Consultant Fee Negotiations
by MAL
INTRODUCTION
The purpose of this document is to highlight issues to consider when negotiating with consultants.
Use this Guideline in conjunction with consultation with PIC and Team Leader.
Check the Consultant Evaluation Sheets (see Marketing Department) to review comments and ratings of
previously utilized consultants.
1. Negotiating (The art of the dance)
a. Clear communications among the team regarding scope is crucial.
b. Negotiating is highly personal and many factors enter in, your personality, the fact that
you will have to work with these consultants in the future, past relationships, etc.
c. Leverage – the promise of future work.
i. If this is the first time working with a client you might consider using this
opportunity as a relationship builder, with the carrot being future work.
d. Reduce their fee to get the job, and then tell them about it after you get the job
i. Or shop several consultants.
e. IDIQ job? – No marketing costs to get the job, potentially a way to negotiate lower
consultant fees.
f. Consider any specific MBE requirements that an owner, municipality or IDIQ might have.
2. Percentages. Check:
a. Consultants fee as a percentage of the construction cost of their work.
b. Entire teams percentages v. GWWO. Our goal is to have GWWO at 60% and the rest of
the team together at 40%. Discuss with the PIC and/or Team Leader.
c. Verify that MBE percentages are within requirements.
3. Scope. Try to find ways to reduce consultant’s scope, to reduce their fee, without taking out
something that we really need. This is walking a fine line between squeezing them and making
sure we get the job done correctly.
a. Consider sending consultants each other’s letters with the dollar amounts removed for
them to cross check each other to reduce scope gap (ie permitting, MDE, reforestation,
flood plain, other regulatory issues).
b. Verify that the number of meetings and submissions are noted and are in line with what
we want.
c. Unknowns: If possible identify and isolate unknowns as separate line items.
i. SRI was pretty sure we didn’t have a flood plain issue, and excluded it anything
to do with floodplain research, waivers or delineation. We did have a floodplain
issue. It would have been very easy to create a phase or category that was
dedicated to the flood plain at the proposal stage, not so easy later.
ii. Have the consultants make some calls to research exactly what is required by
whom, to better define and clarify the unknowns and their scope.
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d. Retaining Walls (and other typical scope-gap items). Decide at the proposal time
whether the Civil/Landscape or the Structural consultant has site retaining walls.
i. Structural always assumes that Civil/LA has it unless they are told otherwise.
ii. Civil/LA may or may not know until DD if the walls are so high that they need
the structural engineer to design them. If that is the case, discuss with both and
create a contingency plan – or give them all to the structural engineer.
iii. Be aware that if we require the Civil to carry, their fall back may be delegated
design of the walls, which we may not want.
4. Consultant Agreement (CA) Letter. Provide the consultants, especially if they are new to us, a
clean copy of the Consultant Agreement letter as soon as possible – preferably during the
teaming phase.
a. This gets expectations out there early.
b. If there are deal-breakers, we can find someone else before a lot of leg work is done.
5. Prime Agreement. Send the consultants the Prime Agreement as soon as possible.
a. They will be tied to it through our CA letter, the sooner they see it the sooner issues can
come to the table.
6. IDIQs. On IDIQ type contracts (NPS, BCPS, UM, etc), send all of the consultants on the team the
GWWO Consultant Transmittal of Prime Agreement letter, attach the contract, their rates and
the boiler plate CA letter – as soon as we have a signed contract.
7. Insurance
a. Understand what the consultants carry when the team is created.
b. If a major consultant (Structural, MEP, Civil) has less Professional Liability Insurance than
GWWO:
i. Know that this disparity means that, in essence, we are insuring them.
ii. Talk to a principal
iii. The vagaries of the project may or may not be such that it matters – but have
the conversation.
iv. Consider project specific insurance for either projects that require greater than
we have, or consultants that have less than we have.
v. Endeavor to get a limit of liability clause in the contract to cap potential claims
to a dollar amount, or the fee (which we talk about in the commentary to AIA
B101 10.11)
c. Consultant’s General Liability insurance does not need to be equivalent to ours.
8. Exclusions. Scour Consultant’s proposal letters for exclusions that don’t make sense.
a. On New Carrollton Library SRI excluded cost estimating, which we knew was needed.
b. KIM Engineering excludes review of drawings and specifications, yet in their geotech
reports recommend that they review the documents – either have them include review,
or know it will be an extra.
c. Think about including scope for CA services for the geotechnical engineers.
d. Consider record drawings and post construction services and verify that they either are
included, or not needed.
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9. Terms and Conditions. When including consultants letters as attachments to the proposal strip
out their terms and conditions which may be in conflict with our CA letter and/or the Prime
Agreement.
a. Communicate to the consultant that we did exclude their terms.
10. Add Services. If during the course of a project there is a legitimate additional service for us or
our consultant, communicate with the owner immediately.
a. Make sure to add at least 20% to the consultant’s cost (see discussion in B101 GWWO
Modifications page 48) for our insurance, OH, administrative and profit.
i. Verify with the Prime Agreement that it doesn’t cap the markup, some either
cap it, or don’t allow it.
ii. If not allowed or capped, include enough hours for GWWO to cover the 20%.
11. Allowance. Create an allowance category in the proposal to the owner.
a. Great idea to cover unforeseen issues that invariably come up. If needed it can be
dipped into, if not needed it can revert to us.
b. or, have the Owner carry it and dip in when needed – then have it revert to the owner
at the end of the job.
12. MBE
a. Verify subgoals
i. Often different among different agencies.
b. Getting the MBE %’s correct is very complicated and could put us in a position of giving
away $$ to get the consultants we want if we aren’t careful.
c. On some IDIQ’s we have included multiple consultants per discipline to help us craft the
right team.
i. Discuss with Team Leader/Marketing or PIC.
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