures, pandemics, new additions, new rules – changing social tastes – mindsets, effects of transfer of power / governess, changes in financial status, material research & developments in other branches, failures, public tolerance etc. and so on! **

In this prolonged period (and probably even in the upcoming era) the field of civil engineering kept on getting refined in terms knowledge and experienced gained by contemporary professionals / companies, from repetitive operations use of technologies available in respective time; Learning from these, is not only educational but it also tails about the longevity and sustainability of civil engineering profession.

(** as more and more industrialization took place, the needs cropped up and significant amount of research work happened in engineering, to elevate quality of public life. New materials, technologies were developed (like smart & nano materials, NTE materials); the requirement / magnitude of civil engineering construction projects got increased rapidly. In olden days most of the projects were awarded by government sector in ‘item-rate’ or ‘lumpsum’ mode and designs were issued by government; they were slow and increased the burden on government officials; invent of ‘EPC’ contracts dispersed the workload, accelerated the construction sector, and increased the requirement of detail design from contractors / private clients. Also, the competition within contractors increased encouraging / forcing them to invent newer ways / technologies and materials).

As mentioned at the beginning, for convenience we classify civil engineering filed into various sectors / domains / BUs. Further each of these sectors have sub-domains / micro BUs; as per different design and construction requirements, listed below :–

• Type of structure (bridge, dam, tunnel, building, airport, runway, railway, road, LnG storage tank, Formworks etc.)
• Type of materials (masonry / steel / concrete / timber / aluminium / composites / smart or nano or green etc.)
• Type of project / contract (EPC, DBOT, HAM, DPR, Lump sum, Item rated, percentage base, petty etc.)
• Size / magnitude of works (in terms of Time, Cost, and quantities)
• Scope (DPR stage works, Tender stage, detail engineering stage i.e. post award of contract / during construction, proof checking, value engineering, AE, IE (on behalf of main client/ owner) audits during - maintenance & repairs / retrofitting phases etc.);
• Planned construction methods and equipment (overall resources i.e. – Man, Material, Machinery, Money & Time)
• Skills involved (architectural, civil & structural, geotechnical, hydrology, MEP (mechanical, electrical, plumbing/piping, HVAC) and any special services in some specific project case (like, sculptures / horticultures / audio & music / oceanography / mining / metallurgist / mineralogist / BIM etc.); royalty charges for use of patented / system designs (e.g. use of tetrapod in marine shore protection works; use of quadricon / mero system steel joints etc.).
• Responsibilities involved (like – issuing a design adequacy certification / validity or indemnity to be issued for a long-term period or accepting ownership of third party designs etc. - this may also involve some legal aspects and penalties on breach could be hefty, so shall be worked out meticulously).
• Most important is client’s / employers’ budget and requirements; specifications (codes & standards).

The design fees can be estimated / worked out / arrived at, after knowing the individual contribution / magnitude of each of the above factor/s, individually and in combination with other factors, all together. In case if, the assessment of exact scope as per above factor/s and hence the design time and fees if goes wrong, then everything later goes haywire. Hence estimation of scope (judgment based on matrix of all above factors) becomes primarily important and shall be done meticulously – which is explained in this paper with appropriate examples / case studies wherever possible. If the client is a government body, then the competition to acquire big design projects is usually tough (as more number of consultancy companies bid for design / PC works); in certain cases companies use tactics like – shake hands with other parties, form dummy or duplicate bidders etc. (ethics / rationality of such practices may be decided by readers on their own and not a purpose of this paper, but only for completeness of this treatise they are mentioned here). In India it is common observation that the payment from government sector clients gets delayed to a significant extent as compared to private companies!

Methods of estimation of design consultancy fees
Following are the typical methods followed by professionals all over the world to estimate the design consultancy fees :-

1. Sum of Man hours / Man days consumed (per each discipline and each stakeholder, junior – middle – senior level engineers, surveyors, draughtsman, etc. + supportive staff + taxes).
2. Quantity of outputs (viz. Number of designs / drawing sheets multiplied by unit rate etc.).
3. Percentage of project cost (fees proportionate to main contract value, say 1% or 2% etc.).
4. Lump sum / adhoc basis.
5. Quality / intensity of output (viz. preliminary design, budgetary design, detail/ definitive etc.) and per stage / multi-disciplinary involvement; “what should be the fees for creativity / talent?” is a key question which often remains unknown / unanswered!!

Each of these methods are explained, one by one, in detail with examples / relevant case studies in the foregoing paragraphs.

METHOD-1 : Sum of Man hours / Man days consumed - After assessment of overall project cost and items to be designed, the estimator (lead costing / proposal engineer) can arrive at the man hours / man days required at various levels (designer – draughtsman – checker – team leader – quantity surveyor etc.) in various disciplines (civil / electrical / mechanical / architecture etc.) for individual structures/items. Then multiply them with unit rates per day / per hour by individuals and finally sum-up fees for all individual items together viz.

Example.1 – refer table 1.


Example.2 – let’s consider one 2mx2m C/S, 20m long, small rectangular RCC box culvert in a road project; then it would consume typically three to four day time (structural design + hydrologist + drawing + estimation) as explained table 2.

