Impact of discounted professional fees on the risk exposure of civil and structural engineering services consultants in South Africa

Abstract

The abolition of mandatory fee scales and the prevalence of lowest-cost bidding for the procurement of consulting services in South Africa have seen engineering services consultants compete based on price for engineering contracts. Discounts benchmarked against ECSA (Engineering Council of South Africa) professional fees guidelines demanded by clients have resulted in declines in professional fees over the years. The capacity to deliver professional services that are of such high quality that it meets the client's expectation, professional and ethical standards when working at low fees is one of the biggest challenges facing consulting professionals today. This research studied the risks encountered by civil and structural engineering services consultants and the impact of discounted professional fees on their risk exposure. The study included a review of literature, discussions with practising engineers and a questionnaire survey of 23 practising consulting engineers representing small, medium and large consulting engineering firms. A key finding of this study is that discounted fees accentuate several project level risks and create organisational level risks for the consulting engineering professional. The implications of these are discussed, and recommendations for improving the industry put forward.