Geotechnical engineers are frequently asked to prepare cost competitive proposals for providing a geotechnical engineering investigation for a project. When presented with such an opportunity we provide an appropriate scope given the nature of the project along with an estimated cost for providing these services. In many instance, our proposed price is not the lowest and the project is awarded to another engineering firm. Whenever this happens I usually shake my head, knowing that competitively bidding geotechnical engineering services (or any engineering service for that matter) is inefficient and represents an imprudent evaluation of cost.
Let’s first look at the process of comparison shopping for these services. Assume an owner is building a two story office building with an overall footprint of 40,000 sq. ft. In Florida, the average cost of geotechnical engineering exploration and recommendations would be on the order of $5,000. Three bids for this project may result in prices 15 percent either side of that average cost ($4,250 to $5,750) representing a $750 deviation from the average. Typical cost of construction at $200 per square foot puts the building budget at about $8 million, and assuming an overall design cost of 8% of the building cost, all design fees will total over $600,000. The amount “saved” by bidding the geotechnical engineering services ($750) comes to about a tenth of a percent of the design budget and less than 1 cent per square foot over the building area. Clearly, the price differential between the low and average bids is minuscule.
The insignificance of the differential price alone is reason enough not to bother procuring bids, as the cost of procurement itself (letters, phone calls, reviews, etc.) and evaluation of the bids would exceed the financial benefit. But, taking the low bid is a simple and defendable selection method. Yet there are much more important reasons to procure geotechnical engineering services based on experience, capabilities and qualifications rather than price alone. You see, the real cost of geotechnical engineering services has nothing to do with the price of these services but everything to do with the costs associated with the resulting recommendations. I have seen many examples of the impacts of the “true cost” when a less experienced engineer employing less advanced (but cheaper) exploration methods, or relying on less data (borings, lab tests, etc.) or applying more conservative (or risky) evaluation methods produced foundation recommendations that were overly conservative or conversely risky. The former resulted in foundation designs that were much more costly than necessary, orders of magnitude greater the bid cost savings, while the latter may have created higher long term maintenance/replacement costs and post construction issues and possibly even failures. In either case, the additional cost would dwarf the price differential of the geotechnical engineering bids.
I have explained this issue in great detail to many clients and the most common question is, “How can I trust that my sole source price from the most qualified firm is fair”? It is a good question and the answer is in the question itself. If you have concerns that the selected firm will not prepare a fair scope or cost, then you are dealing with the wrong firm; at least the wrong one for you. You will eventually trust the geotechnical engineer to provide design recommendations for one of the most critical aspects of the project, its foundations. If you cannot trust the firm to be fair in pricing, then trusting them with a much more important design responsibility would be illogical.
So, talk to your geotechnical engineer, become familiar with their qualifications and capabilities, build a relationship of trust and know that the true cost of the project’s geotechnical engineering will be felt throughout the entire process.
Want More Information?