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Cutting off their noses. . .

Do consultants and clients need guidance on setting fee levels?

Structural engineering consultants are facing a crisis created by a worsening culture of low bidding and falling fees. The situation is so bad that it has prompted the Institution of Structural Engineers (IStructE) to publish guidance for consultants and clients on fees for certain types of work. Its members have complained that fees have plummeted from around 3.5% for complex projects like stadiums to as low as 1.2%.

Meanwhile architects enjoy fees tipping towards 5%.

'It will not only help our members but also inform clients what services are provided so that so everybody understands and knows what's included, ' says IStructE chief operating of cer Keith Eaton. 'We know many of our members had problems with clients because things weren't explained properly.' Design and business manager at specialist stadium consultant Bianchi Morley, Carol Fines, says structural consultants have only themselves to blame for cut throat bidding wars.

'I'd like to bang their [consultants] heads together, ' she says.

'The industry has lowered fees but as a result the jobs cannot be resourced properly, ' she says.

'Once you start drastically reducing fees, it's dif cult to go back up. I think we are creating such a dangerous situation that is getting worse for this industry and engineering companies have got to have a long hard look at themselves.' The impact of cut throat bidding is particularly acute on smaller jobs where the overheads are lower, according to Scott Wilson regional director John Holden. This, coupled with low fees, is causing some consultants to pull out of this work altogether.

The Association of Consultancy & Engineering (ACE) and the Engineering & Technology Board both say that the knock on effect of the 'discounting crisis' is that consultants are not making enough money to enable them to get the best graduates.

'Low fees will impact the salary levels of graduates. It's about valuing engineering properly, ' says ACE economic and policy director Irum Malik.

The guidance was broadly welcomed by most consultants contacted by NCE.

One voice of dissent comes from Whitbybird founder Mark Whitby, who says that low fees are only a problem if consultants make them one.

He says it is difficult to publish generic fee information because each job is different and a guide cause embarrassment and misunderstanding between consultants and clients. 'I think it's a very dangerous thing to do.

Good clients know what they should pay.' Whitby would like to see a risk assessment made statutory for ms seeking public sector contracts. The assessment would focus on the firm's insurance track record. Only those with those with a 'Triple A' rating could get the job.

Stanhope director Peter Rogers shares these views. He says that the IStructE guidance could give clients and consultants unrealistic expectations of what should be charged.

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