Back to Scale Fees for Professional Consultants

During past years, Contractors have often complained that tender prices are ridiculously low. The situation has been even worse for professional consultants, particularly design consultants.

Once upon a time consultants used to be paid scale fees set by their professional institutions. Presumably this was intended to ensure that professional standards were maintained.

There is a lot of truth in the old saying that “if you pay peanuts you get monkeys.” We have known a lot of contractors and employers who say that even monkeys are in short supply when it comes to contract administration!

Quite apart from badly drafted contract documents, designs which cannot be built, all projects seem to suffer the effects of variations not being valued, extension of time applications not being processed, loss and expense not being ascertained etc.

Many consultants will blame this on the poor quality of information provided by the contractor. This is often very true when it comes to claims. However, under most contracts, the duty of granting extensions of time and valuing variations is fairly and squarely the duty of the Engineer, Architect or Quantity Surveyor as the case may be.

Why do they not perform their duties in these respects? It is quite simply the case that there are insufficient amounts in their fees for them to employ the expertise required.

Although this may not have an immediate adverse impact on the Employer, we estimate that for every US$100,000 saved in fees for contract administration, US$1 million will probably be spent on the arbitrations which are likely to follow.

Unlike contractors, consultants cannot achieve savings in costs by innovative methods of construction and buying power with subcontractors and suppliers. When employing engineers, architects and quantity surveyors you generally get what you pay for. That is why it used to be (and still is) possible to calculate a reasonable scale fee based on the nature and value of the project.

For an employer, the most important factor when employing a consultant should not be price; it should be quality of performance. If the consultant does not perform and the project is completed late, the fees are insignificant when compared to the costs of the delay and disputes which follow.

Our recommendation to governments and to all employers is to select your consultants on the basis of their capability and to set a scale fee on the basis of the cost of doing the job properly and efficiently plus a reasonable percentage to cover overheads and profit. The work should then be shared out among the consultants on the select list. The performance of each consultant should be carefully monitored and measured against a specification for the services to be provided. In cases of inadequate performance, the consultant should be suspended from the select list or replaced by another consultant of adequate ability. Under such a system healthy competition would remain but on the basis of expertise and performance (i.e. value for money) and not on the basis of price.