Re: Fixed Price Quote for Engineering - Thoughts

From: <Christopher>
Date: Wed Jan 14 2004 - 11:00:00 EST

I get into this problem fairly often. I've set up some rules for myself when I do fixed price jobs. Rule 1 is don't offer fixed price bids on work where I don't have pretty much complete control. Rule 2 is don't offer a fix price on types of work that I haven't done before. Rule 3 is always provide a work statement to include deliverables, information needed, a rough outline of the approach, any caveats that will bound my responsibility and a rough schedule including a schedule for items I need from the client and terms and conditions of payment. The work statement is incorporated into the purchase order, one way or another. I also am very careful about giving fixed price bids to people I haven't had a chance to size up. And I don't dicker over price, unless I'm really desperate for the work. I've never been that desperate.

>to do bid fixed price jobs the scope has to be clear and concise;
>otherwise the problem is that there is virtually unlimited potential for
>never-ending scope.

Right. That's the reason for the work statement--to provide agreement on scope and deliverables.

> The appearance is the opposite due to push button software.
If you think you can do a job push button style you're probably in the wrong business. People don't hire out things they can do simply by pushing a button.

>- engineering analysis is variable and the same product from all sources
>cannot be specified and contractually detailed.
Not so. You have to learn what your client actually wants and decide if yyou can provide it. If you don't know what your client wants you won't even know when you're finished, let alone if you've given him what he needs. If the client really doesn't know what he wants, you need to help him find out.

>there is no obligation on them to solve or account for all safety
> and engineering issues, and no accountablility if they do not.
Not so. Captive engineers, whether or not registered are as accountable as anyone else. If they screw up they may be sacked or passed over for promotion. There is every obligation to account for the same things that the hired guns account for.

>- the size of the job has to be sufficiently large in order that the
>variable or risk content is in reasonable proportion to the total value of
>the work. This rarely happens in engineering, and is grossly imbalanced in
>risk.

>- in engineering the cost of litigation or risk is far higher (by multiples
>of hundreds of thousands) than the work value.

>- in fixed price jobs there are progress payments . This is not possible in
>engineering other than on very large jobs because the cost of administration
>is too great.

>- payment risk is far greater. Once the work is turned over there is little
>chance of recovery.

All nonsense

>- quality of product is a huge issue. On the surface two drawings can look
>the same. Lines on a page. One drawing can have engineered background, to an
>optimized level, containing resources and content that are cost effective to
>buy, everything fits, there is a database with intelligent data.
Technobabble.

Christopher Wright P.E. |"They couldn't hit an elephant at <a href="/group/PipingDesign/post?postID=vu6Co0Pt6HFUFq-M_lUiRkZvouVaX535yg3TDQIatusGz9Gk0ouEykuIhNRzACTVY3BUPTbH8Xl-cCI0txM">chrisw@skypoint.com</a> | this distance" (last words of Gen.

___________________________| John Sedgwick, Spotsylvania 1864)

<a href="http://www.skypoint.com/~chrisw">http://www.skypoint.com/~chrisw</a> Received on Wed Jan 14 11:00:00 2004