The Fresh Projects financial control system will enable consulting engineering companies to price their services fairly and derive commensurate value for their services to ensure the sustainability of the industry and its level of skills, says engineering software development firm Fresh Projects founder Simon Berry.

The locally developed online system enables an engineering company, or an individual engineer, to determine a profitable fee structure for a project well in advance of commencement, reducing the likelihood of accepting unprofitable projects.

Consulting engineering fees in South Africa are not prescribed, but guidelines published by statutory body the Engineering Council of South Africa (ECSA) recommend fee structures. In an unfortunate twist, this fee tariff model, which aims to provide clarity on engineering fees, is being investigated by the Competition Commission for possibly reducing competition in the industry.

“Fee scales are not effective, and they were dumped in the UK twenty years ago owing to competition issues. Artificially discounted fee structures are causing an unfortunate ‘race to the bottom’ between consulting engineering companies, with a concomitant reduction in resources to support skills in the industry. All projects must be priced on first principles – the cost of providing the engineering services and a reasonable profit for the engineering company in an open, competitive market.”

South African consulting engineering companies are offering discounts of more than 50% in project fees to win work. However, this leads to unprofitable projects and, possibly – because costs are slashed so severely – lower-quality work, as there is a limit to the time and resources a company can allocate to such projects.

“The Fresh Projects system empowers engineers with empirical data and information to take to the negotiating table and demonstrate to clients the effects of various fee levels or discounts on their ability to carry out the work.”

Unprofitable projects are a significant risk to the industry, especially as it grapples with the same macro-economic conditions that its clients are, leading to disputes on quality of work and contractual obligations, which will add to the risks for clients and firms alike.

Consulting engineering work is valuable owing to the highly skilled nature of the work undertaken in addition to the value-add provided by engineers through improvements made, problems solved and design flaws identified, and the success of infrastructure developments delivered. The industry must insist on fair reward for work, emphasises Berry.

A key benefit of the Fresh Projects platform is that it allows for easy identification of unprofitable projects and clients; enabling companies to focus on profitable market segments.

“As long as consulting engineering services are undervalued or unprofitable, and skills driven out of the industry despite a need for experts and professionals in infrastructure development and construction, industry and infrastructure development in the country will suffer.”

The platform does include the ECSA fee scales, which can be used as a reference to determine project profitability. Companies can set many parameters, including the pricing of projects in various currency denominations to quickly and easily determine profitability in various countries.

“The aim of the system is to make it straight forward to visually determine project profitability, provide empirically sound forecasts and ultimately support the sustainability, growth and development of the consulting engineering industry,” concludes Berry.

Story highlights:

* Easy-to-use consulting engineering project planning tool empowers engineers with information to negotiate fair fee structures.
* Discounts in fee structures are driving skills out of the industry, but consulting engineering work is valuable to delivering infrastructure developments.