Table: 2
Activity	Duration (days)
Preparing analysis model (2D wire frame)	0.5 to 1 day (depending on skew angle)
In case of highly skew culverts (in plan), some PCs insist for 3D / FEA model – which takes 2 to 3 days.
Design calculations (from available std. spreadsheets)	2 days
preparation of hydrology calculations (discharge, velocity, slope, afflux etc.) takes about 1 day time, which goes in parallel with above (so not counted separately in lumpsum duration)
Developing GA drawing (these goes in parallel with sr. A above) - 1 day
Preparing Reinforcement drawings	1 day
Total =	Effectively 4 days
N.B. – note in above example, if the culvert length is made 45m in place of 20m still the design efforts & time (and hence fees) practically remain the same. Also the consulting firms which do such works on routine basis, does have lot of previous data / drawings which shorten the time further.

Imagine, a mega road design project, where there are say 5 to 6 culverts per kilometer stretch of a road, so the culverts having same / similar sizes can be grouped together and design can be standardized; then the design duration reduces from 4days to about 1.0/1.5day per culvert (repetitive designs). Thus, if there are say hundred culverts in a typical 25km length road project then grouped together only 20 to 25 designs are needed; to complete first cut design & drawings of culverts alone would consume 25x1.5 = 38days i.e. about one month duration with one junior designer and one draughtsman (and about 10days of a hydrologist). Here the importance of ‘repetitiveness’ and ‘standardization’ plays a vital role towards fast completion of the projects (and thus overall saving in design and construction). Many clients / contractors / consultants, underestimate the importance of timely completion of projects, and finally run into losses / closure of project (without completion & with unexplainable delays)! Clients / contractors / consultants / PCs / AEs / IEs should have curiosity about the engineering facts but instead of arguments / fighting on small-small issues / doing R&D / wasting time on trivial matters, the attention to be paid to overall ‘time’ and ‘quality’.

Example.3 - Now let’s imagine design of (i) one flyover, (b) one major bridge and (c) one ROB – all with same span configuration say 4 x 30m span and same heights and widths. Then the typical time consumed on detail design would be as table 3.

From above example, it may be clear that although the design / drawing efforts could be the same / similar in same structures but the external client’s approvals (like when crossing Railways / DFCC / Bullet rail / gas lines / NHPC canals etc.) and extra discipline (viz. hydrology in case of MJB) may take additional time. Off course the duration of 6 to 8 months mentioned above for ROB does not mean that the concerned engineer is working continuously full time on ROB alone; he gets a leisure / breather space in between (after submission of documents to Rly), which can be certainly utilized to complete other structures’ design. It is the skill of ‘concerned head / team leader / coordinator’ as how to best utilize the time and availability of team members, software with overlaps / holidays / work from other projects etc. Once the time is estimated in days in can be converted to hours / weeks or months from the standard norms (viz. 8man hours per day or 25 working days per month). Then based on the hierarchy of teams planned (viz. junior designer, senior designer, draughtsman, checker, and team leader etc.) and their estimated time duration multiplied by their planned salaries (hourly rates), the final fees due to ‘manpower’ alone can be worked out (as illustrated in example-1). Then add other consumption heads - viz. printing & stationery charges, courier charges, taxes (PF/PT/GST etc.), site visits, conveyance, administrative charges (salaries components of non-technical support staff), estimated profit, fees by expatriate (foreigner freelancers) team members / outsourced portion, (annual increments in case of long duration jobs) etc. – all relevant to arrive at a final ball point number / total fee. Depending on the experience in past (repetitiveness of similar job / data available) or uniqueness of the project, relationships with a particular client, availability of team skills & size (any attrition rate after yearly appraisals), competitors, magnitude of work available in hand etc. the in-charge of organization may decide on any ‘discount’ to be given or how.

Table: 3
Activity	Duration (days)
	Flyover	MJB	ROB
Hydrology calculations	- -	5 days	- -
Prepare GA drawing	2 days	3 days	3 days
Client approval on GAD	- -	- -	2 to 3 months
Analysis model and calculations, report	5 days	5 days	5 days
Detail concrete and rebar drawings	5 days	5 days	5 days
Bearings / expansion joint design	2 days	2 days	3 days
Launching methods – calcs.	5 days	5 days	5 days
Railway / RDSO / CRS approvals	- -	- -	3 to 4 months
Total Effective =	19 days	25 days	6 to 8 months
(Note that some of the activities may go parallel in above example; however, activities are added individually for only explanation purpose).

