Are Engineering Fees a Percentage of Construction Costs?

Engineering fees are often calculated as a percentage of construction cost.

Building owners and developers commonly compensate their professional engineering consultants based on a percentage of construction value. Most conventional fee structures use construction cost as a basis for final fees after a project's scope and magnitude have been established.

Fee Structures

Clients pay for engineering services in several ways: hourly rates, cost-plus fee, fixed lump sum and percentage of construction cost. Except for hourly rates, traditional fee structures use a percentage of construction cost to establish a final engineering fee.

Prerequisite

Percentage of construction fees can only be calculated when a project's scope and cost become well-defined. Until then, hourly rate and cost-plus compensation methods more appropriately apply.

Construction Cost

To calculate a percentage fee, one multiplies a project's construction cost by an acceptable percentage. Construction cost equals the cost of all materials, equipment and labor required to build a facility or develop a site. It excludes all professional design fees, including engineering.

Acceptable Percentages

Many state and federal agencies publish fee schedules and calculators to provide percentage guidance. Recommended percentages consider the effort that different project types, sizes and complexities will require. For example, engineering a complicated school renovation commands a higher percentage than engineering a new school.

References

• The University of Tennessee: Qualification Based Selection -- An MTAS Guide for Procuring Professional Engineering Services in Tennessee
• University of Missouri: Architectural and Engineering Basic Services Fee Estimating Guidelines
• State of Florida DMS: Design Professional Fee Guidelines for "Basic" Architectural and Engineering Services