M&E Services Engineers Fees - sample pages

S E G

A P E

L P M

SA

M&E Engineers Fees A survey of the fees charged by consulting M&E services engineers

2022

LE P M Y SA NL O

This sample is intended for evaluation purposes only, to show the type of information covered and examples of the layout. Data has been amended these are NOT the published tables / charts. th

The Fees Bureau 13 M&E Fees Survey 2022 edition

0

Background

0.1 How the fees data is collected and analysed 4 0.2 Definitions 4

0.3 How to use the data 5

1

M&E Engineers Charge-out Rates 1.1 Charge-out rates overview

1.2 How charge-out rates vary by practice size 1.3 How charge-out rates vary by region

6 8 10

2

M&E Engineers Fees 2.1 Fees overview 12

2.3 How fees vary by region 14 2.4 Fee range 15

2.2 How fees vary by building sector 16 2.5 Stage payments 18

2.6 M&E elements versus total construction cost 19

Changes & Trends

3.1 Changes in hourly rates and fees 20

32 Long-term changes in charge-out rates 21

3.3 Changes in fee levels, 2019 to 2020 22 3.4 M&E Fees Index 23

3

4

Market Sectors Private Housing 26 Offices 29 Leisure 31 Industrial 34 Retail 35 Education 36 Health 38

Published by The Fees Bureau, a division of Mirza & Nacey Research Ltd ISBN: 978-1-913403 © Mirza & Nacey Research Ltd 2021 The information in this publication is based on a survey of architectural practices undertaken over the 24 month period ending in July 2020. Whilst every effort has been made to ensure the accuracy of information in this publication, Mirza & Nacey Research Ltd can accept no responsibility for any errors of fact, omissions, or opinions expressed. The information supplied should be used as an aid to decision making and not as the sole basis for taking such decisions.

M&E Engineers Fees is copyright Mirza & Nacey Research Ltd. No extract or quotation may be published or broadcast without prior consent. www.feesbureau.co.uk

MIRZA & NACEY RESEARCH

1

LE P M LY A S N O

This sample is intended for evaluation purposes only, to show the type of information covered and examples of the layout. Data has been amended these are NOT the published tables / charts.

0

background

Definitions

How fees data is collected converted to percentages. A question relating to hourly charge out rates was inserted into the July 2020 questionnaire.

This report has been compiled using data collected from consulting engineers throughout the UK by way of a postal and on-line survey. This survey is conducted amongst a sample of consulting engineering firms every three months.

The sample aims to reflect the profile of the profession, both by size of practice and region.

The data collection period for this research is the 24 months to July 2020.

About 120 M&E consultancies have contributed data to this survey. Together, fees data for over 400 separate M&E jobs have been analysed. The value of these jobs (M&E elements) is approaching £1,000 million.

The questionnaire seeks information about new jobs received by the firm - type of work, sector, whether new build or refurbishment, services offered, value of the job’s M&E elements and fees charged. Fees data is supplied by respondents as either a percentage or flat rate fee. As the value of the M&E elements of individual jobs is also supplied, all fees data has been

Please note, the information presented in this report is derived from data collected by way of a survey of consulting engineers. We accept in good faith the raw data provided to us by survey respondents.

How fees data is analysed

12 10 8

The example chart on the right shows how the average fees line is created from a sample of data points.

extreme outliers are examined and may be removed

all data points are plotted on the Fee, per cent of M&E valuechart 12

6 4

6 5 8 4 6 3 4 2 2 1 0 0

a line of best fit through all the data points is created

10

2 0 0

2

is total construction cost, the y axis is percentage fees charged. Any unusually high or low values are examined and a decision is made whether to exclude or not. A ‘line of best fit’ is created through the data points using a modified regression analysis. This line is the average fees line.

The fees data is grouped by main building sector (private housing, leisure, offices etc.) and within that by building type (new build or refurbishment) and by type of service offered (Normal, Full or Performance). This provides several possible permutations for each market sector analysis although we only report on sector and service types where the data is sufficiently robust. The data is plotted as a scatter chart, the x axis

1

2

0

3

1

4

2

3

5

4

6

5

6

7

7

Value of M&E elements £ million

M&E Engineers Fees 2022 edition

8

8

9

9

10

Fees The fee charged by a consultant for services offered. Excludes VAT and travel expenses.