This method is popularly adopted in the design of Industrial / chemical / marine and offshore structures, where the time is a binding factor, and several disciplines are involved. Now a days, even in a road construction sector the time is becoming a binding factor irrespective of project cost and complexity (viz. a 250cr project as well as 2000cr road project, both, are awarded in same time duration i.e. two years); in such cases first two to three months are consumed in surveys (ground / geotechnical etc.) and next three to four months in detail design – thus within first six months the detail design / drawing of major scope (Culverts / Flyovers / ROBs / under passes) etc. shall be completed and made available for construction (GFC drawings to be issued). Later the remaining structures like toll plaza, signature bords / hoardings etc. may be completed in parallel with the ongoing construction. Out of two years duration last two months shall be kept reserved for finishing works, inspection, closure of C.O.S. in discussion with client and handover to client. Accordingly, the design consultant can plan his team size & schedules. Many good consultants use / prepare detail macro / micro level design plans, strip charts, schedules - using MS-Projects or Primavera or other planning & budgeting software programs (or simple flow charts & bar charts in excel). Project estimation and arriving at a sizable fee is really an art! and further execution of this program is a real skill (without taking undue risks in the design time, quality of output, or fees)!

One very important point is that the consultant must keep a record / register of man hour consumed every day and regularly keep reporting (weekly) to the client about the man hours consumed by the various disciple teams in that week. This task is monotonous (and a few people feel boring also) but very important especially in case of change-of-scope (COS) or revisions or time spent on R&D tasks (may be as per own wish or as inspired by client), or other disputes arising between two parties in future. Time-management & document managements (TMS / DMS) software programs are useful to keep a track of these (time leakages).

‘Quantity of outputs’ basis:- In certain design consultancy assignments (mainly fabrication / shop drawings, GFC or as-built drawings etc.) the quantity of output is massive and more or less defined, and hence governing too (i.e. there are large number of productions in terms of drawings). In such cases, firstly identify overall scope; then divide main scope in small modules - prepare schedule of the number of drawings / estimated output per module (considering the mutually agreed size of the output / drawing – viz A3 / A2 /A1 / A0). Depending on the complexity of contents and repetitiveness etc. to be shown in these drawings, decide unit price per sheet; multiply this number with the overall expected quantity, thus the total fees is arrived at (in certain projects clients insist for certain software programs like – PDS / PDMS / Revit etc. which if the consultant is not having, then has to buy a fresh, or get a monthly rental subscription. Such new software procurement leads to proportionate increase in their fees; remember, that cost of a new software can’t be recovered from a single project, neither it will be viable to keep fees competitive). In case of mixed drawing-size requirements, the total fee is estimated by multiplying unit fees with respective size with respective numbers of outputs. Table 4.


The unit rate completely depends on the contents viz. unit rate of an A1 size drawing for a GAD of a G+3 building could be half of that for reinforcement detail drawings; similarly, the rate of A1 size architectural drawing containing building layout for municipal corporation approval may have twice the unit rate than that of the reinforcement detail drawing of same size. Similarly, the rate of A1 size drawings showing electrical layout of an underground metro station may be further different. As stated previously these rates vary as per data available from previous projects / repetitiveness / standardization, effort put and availability of experienced team members (overall efforts). Caution is required to be taken in such type of fees when work is outsourced to a third party; their draughtsman tend to unnecessarily increase the number of sheets by showing lesser content per single drawing (by increasing the scale of view ports in individual sheets etc.). Also, ‘duplication of details’ in different sheets shall be controlled. Appointment of an active senior experienced retired drawing checker may be helpful for such works.

Example.4:- Consider a case of steel fabrication drawings in which per A3 size sheet about 2T to 5T weight rolled section members can be covered; thus a steel shed with 250T steel BOQ, would require about 50nos. to 125nos. of sheets of A3 size (assuming each details are unique without any repetition / duplication).

Similarly, in case of RCC rebar detail drawings per A3 size about 0.5T to 0.8T weight of rebar cage can be comfortably shown. Thus, a 4 x 6m x 120mm thick slab with steel index @ 120kg/cum (#) has about 340kg reinforcement hence can be shown in a single A3 size sheet or maximum two sheets (note :- here the scale of the view ports plays a vital role; but to keep the drawing legible what scale is required is considered while giving this example, also legible text font size can be given). Also note, that if a project has almost all unique items requiring ‘fresh drawings’ without (or hardly) any repetitions, then better to choose percentage basis, than ‘quantity of output’ or a ‘man hours’ basis (as these two may be subjected to large changes), this method is explained ahead. Before moving to next method of estimation, a few important aspects to be noted are as below.

(# note – concept of Index is explained ahead in detail)

• Consideration on Revisions:- In certain cases after drawings are complete, there may be a change in the data / scheme / methodology – necessitating revision in documents. The consultant should foresee and account for a suitable factor (say 20% of the drawings may get revised) for at least one number of revisions in the primary fees. But for a greater number of revisions separate / mutually agreed payment norms / basis should be devised by both the parties (consultant and contractor / client) together; so that the interest of both parties is preserved (i.e. consultant is not measurably utilized)!
  
  In certain cases the revision fees could be as high as main fees or even higher (if complete proposal is revised by client – say original proposal had a box type VUP which is changed later to a Girder type bridge! Or, in original proposal of G+3 RCC building changed to a G+5 Steel building etc.) – in such cases if the design is not started as per the original scope then it is better to scrap-off the original agreement and sign a new agreement as per revised scope to avoid disputes in later date; but if in case original design is completed but not approved then contractor should pay a sizable amount to consultant (refer suggested fees in table 5) and close the old agreement.
  
