Design Fees, the State of the Profession, and a Time for Corrective Action

There has been considerable consternation over the years about the disintegration of the status of civil engineers, as well as significant distress over the profitability of engineering firms in view of a continuing decline in the compensation of civil engineers relative to other professionals. This paper studies the impact of government agencies’ use of outdated percentage of construction fee schedules for determination of professional compensation. Research has found that, due to the application of stagnant fee curves without adjustment for the effects of inflation on project costs, fees over the last several decades have dropped on the order of 20% or more. Prior to the early 1970s, fee curves published by the professional societies were regularly updated to reflect inflationary trends in project costs. However, since that time, few government agencies have adopted any meaningful deviation from the fee curves of the pre-Justice Department antitrust settlement with the professional societies. The settlement agreement was that the professional societies would no longer publish minimum fee curves to establish appropriate compensation of their members. The paper discusses the erosive financial implications of these policies for the design professions’ compensation.