| Saying "No"
to Fee Requests in RFPs
In tough economic times, being asked to submit a fee as
part of an RFP can be an invitation to disaster. The hunger
for work can lead a design professional to underbid a project
and, if the job is secured, provide less than adequate design
services. So how do you handle such requests for fees?
Following is a letter addressing this issue from Howard Dutzi,
a committee member of the Structural Engineers Risk Management
Council (SERMC), an organization of structural engineers who
participate in the Structural Engineers Risk Control and Liability
program (SERCL), a program of professional liability and risk
management services provided by XL Design Professionals. This letter was sent
to a design planning firm that requested a fee proposal as
part of an RFP from Howard C. Dutzi & Associates, Inc.,
Colorado Springs, CO
Dear Mr. Doe:
Thank you for your kind invitation requesting that our firm
submit a proposal for providing structural engineering services
for the above referenced project. This is a project which
we feel highly qualified to perform.
Unfortunately, we must decline your offer. Our firm has a
policy not to submit a fee as part of a selection criteria.
Although we feel that fee is important, we have found that
it is difficult to arrive at a number at such an early date
without a discussion with the client to determine their precise
needs and expectations. Even though your RFP does a better
than average job in outlining a scope, there are still many
unknowns.
Several years ago, we discovered that one's professional
approach to a project changes when fee becomes the criteria
for selection. We soon realized that firms were submitting
low fees necessary to get the job. This led to engineers finding
ways of cutting their time on a project. This was accomplished
by minimizing the level of service such as:
- Selecting structural systems which are easiest to design
as opposed to selecting a system which is the most economical
to the owner.
- Leaving much of the engineering design up to the contractor.
- Designing the more heavily loaded members and repeating
throughout.
- Minimizing details and leaving it up to the contractor
to develop.
- Not providing checking during and at the end of the preparation
of the contract documents. Failure to do so leads to more
errors.
- Providing minimal review of the shop drawings.
This list could go on and on. While we all need to be conscientious
as to how we spend our time, doing so by methods indicated
in this list is, in our opinion, foolhardy, does not serve
the best interests of the client, and leads to a building
costing more than is necessary.
In the past, we have considered going after projects based
on price, but in discussing what we needed to do in order
to develop a low fee, we soon came to the realization that
we were suddenly and primarily representing our own best interests
and not those of our client. We were talking about methods
of "short-cutting" rather than concentrating on
how we could, to the best of our ability, serve our client.
We recognized that we need to be responsive to our client's
needs, produce an economical structural design, and provide
documents which are complete, clear and will lead toward more
competitive pricing and will also minimize the time of the
people who need to interpret and work off of them. It is our
philosophy that we must represent the best interest of our
client.
It has been our feeling that we should first be selected
on the basis of our qualifications, our ability to do the
job, and how we can fit in and be a viable member of the team.
If we meet this criteria, we should then discuss everyone's
needs and arrive at a fair fee that will meet everyone's expectations.
If such a fee cannot be developed, we shake hands, part as
friends, and hope we will be invited for consideration on
your next project.
We hope that you understand our position and that perhaps
sometime we can be of service. Meanwhile, best of luck on
this project. It sounds exciting and is the type of project
we would have enjoyed participating in. It should be a real
asset to the community.
Very truly yours,
Howard C. Dutzi, P.E.
And now the rest of the story: You may be surprised by the
outcome of this letter. Velma Lane of Van Gilder Insurance
Corporation, Mr. Dutzi's XL Design Professional agent, writes:
Mr. Dutzi called me and said that the firm actually did get
back in touch with him. They said Mr. Dutzi's firm was exactly
the type of firm that with which they wish to develop a long
term relationship. Further, the person preparing the RFP was
actually the owner's representative and really was not up
to speed on the selection criteria for structural engineers.
The firm has asked Howard to submit a proposal (without fee)
and, as they go through the selection process, it was their
hope that Mr. Dutzi would be the firm selected to perform
the structural services on the project.
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