  

  Table: 5
  Status	Percentage Fees
  Design started but not submitted. (**)	25% of the total fees (*)
  Design submitted but not approved.	50% of total fees.
  Design submitted and approved but not executed.	90% of the total fees (##)
  (*) – inclusive of mobilization advance given (if any).
  (**) - In case of situation ‘a’ above, many consultants attempt to submit half cooked design/drawings, hurriedly / hastily to contractor, to show in records that they have completed the design and to claim / recover maximum possible fees as suggested in status ‘b’ above. So owner should be careful.
  (##) – only the 10% fees reserved for site support, is deducted.

  While dealing with the ‘Design Revisions’ in international contracts one has to be extremely cautious, because certain consultants try to squeeze money from the pocket of contractor stating the legal clauses in the contract document (or else absence of adequate clauses towards revisions), here it is worth discussing one live case study from one of the important metro rail project in West Bengal (names / identities of the parties involved are not so important (and protected here), and only the key lessons learnt are mentioned).
  
  Case Study – 1:- In one of the esteemed metro rail construction projects, one Indian JV contractor appointed world’s leading consultancy firm for the detail design. Hefty fee was agreed between the two parties, but unfortunately the contract document was not framed properly (it had only 5 pages for a huge 54cr rupees fee!) and the contractor blindly trusted the consultant. As soon as the consultant’s team resumed to site the design work started; but several items were not stated in the design agreement including the approval process and when to release the fees (steps) etc. The engineering manager deputed by consultant at site immediately judged this fact, with a few months of start of the project he started raising a ‘variation-bills’ / ‘revision charges bill’ for small-small items which were actually the part of consultant’s liability/duty! At the outset, the cost stated in such individual bills appeared small to many local site personals (even they didn’t convert it into local currency) hence kept on paying them, one by one. Unfortunately, after completion of about two year or so, the project got halted due to some administrative issues; the project got re-opened after passage of almost five years or so; till then the consultant’s team was inactively present at site (on/ off, fashion between their parent office, abroad for a few months and Indian site office for a few weeks, and still kept on charging monthly deputation fees). After receipt of ‘green signal’ from client the contractor reviewed the project progress (physical and financial) and was shocked to find that only 25% of the designs were submitted in the period of long seven years; out of these only 5% submissions were approved but the cumulative fees paid to consultant till that moment, had ran upto about 83% or so (i.e. 25% on mere submission and 58% on revisions / variation alone); the site accounts team and management released the grave mistake! They wished to terminate the design contract but by that time, consultant had completed all legal formalities. These caused soreness and dispute between parties. Project progress got hampered for long six months; in the meantime after a lot of mediation the dispute was resolved and a new consultant came on the board (now the new contract agreement was framed in line with international practices& guidelines (FEDIC) and had exclusive clauses on revisions, obligations, roles and responsibility of both parties, maturity of submission for fees will be only after approval from main client, indemnities etc. –the new document had total 350 pages!). The contractor had a great struggle to complete this project in time and budgeted price (as time loss was there for various reasons and due to wasteful fees paid, the entire profit was lost at the beginning, itself. In such dire situation, often many contractors would have exited the contract but in this case the contractor continued the project and completed it, in time.
  
  From above case study, it will be clear how the consideration on revisions / variations at the beginning of project itself is important. Any mistakes could lead to ‘make or break’ situation.

• Consideration on Unused / un-executed - designs, drawings, man hours:- In some cases / due to urgencies, clients give verbal instruction to consultant to provide certain designs / drawings on priority basis, but later (after design & drawings are complete), the clients forget or change his / her mind or employer may remove that portion from the contract scope. In such cases, client give excuses that ‘the design output is useless for us!’, without much botheration about the sincere efforts (time, money and other resources) put by the consultant. The consultant is bound to pay to his staff for their efforts viz. monthly salary (irrespective of money received from the client or not). This leads to a disturbance in cash flow of a consultant; In such cases a few sensible clients pay full amount, or a few pay upto 90%; in worse situation at least 60% amount shall be paid on submission (as the approval from main client / employer / owner / proof checker / third party is still not obtained – neither required as well as the fees reserved for construction support is no more needed). – ref. the suggested ‘payment slabs’ as table 6.
  
  
  As a caution to clients / contractors – please note that there are a few shrewd consultants who when get idea about such possible changes in scope – they quickly prepare substandard designs and dump them through email to client / contractor’s desk, so as to claim full submission & squeeze money out of it!
  
  Suggested Payment Slabs :- depending on the size of the job following are the suggested payment terms.

• Consideration on ‘quantity drop-outs’ and reparations :- In business everyone tries to make profit as much as possible; for this, a few business models try to make cost cutting at all possible corners. Clients aim at recruiting a best design consultant - at a least fee (L1 system). In this bargain, sometimes may land up appointing a substandard / inexperienced consultant for work. Especially in case of bids were client themselves are novice; in such case if recruited a substandard / novice consulting agency, then may produce a BOQ which looks most economical at the outset but in reality, could have several errors / drop-outs / flaws; ultimately leading to highest quantity consumption due to errors / drop-outs / glitches (cell linking mistakes in spread sheets and even goof-ups) and time over-runs & spoiled reputation. Further, the reflection of such mistake/s in BOQ could be stalling the entire project; and the cost of impact could be so high that one can not give penalty to the consultant for this to recover the losses! (Remember, that the design consultant fee ranges between 0.05% to as high as 2% of the project cost (depending on several factors discussed earlier and ahead); so a mere 5% error in BOQ would be devastating for the overall project cost as well as consultant.
  