Normal Services Normal Services are those services for which a price (or a pricing mechanism) has been agreed with the client for a defined amount of work. Any further activities over and above the Normal Services are defined as Additional Services and are designed to be payable on the basis of time-charges.

Normal Services include: Pre-Design: ACE stages C1 and C2, equivalent to stage 1 in the RIBA Plan of Work (2020) Design: ACE stages C3 to C6, equivalent to stages 2 to 4 in the RIBA Plan of Work Construction: ACE stages C7 and C8, equivalent to stages 5 to 6 in the Plan of Work Performance Duties Partial or abridged duties, where the M&E consultant does not offer a detailed design service. For example, the M&E consultant may produce technical drawings to enable tenders to be obtained, leaving the successful subcontractor with the responsibility to undertake the detailed design.

Full Duties A loose, non-defined term covering either, all the stages leading to and including construction, or both Normal Services and Additional Services together.

Firm Size Measured in terms of the number of engineering staff (as defined above) but excluding support staff and 10 administrative staff.

Consulting Engineering Firm A firm which provides engineering consultancy and is owned and/or staffed by one or more fully qualified Engineers.

These exclude in-house departments, local authority departments.

LE P M Y SA NL O

This sample is intended for evaluation purposes only, to show the type of information covered and examples of the layout. Data has been amended these are NOT the published tables / charts.

How to use these statistics Hourly rates tables

Percentage fee charts

Hourly charge-out rates, on pages 6 to 9, are presented overall, by size of practice and by region for each of the main categories of consulting engineering staff. All data refers to the rates in effect on 1st July 2020.

Figures are presented as averages (medians), together with lower and upper quartiles. It is felt that the median is a more representative average than the mean as it is unaffected by any extremely high, or low, rates.

- the MEDIAN average is the middle value, when all data from survey respondents is listed in order of magnitude.

- the UPPER QUARTILE is the value which appears three quarters the way up this ordered list of data and marks the 75 per cent point in the data - the LOWER QUARTILE is the value which appears one quarter the way up this ordered list of data and marks the 25 per cent point in the data.

The fees data is presented as a series of tables and charts based on the data collected by a survey of consulting engineers. Fees are expressed as a per cent of the value of the M&E elements of the project. The average fees line on each chart is an indicative ‘line of best fit’. Reported fees charged vary around this line; the range of fees charged for jobs is discussed on page 15.

line which reports on the data collected.

In some cases insufficient jobs have been reported to us so it is not possible to include both new build and refurbishment charts.

‘Fees’ relates to the Normal, Full or Performance Services provided by Consulting M&E Services Engineers, as defined in ACE Agreements.

From this point on the average fees line follow across to the left hand scale (y axis) to read off the percentage fees value.

Fees exclude expenses and VAT.

When considering the fees data please bear in mind the following:

Start by gaining an overview of these figures with the main summary tables and charts on pages 12 and 13. These show average fees lines for the main types of consultancy work for Normal, Performance and Full Service. The Normal Service is split between new build and refurbishment.

On the bottom scale (x axis) of this chart find the contract value of your job. Follow this point up until you reach the average fees line.

the ‘line of best fit’ on each chart is exactly that - a ‘best fit’ of the individual values reported. Some fee values reported will lie above the line, others below it. the indicative lines of best fit take no account of the complexity of the work.

Next, find the building sector closest to the job you are seeking from the list on page 25. Once in the appropriate sector, you will find a chart with the average fees

the scale on each chart may vary.

The range of contract values charted reflects the range of jobs reported

Worked example

How to calculate the average fee for a £5 million project, Normal Services

1

In Section 2 (page 25), select sector and sub-sector

2

Then choose the appropriate chart by choosing New Build or Refurbishment; and select Normal Services, Performance Duties or Full Duties

4

Read off the left axis to find the average fee, in this example the average fee = 3.7%

Fee, per cent of M&E value 10 8 6 4 2

3

On the appropriate chart, find the contract value of your job by reading off the bottom axis - in this example it is £5 million. Follow this point up until you reach the appropriate average fees line

0 0

2

4

6

8

10

12

14

Total value of M&E elements £ million

3

LE P M LY A S N O

This sample is intended for evaluation purposes only, to show the type of information covered and examples of the layout. Data has been amended these are NOT the published tables / charts.

