Well said, Steve. Congratulations! Keep it up!!
C. V. Gangadharan.
--- Steve McKenzie <mechproj@xtra.co.nz> wrote:
> The posting is a rather gloomy one.
>
> First, fixed price is a reality in many areas. The
> fixed price is normally a
> lump sum or a percentage of the installed cost.
> There is a tendency to the
> former as management increasingly tends toward an
> accounting driven
> practice. Everyone is in the same boat; you have to
> get over it, or work for
> someone else who will give a fixed price and pay you
> an hourly rate.
>
> Where the scope is clearly defined there should be
> no problem; just work out
> the hours,hourly rate, materials, disbursements,
> fees, profit and risk. Then
> you guestimate what the market will stand, and
> decide what discount will get
> you the job. From these two sums you come up with a
> bid price. If you dont
> know how long it will take to do something, guess
> generously. Uncertain
> things usually take longer to do than anticipated. A
> client will have little
> confidence in your capability if you cannot tell him
> the effort involved.
> Where the scope is not clearly defined, then write
> your own and include it
> as a condition of your bid. This is quite a strong
> position to be in. I
> believe it is acceptable to include provisional sums
> for unclear work;
> although it is essential to ensure the client knows
> what a provisional sum
> is, and that he will be paying for the actual effort
> required, not the
> provisional sum.
> State clearly that deviations from scope will incur
> extra cost, and state
> the basis for the extra cost; normally hours worked
> at stated rate plus
> marked up materials/disbursements. I always state
> required client turnaround
> times for approvals etc because there is always time
> wasted in waiting for
> late information, or trying to work around it. Also
> state your quality
> requirements for example what file formats you
> require.
>
> Fixed price can have a downside for the client, for
> example.
> In a fixed percentage job, the fee is proportional
> to the total project
> cost. There is an incentive for the engineering to
> specify high capital cost
> solutions. Fixed percentage jobs can be expected to
> have expensive equipment
> and unnecessary overdesign. By overdesigning, any
> uncertainty is reduced by
> large safety factors instead of detailed design
> investigation.
> Similarly for fixed lump sum, there is no incentive
> for the engineer to do
> any work other than the bare essentials. If, for
> example a smart low capital
> cost solution for a particular problem is
> discovered, but significant
> engineering input is required, then the lump sum
> engineer may choose to
> avoid this and go for the solution which is more
> capital cost intensive but
> involves less engineering design work.
> Neither of the above examples are necessarily bad
> things, they are
> commercial realities imposed by others.
>
> Some types of work, such as troubleshooting and
> scope definition, are not
> suited to lump sum bidding. If a client is stupid
> enough to insist on a lump
> sum in this case, always write your own scope of
> works, and stick to it. If
> the clients expectations are not satisfied when the
> scope has been
> completed, then extra work can be negotiated,
> normally on a rates basis.
>
> As far as getting paid you are in a strong position
> until the deliverables
> are issued. Some contracts have payments tagged to
> milestone deliverables.
> No pay, no more deliverables issued. End of story.
> With variations/ scope
> changes, ideally they should be agreed and signed
> off as they arise. This is
> not always practicable, but there is nothing worse,
> from a clients
> viewpoint, than an engineer turning up with a bundle
> of claims near the end
> of a job, and expecting payment for them. Get in
> early with claims and they
> stand a good chance of being paid in full. How you
> go about this depends, in
> part, on how well you know thew client.
>
> Quality and comprehensiveness of deliverables is a
> perennial. It pays to
> look over the fence every so often, to ensure your
> output approximates that
> of your competitors. It is bad form to complain to
> the potential client
> about the work of others, however, especially if you
> missed out.
>
> I dispute that design and analysis is vastly
> superior nowadays. Slighty
> better perhaps but not vastly superior. More use of
> software, often by
> semi-skilled operators who have little insight. Some
> reduction in
> safety/design factors, and perhaps costs. Simple
> numerical methods have, in
> the large, displaced higher mathematics - when was
> the last time you used
> integral calculus seriously?
>
> You will really have to learn how to provide fixed
> price bids, however you
> should feel free to write your own scope or tag the
> clients scope so you are
> not unnecessarily exposed. In my opinion a bid is a
> commercial tool more
> than an engineering one, and should be treated
> accordingly, just like
> contractors do.
>
> Cheers
>
> Steve
>
>
>
> -----Original Message-----
> From: Paul Bowers [mailto:pbowers@pipingdesign.com]
> Sent: Wednesday, January 14, 2004 11:55 AM
> To: PipingDesign@yahoogroups.com
> Subject: [PipingDesign] Fixed Price Quote for
> Engineering - Thoughts and
> Comments
>
>
> A message from a listmember who prefers to remain
> anonymous:
>
>
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