  Hence the only solution available with the client is to ‘Thoroughly check the BOQ given by consultant’ on your own without blindly believing on the consultant! and tally the individual items / values with schedule-D of the tender documents – spot checks of BOQ.
  • A few clients pass on a small part of the penalty to design consultant for such mistakes to make them to realize their mistake (not as a corrective action).
  • Not only so, but also, whenever the consultant saves the quantity during detail design (compared to bid BOQ) and hence the profit - a few good clients keep a ‘bonus clause’ in consultancy agreement – this encourages the design consultants to give their best optimized design.

• Consideration of Time overruns:- in certain scenarios (especially man hour basis) the clients or consultant self keeps on making changes / R&D that the estimated man hours get exhausted (or even in case of less estimated man hours quoted in offer to get job and approved by client) before total submissions are done. In such cases either the consultants ask for additional man hours or hold the further submissions, a few consultants bear the loss and complete the submitting. Often, in major design contracts, it covers penalty for such delays or time over runs and even reviews at intermediate stages are conducted at higher levels; but in case of petty / small / lumpsum type design assignments this penalty is not possible, if time over run occurs.
  
  Man hours & Fees must be arrived at properly keeping such things in mind, and contract conditions shall be framed robust enough to cover such anomalies.
  
  Percentage of main contract value :- In big works, the overall fees may be linked / related / compared with the overall project cost. As mentioned earlier the detail design consultant’s fees ranges between 0.05% to as high as 2.0% of the project cost (depending on the repetitiveness of designs / types and numbers of disciplines involved / requirement of foreign experts as per contract conditions etc.); it’s a fact that architects do charge higher fees than that of the engineers. The cost of proof checking is usually half of the detail design, and the cost of the value engineering / expert opinion is about 25% of the detail design. The fee for tender stage consultancy is usually 10 to 20% of that of detail design fees (as in tender stage only BOQ is important and no detail calculation reports and shop / GFC drawings are needed). However note that the mistakes in DPR itself, could be devastating. After preliminary assessments the consultant would get the judgement about accuracy of DPR – accordingly he must appraise the contractor in advance.

Example.5 :-

• Imagine a typical road project, with 23km length, 650cr Rs. Cost and 2year duration for construction. Then the fees for detail design would range between 1.0cr to 2cr (which includes pavement & highway design, structures & Geotech, hydrology etc.). The fees for highway discipline practically remains same, but the fees for structure & hydrology depends on the number of structures / CD structures.


• If same length (i.e. 23km) of an elevated corridor with project cost – 1500cr is to be constructed at other location, then design fees may still range between 1.5cr (for repetitive structures alone) to 20cr (no repetitive structures + one extradosed span + Geotech surveys + expats + highway geometry + nominal hydrology etc.)

Often good contractors try to appoint a same consultant for ‘pre’ and ‘post’ tender stage designs to avoid any chances in Qty / disputes / escalations, over bid stage.

Lump sum fees / adhoc basis:- In petty / small design assignments the consultant may charge Lump sum fees when there is time or scope are fixed – this method is used for ‘Structural Audits’ or ‘Bid stage designs’ or other one time assignments. Reputed academic institutes like NIT / IIT follows this method for small projects – like review of one ROB / MJB – 3lakh INR as well as minimum review fees (irrespective of magnitude of designs) is say Rs. 3 lakh INR.

Quality / intensity of output :- The quality / intensity of output (in terms of elaborateness of detailing) should be varied as per the situation / requirements (viz. preliminary design, detail engineering / definitive etc.) and well as the quality of resources deployed (skilled man power, software, remuneration to staff etc.)

