time and material contract with civil engineers

6 Replies

I'm developing a multi-family community from scratch, and hired a local civil engineer firm for site work (grading, erosion control, drainage plan, etc.) design. The design will be used to get city permits. 

It is expected that after we file the permit application, the city will come back with comments for us to revise the plan, and it is unclear how much change they city will want. So, in the contract we signed with the civil engineer, we have a fixed dollar figure for the initial design work leading up to permit application. However, due to the uncertainty of how much the engineer will have to work on the city's comments, our contract with the engineer says the engineer's work to address the city's comments will be on a time and material basis.

A few days ago the city got back to us with their comments regarding our permit application. The engineer told me an engineer will need to work 8 days full time to address all the comments, which seems to be an exaggeration of the work involved. Yet there is nothing I can do about it. It is impractical to change the engineer at this point.

I think this is a pretty common problem, very much like being presented a change order (on a time and material basis) by a General Contractor, except it is much hard to determine the time needed for an engineer to finish his job.

How do you deal with such a situation? I'm asking this both for the situation at hand, and for future reference.

If I can do things all over again, it seems my only choice is still a time and material contract for the engineer to work on the city's comments. Any suggestions?

When you say multifamily community, how big? 

1. Did you hire the engineer directly or through an architect? 

2. I assume you are working with a general contractor also? 

3. How big is this project? how big is the lot? how many parking spaces? How many pages of drawings did he submit?    8 days @ 8 hours is 64 working hours, that seems to be more time than he would need to complete the original design. What is his hourly rate? Most engineers charge around $125 - $150 an hour - That's almost $10k. What did he charge you to begin with?

4. Did you review the comments from the plan reviewer? Are they being unreasonable? What are they asking for? Sometimes the plan reviewers are over zealous and make overly stringent requests that the building official can over ride. Typically a contractor or architect who has done several projects in a town has a relationship or rapport with the plan reviewers and building official and can reason with them to some extent.

5. Has this engineer submitted permit plans to the particular municipality that you are trying to obtain a permit from in the past? If he has any experience with this town he should know what they require. I would agree that every town chooses to enforce the local and state codes differently but if he's worked in the town before he should be aware of most of what they're looking for. 

Thanks for your reply, Jim.

1. I hired the engineer directly, the architect knows him well too. The engineer is one of the dominant firms locally, and is reputable.

2. Yes, we've picked a GC, who is local too.

3. The project has 15 units on 0.9 care, with 26 parking spaces. The initial charge for the construction documents is $10K. There are other services (survey, site plan review etc) that proceeds the construction documents, and those cost $22K.

4.There are 70 comments the city made on the construction documents, none of them is unreasonable. Most are minor, cosmetic ones. The engineer did not make any fatal errors or have to dispute anything major with the city. This engineering firm is located within 2 miles from the city hall and work with the city a lot, and they know the reviewers very well too.

My architect did say he does not usually see so many comments from the city. I think one cause of so many comments is that there was a new engineer who did a lot of the work on our project, and he stayed at the firm for less than a year and has just left the firm recently, and a different engineer is dealing with the city's comments now.

The issue with T&M contract is that a disreputable firm may have the incentive to over-charge. I don't want to think the firm we chose is doing this, but they certainly don't have strong incentives to do things fast, and I'm paying them to correct their own omissions/errors of the inexperienced engineer who were assigned on our project.

So as you can see, I did my homework in choosing a local, reputable firm, who does lots of business with the city, and still ran into such an issue. I think the inherent issue is with the T&M contract, yet I don't see a way around it, even for my next project down the road. 

Any thoughts?

Hello, I am new to this forum and this subject touched a nerve with me so here you go...

I have been in civil engineering for 28 years. I will be brief and say that it sounds like your being taken advantage of. When a civil engineering contract is put together, it is traditionally for a fixed price "PLAN CHECK CORRECTIONS INCLUDED". It is the engineer's obligation to him or herself as well as the client to anticipate approximately 3 planchecks depending on the complexity of the project. The cost associated with completing those corrections should be in the contract, but not necessarily spelled out, but definitely absorbed into the fixed price.

Depending on the size of the civil engineering company's design staff, it should take approximately 1 to 2 working-day weeks to turnaround a plancheck if the design was done within substantial conformance of the design standards of the governing agency. The traditional time for a civil engineer to require a T&M fee is usually:

1. On the front end during the pre-planning phase of a project which is normally a moving target until you have a final plan that can move forward into final design. This is the norm and I tend to set this at a time and materials basis to an amount not to exceed. In other words, I will set price of maybe $5K-$8K (depending on the project) which I would bill toward for pre-planning engineering. If the amount of work exceeds this amount I would contact the client to let them know, and give them justification for additional cost.

2. Changes beyond the scope of their contracted dictated by the owner or governing agencies or both.

Next project you do, ask the engineer to make sure that their cost covers plancheck corrections so there is an amicable understanding of what is being paid for. Nothing worse than someone knowingly taking advantage of you.

I hope this helps

@Will Brown I’m an architect in California, and many of our contracts are written that way.... only because the city review process has gotten out of control. With the amount of work now, almost all cities are looking for ways to slow the process down. We always put an estimate on out TM fees, because expecting 1 day and needing 8 is a big difference and probably means we did not perform on our previous task. That is one potential reason to avoid a Fixed fee followed by time and materials. I always recommend running your civil through the Architect as a way to have another set of eyes on the fee/scope/deliverable. Good luck with your project! Scott

Hi @Will Brown - I’m chiming I’m not with knowledge(sorry!) but with a question. Would the drainage requirements be mitigated by making the parking lot from pervious pavement/asphalt and the installation of a green roof(which would contribute to stormwater absorption?) I don’t have experience with what you’re doing, but I wonder if some smart infrastructure could reduce overall costs.