RE: Fixed Price Quote for Engineering - Thoughts and Comments

For large jobs - the volume of documents required for bid is enormous and in the end what is actually produced is a "best guess" at defining the project. The margin of error built into that "best guess" is often times greater than any potential profit. Add to that any litigation costs, resulting from interpretations of the "best guess", and everyone is in the red.

My background is large projects ($100M+) using expensive but very cost-effective 3D Plant Design tools from Intergraph. Intergraph is now focusing on developing tools which encompass the total life cycle of the "Plant". Companies like DOW chemical & Siemens are helping to fund this development.

Basically the information is reused and passed along electronically through the life of the plant:

preliminary design info -> engineering info -> procurement info -> construction info -> operations info -> maintenance info -> decommissioning info.

The value in doing this is that the client ultimately has an as-built 3D model of their Plant with a database populated with the entire history of the plant. Forget searching through mountains of paper - anything you want is available via a web browser. STOP - just think about the value of that information through out the life of a new plant being designed today.

Getting there is not trivial and requires a very involved engineering process. The politics of most companies and projects ultimately kill this process.

On the Engineering side - there is no added value in the exercise of preparing and passing that data along to the Client

On the Client side - the cost of the plant comes from the Capital Budget of one division of the company - the data has no value to this division and requiring it would be just an added expense to the project - the operations division, to which the data is valuable, has its own budget but by the time funds are available it is too late.

It's not fiction, most of the capabilities are already in place with just a few holes to fill in but it also isn't happening - most clients don't understand what we can truly do for them. A fixed price bid process also means we usually never get a chance to tell them.

In order to do effective engineering there has to be a relationship between the engineering company and the client - there has to be trust that as professionals we are keeping the interests of our clients in mind and being compensated accordingly for our services - COST +.

I know it all sounds kind of Utopian but I've seen my share of bad decisions made because of cost constraints - you really do get what you pay for.

There was a joke about the Space Shuttle being designed and built by the lowest cost bidder - I haven't heard it in years.

Paul Hawco

Mechanical Engineer

Neill & Gunter (Nova Scotia) Limited

<a href="http://www.neillandgunter.com">http://www.neillandgunter.com</a> <<a href="http://www.neillandgunter.com">http://www.neillandgunter.com</a>>

[Non-text portions of this message have been removed] Received on Wed Jan 14 12:36:00 2004