• In certain cases, client requires only outline design for budgetary purpose – in such cases no detail calculations or reports, drawings are asked; only cursory GAD is sufficient. Sometimes list of key items with gross weights (outline BOQ / qty) may be asked by client.
• Whereas in certain cases detail drawings are required but without working drawings (Reinforcement shop drawings or fabrication details, BIM etc.) and without written calculation reports (like in DPR stages).
• In case of bids (tender stage) outline drawings with detail BOQ is required by clients (but the consultant must do detail analysis for personal reference for accurate estimation – although written design report is not generated). This is useful, especially for nonroutine structures in that bid.
• In case of definitive design / detail engineering - all documents viz. analysis models, design calcs. Drawings (GAD, detail, shop, GFC, BIM), BOQ etc. are required by client/s – the same are officially reviewed at multiple stages (PC / AE / Client) before released for execution / construction.
• In certain cases, generation of documents from scratch is not required; it may involve only review of documents viz. proof checking / third party approval / value engineering (VE) jobs.
• In multi-disciplinary jobs the quality / intensity of output from each individual discipline may not (& need not) be same – e.g. it varies as per requirements – say (1) imagine an architect’s firm is bidding to local municipal corporation for project named ‘glorification of city transport system’, in which the output from structural, hydrology & Geotech team may be very limited. (2) or imagine a tall 100 storey tower coming up on a seashore – then the inputs from architect, structures, Geotech team will be intense as compared to hydrology team; in such case the services may also be required from a ‘wind engineering expert’ (for wind tunnel tests etc.)! (3) as a third example consider a ‘statue of Chhatrapati Shivaji Maharaj’ coming up in between sea near southern Mumbai coast – then the inputs from all disciples will be intense, and not only so, but inputs from a ‘metallurgist’, ‘oceanography experts’, ‘history experts’ will have to be ‘hired’ by the lead consultant.
• Some clients ask for a 3D walk through / animation at the last moment, but this requires detail working and consumes time and money – so before finalizing a ball point number as a fee, please discuss in detail with client about all hidden / un-spelt requirements that may crop-up later, to avoid last minute hassles!

Thus, the fees vary as per quality / intensity of output as per situations / requirements and contribution from subdomains! Another important aspect is Fees for creativity! what should be the fees for skills / art or a creativity? A renowned artist may charge higher fees than a newcomer for same task! This matter is really debatable; unlike engineering where mathematics, accurate detailing and productivity matters more (which are even quantifiable to a great extent – i.e. ‘product realization’ as defined by IS0-9001 standard) and hence more or less the norms for fees for doing certain tasks is well established in local market (although may vary significantly, internationally), but same is not the case with ‘creative’ or a ‘skill’ based output / domain where the output is uncertain, non-measurable in terms or ‘time’ or ‘quantity’ – such areas give output which has ‘emotional impact’ or ‘aesthetics’ or ‘social appeal / engagement’, relevance – so deciding the fees for such items is extremely difficult and could create a ‘make-or-break’ situation with clients in terms of winning the consultancy assignment as well as preserving the ‘esteem’ or artist/s involved. (for example the honorarium charged by Big-B for one advertisement would be much different than demanded by a local TV artist !).

Joint Ventures (JV) / Consortium, Fees in external Hiring:- This world is full of diversity and gamut of individual skills & talents. A single person may not have all the skills and talents in him/her that is required in variety of projects; and same is the case with consultants / organizations, too. Often there are jobs which require multi-disciplinary skills. Individual consultants can not afford to recruit all possible domains / skill sets, in their organization for a short duration. In such cases, a first option which emerges is to hire the services of professional/s with required skillsets (absent within organization) for a limited period and defined / measurable output. While hiring, a senior / renowned professional greatest possible care is required to not hurt their esteem / ego (especially when more than two to three numbers are hired at a time on single project, conflicts and difference of opinions may occur) as well as to ensure that they deliver output as agreed.

In certain cases, merely individual hiring is not sufficient, but services from several domains (teams) are required for a longer duration and for a significant part of the scope. In such consultancy assignments option of a joint venture (JV) / Consortium works well, were two to three companies come together for a short duration – firm a JV and distribute the workload / share scope. Based on the percentage of scope of work shared (or in terms of cost of works) one company within the JV / Consortium could become the ‘Lead partner’ and rest become ‘associates’ for that project. This equation would change time to time, in the next project as per job requirements. In consortium often the team/s or key team members get swapped / pulled / attracted to other organization in future (for better salary / hikes); hence the team members often sign an agreement / undertaking / memorandum (a protocol to not recruit directly) within companies or even a bond directly with the team members which helps to retain the team members to some extent and overall cohesiveness (reduce attrition rate). After distribution of main scope within each organization/s and teams – individual partners do their assessment and estimate the fees. The lead partner must ensure that entire scope (direct or indirect components) is covered without any overlaps as well as dropouts; this is very important point to avoid conflicts – disputes within JV and with clients, in later date. A ‘channel of communication’ and ‘submission process’ as well as ‘templates’ of the documents shall be finalized at the beginning for ease of coordination. Issue of copy rites / IPR should also be properly addressed within JV to preserve the identity and integrity. All these require a small proportion of main fees. In case of JVs clients should do thorough initial scrutiny and kick-off before awarding the work. In case where JV partners are from different nations then the currency to be used for payment (INR / EURO / DOLLAR / Dirham etc.) / establishing escrow account; rites to withdraw money, signing authorities (persons) from JV for that project, etc. are very important aspects and shall be finalized at the beginning (and reviewed by the client/s).

In certain JV cases it may happen that one partner quote very high fees for their assigned scope whereas others may quote sizable fee or some may even quote on lower side. So, all though the overall fees considering all partners together (when summed up) may look to be appropriate – but individual components may not be proportionate (a few partners / disciplines may make profit whereas a few may run into loss) such fees structure may disturb the overall equilibrium and such consultancy jobs may come to halt after functioning for a few weeks or months! Client as well as lead JV partner shall do detail scrutiny about each component of fees before signing off the contract. Merely seeing lowest (L1) fees is not correct.

