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Owner Q&A · Pricing and fees

How can an engineering firm avoid underpricing a proposal?

Build the proposed fee from the work required rather than starting with a target total. Break the scope into tasks and deliverables, then account for technical production, project management, meetings, coordination, internal review, quality documentation, agency responses, and closeout. Identify the staff level for each activity and estimate effort using the firm's cost and rate method. Add direct expenses and subcontractor quotes where the contract allows.

Make assumptions explicit. State what data, access, decisions, and design information the client will provide. Define expected review cycles, meetings, site visits, and agency coordination. Identify work by others and exclusions. Check that the proposed schedule supports the staffing plan and gives senior reviewers time to perform their work. A compressed schedule can create cost and quality pressure even when the fee covers the task list.

Use comparable completed projects carefully. Compare projects with similar scope, deliverables, procurement requirements, client inputs, and accounting definitions. If one estimate differs sharply from a past project, investigate the reason. Do not assume that a prior fee is a reliable benchmark when it involved different site conditions, review requirements, or staffing.

Have a person who did not prepare the estimate review arithmetic and scope coverage. Ask the technical lead whether key review tasks are included, ask the project manager whether the schedule and workload are realistic, and ask the commercial reviewer whether contract terms change the cost or risk. Confirm that travel, escalation, reimbursables, and subconsultant treatment follow the solicitation. For public procurement, use the required format and observe the stated rules.

A low fee can result from omitted effort, optimistic assumptions, or an unclear change process. If the proposed amount cannot support the planned technical work, revise the scope, assumptions, schedule, or fee through the permitted process. Do not plan to recover the difference by cutting necessary review or relying on unauthorized extra work.

Retain the estimate basis so the team can compare the eventual project results with its assumptions.

This is general education, not legal, tax, investment, or engineering advice; licensed PE judgment and local codes govern.

Richard C. Wilson

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