Case Study – 2 – This is another live case study from India (from an UG metro rail project in southern India) by eminent contractor and consultant/s. The consultant was from South-east Asia hence formed a local JV for operational purpose for certain part of portion. One of the JV partners formed a subcontract / outsourced certain part to third party consultant and this third party outsourced an important function (discipline) to a fourth party! At the outset everything appeared perfect to the main client and to contractor; but as three years elapsed the clashes / disputes / mismatches in submissions – vs. actual construction, started coming on surface. In between one of the JV partner firms got liquidated closed-down and hence the connected chain of consultants got broken, leading to haywire submissions. In this case the lead consultant and contractor had aggressive discussions; then certain part of the design was taken by lead partner in their own scope (without any say on the fees quoted by the said liquidated company, which was unfortunately on a lower side); the remaining part of scope which no one could accept was completed by the contractor’s design team on own (instead of appointing yet another consultancy, which could have invited new problems). Thus, finally the project design and execution got completed and project was handed over to client.

From this example the multifold nature of JV / Consortium may be clear and how the cautions is to be taken while framing the contract and dealing with various stakeholders may be understood by the readers. Even, how the stability of individual partners can affect the JV and overall project, fees etc. can be seen.

Front Loading technique:- Consultancy profession is a very old and noble one; it is primarily based on intellectual professionals; still a few of them seek for profit (and nothing wrong in it). A few of these have learnt / devised certain techniques (good or bad) to make more profit. In certain jobs say there are ten sub activities, each costing say 1.0 lakh rupees (i.e. total fees of 10 lakh); a few consultants while quoting rates / billing for first a few say 3 to 4 activates put higher rates of fees (say 2lakh each) and lesser rates (say 0.5 lakh) for the remaining activities; thus in such situation after submitting a few initial assignments the consultant makes profit and likely to leave that job – obviously this attitude / technique reduces the reliability / longevity of that firm in market! This technique is often called ‘front loading’ – which was popular in olden days for ‘item rate’ type contracts. The client must be vigil and curb all such practices at the beginning itself. Although front loading was common within small / mid-size uneducated contractors, (it is very rare to find within seasoned reputed design consultants), but to bring completeness to the discussion on fees in the present treatise, it is mentioned here only as a caution.

Fees for Structural Audits (with and without NDT):- as per society bylaws (rule number 77) structural audits and recommended at every 5th year for building having life between 15 to 30yrs, and ever 3 yrs for life of building above 30 years life is mandatory. Depending on the combination of (i) original workmanship, (ii) exposure (rain, wind, sun, pollution, earthquake, cyclone etc.), (iii) occupancy / usage, and (iv) maintenance, every building is subjected to varied degree of damages – some damages can be identified merely with naked eyes by experts (visual inspection), whereas a few require detail aid of NDT. The fees vary accordingly. Normally as on date (Yr. 2022) Rs. 500/- is charged per 1 BHK flat or 1 RK and Rs. 750/- for two BHK flat, plus additional amount for conveyance, and GST, instrumentation, report preparation and NDT.

Example.6 :- let’s consider a G+15 storey residential building in southern Mumbai built in Yr. 1985, having two wings – one wing with 4 flats of 1 BHK per floor and another wing has four flats of 2 BHK per floor. Ground floor has parking, podium and gym. Then the typical fees would be as indicated in table 7.


Based on above audit / report if the building managing committee may decide whether to go for repairs / redevelopment and invite PMC proposals then same requires additional fees based on requirements / disciplines and existing building approvals (OC, SRA etc.) – this fee may vary from 10lakh to 50lakh or so depending on client requirements and size of project.

A few miscellaneous points

• What are Indices? – in large civil engineering projects often we workout the density of reinforcements per unit volume of concrete (like ration of weight of rebars in kg per cubic meter of concrete volume), or consumption of structural steel per unit plan area (kg/sqm) or a ratio of formwork surface area vs the total concrete volume etc. From these ratios, an experienced engineer can get a judgment about the accuracy of design / assumptions. These ratios are termed as ‘Indices’, often the engineers estimate / assume the indices for various works based on past experience and then guess the cost of the project. Once the cost of the project / work is decided then it is easy to decide the fee (as per various methods explained earlier).


• Foreign codes / standards – extra fees & time for study / conversion – now a days many big MNCs off-load the works to smaller consultancies. In such situation the designers from smaller company get a bigger exposure but need to keep self updated by continuously reading codes and standards of different nations (ACI / BS / EURO / IRC / IRS / IS etc.). This needs additional time and fees. Further to retain such trained engineers within the organization is another challenge for these smaller consultancies.


• Consulting agreement – although this paper is regarding the fees of engineering design consultancy projects, formation of adequate agreement is also needed (for assurance to both sides). Many client’s merely focus of negotiating on ‘minimum fees’ but forget to define the other points viz. roles and responsibilities / Contract obligations / Client preference / Clash of contract interest / payment terms & steps / breach of agreement etc. the clauses in consulting agreement may vary as per the magnitude of work. In big size work orders / agreements (say above 1cr) it is better to formally adopt the legal procedures for security.

Example.7 :- Design of Segment Formwork / I-Girder Formwork – in industry there are very less number of consultants who are aware of design and detailing of temporary structure (Enabling works). Imagine a typical segment formwork (long line and short line) vs. a design of ‘I-Girder’ formwork. The tonnage of one single segment shutter may be lesser than that of the single ‘PSC I-Girder’ shutter, but the intricacies of detailing involved in a segment shutter are much higher than those in PSC I-girder shutter. Further, it may be noted that for curved segmental spans the design and detailing is still complex. Hence the design fee be decided judicious judgement. For hanging traveling formworks for a balanced cantilever span the detailing is further more complicated and hence the fees is further higher. Thus in case of enabling structures the method of estimation (time based or / quantity based or / percentage of main structure or / lump sum or / quality based etc.) shall be chosen as per requirements. For instance, fees for design & drawing one formwork for PSC I-Girder may be charged 1.0 lakh to 1.5 lakh INR whereas the same weight segment formwork may be charged 2.0 lakh to as high 4 lakhs; fees for similar cross section of box girder in a balanced cantilever may be upto 5lakh or higher (depending on intricacies involved in detailing, size of girder i.e. single cell / twin cell / three cells, curvatures, number or repetitions).

Some of the clients as for drawings in 3D software programs (like Revit / Tekla etc.) for automated fabrication on CNC machine may required large fees and trained resources.

Case Study – 2 – This is a case of an elevated corridor project in heart of Delhi city. One new consultant had quoted for this project and stood L1, but another eminent consultant was L2 consultant; the difference in fees of L1 and L2 was significant! Still the government officials were reluctant to award project to L1 consultant as they were new and past track record was not so good. But this L1 consultant promised government client to given 10% saving in the project quantities. Then government client approached L2 consultant for checking the possibility of such luring offer and possible reduction in fees of L2. Then L2 consultant mentioned that it is technically possible to save quantities but would require complete redesign and hence extra time (as there was a pressure on government to launch this project before elections!), they also clarified that fees quoted by L1 is pseudo saving. Finally, the work was awarded to L1 consultant. One year passed still the L1 could not produce design-drawings (the project duration was just 2.5 yrs). Hence contractor started their grudges. Then client asked L1 consultant to visit Delhi every fortnight and clear the pending issues within period of six months or so. After passage of mere three months it was explored that the L1 consultant had not covered site visits in their offer and hence their entire fees got exhausted in air fairs and hotels. Thus after three months L1 consultant surrendered the project; there was already a delay of 1year and three months – hence client requested contractor to offer some help in terms of logistic arrangements. The new arrangement worked for a few months – then client asked to provide a proof of 10% saving of quantities in designs ready till then. The consultant failed; their fees was so less that client could not impose any new penalty (as already due to frequent air travels the fees was exhausted). Finally the consultant was terminated and a new consultant was appointed; they rationalized the whole remaining design completed the work as soon as possible. Overall project was completed with two years of delay and additional expenditure of about 18% or so.

From this case study we learn that – (1) do not under estimate the traveling charges; charge them separately at actuals (ii) client should not fall in the love with the luring / lucrative promises made by consultant, (3) whoever makes a mistake (be it a client, be it a consultant, or be it an individual) – final money & time loss is to be sustained by common public (citizens) and nation, so be responsible and cautious!

Conclusions :- Engineering Design consultancy is a very satisfying career; everyone wants to be consultant but everyone can not become consultant because it requires knowledge, sincerity, disciplined behavior and patience (the monetary returns in consultancy are proportionate to these skill-sets). In consulting business, one has to keep constantly upgrading their knowledge but reading, attending training / workshops, interacting with different professionals; still one may fall short in a few areas (BUs and disciplines). At such instances a freelancer or option of forming JV / consortium / association may be explored. References given below can be referred for additional information.

References

1. Design consulting agreement
2. Appointing consultants – SOP
3. Structural Audits – article part.1 & 2 – published on Licked in by Er. Vivek Abhyankar.
4. Plantation of trees – cautions and care :– by Er. Vivek Abhyankar & Dr. N. Subramanian, published in NBM&CW.
5. Various websites on Internet.

About the Author
Er. Vivek G. Abhyankar – Founder of SGAWings Civil Engineering Consultants and Advisor (OPC) Pvt. Ltd.; Fellow of Institute of Engineers (India) & IaStructE, Licensed Structural Engineer (MCGM), and Life member of various other professional Institutes. He is a Gold medalist from the University of Mumbai with a PG-Structures degree. Possess over 23 years of rich professional experience in planning and design, detailing of various civil engineering structures (roads/metros/buildings/temporary works, etc.). Apart from professional work, he was a visiting faculty for Structural Engineering at VJTI, SPCE, and has acquired vast experience in technical training for site engineers. He has written more than 30 technical papers on practical aspects of engineering and contributed 3 chapters in top-rated books and guided more than ten M.Tech., AMIE thesis. He also contributed to various professional initiatives in the corporate sector, like E-Learning, Knowledge management, Engineers’ Day, standardization of construction inventory, etc.