M&E engineers charge-out rates

1

1.1 Charge-out rates overview The figures presented here are average (median and quartile) hourly chargeout rates as at 1st July 2020. Rates are separated out for M&E Services Engineers (table 2-1), while tables 2-2 to 2-13 are based on all consulting engineers including civil, structural and M&E engineers.

Chartered Engineers report an average rate of £ . Incorporated Engineers record an average of £ per hour, and Graduates £ . The average rates for M&E engineers are higher, than those recorded for All Engineers (which includes consulting civil and structural engineers as well as M&E).

The average hourly charge-out rate for a Sole M&E Principal is £ , while for Partners or Directors in consulting M&E firms with at least two principals the average rate is £ per hour. Average charge-out rates for salaried staff categories increase in line with experience. Associates’ average charge-out rate is £ per hour, £ for Senior Chartered Engineers, while

Average rates charged by Principals of small and medium sized practices (ie up to 30 staff) are fairly consistent, only rising substantially 30+ staff practices.

London practices continue to report the highest average rates, closely followed by the South East. Next highest is the Midlands/East Anglia.

CHART 1-1 Average hourly charge-out rates for Principals by region

n/a 50

4

M&E Engineers Fees 2022 edition

50

50

£ per hour

50

LE P M Y SA NL O

This sample is intended for evaluation purposes only, to show the type of information covered and examples of the layout. Data has been amended 110 110 these are NOT the published tables / charts.

80

80

100

100

60 60 Average (median) charge-out rates and inter-quartile range between 90 lower and upper quartiles

90

CHART 1-2

80 40

40

Inter-quartile range

80

2010

20182010

2018

Upper quartile

Lower quartile Sole Principal Partner & Director Associate Senior Chartered Engineer

75

75

Chartered Engineer Incorporated Engineer Graduate Engineer 0

50

50 0

0

50 50 50 50 50 50 50 50

£ per hour

50 0 50

50

0 50

50 50

50 50

50 50

50

20

0 40

20 60

40 80

60

50

£ per hour

apply change the data point markers apply change to the data point to markers

default1-1 is square default is square TABLE

select the markers, select the markers,

Average hourlyopen charge-out rates, main category of M&E and Appearance panel (Windows>Appearance) open Appearance panel (Windows>Appearance) select “elipse” select “elipse” Staff Engineering To for create To create the shape the the firstshape time: for the first time: select markers, select markers, toabsolute>10pt shape>Ellipse >55 absolute>10pt 85 70 Effect>Convert toEffect>Convert shape>Ellipse >

£ per hour Sole Principal

Partner & Director ALL Principals, Partners, Directors

Associate

Senior Chartered Engineer* Chartered Engineer**

Incorporated Engineer Graduate Engineer

£ per hour Sole Principal

Partner & Director ALL Principals, Partners, Directors

Associate

Senior Chartered Engineer* Chartered Engineer**

Incorporated Engineer Graduate Engineer

100

£ per hour

M&E Services Engineers Upper Lower quartile MEDIAN quartile 50 50 50 50

50

50

50

50

50

50 50 50 50 50

50 50 50 50 50

50 50 50 50 50

All Consulting Engineers including structural, civil and M&E Upper Lower quartile MEDIAN quartile 50 50 50 50

50

50

50

50

50

50 50 50 50 50

50 50 50 50 50

* Senior Chartered Engineer = with five years’ or more experience ** Chartered Engineer = with under five years’ experience

50 50 50 50 50

5

LE P M LY A S N O

This sample is intended for evaluation purposes only, to show the type of information covered and examples of the layout. Data has been amended these are NOT the published tables / charts.

TABLE 1-4 Average hourly charge-out rates, size 6 to 10 engineering staff MEDIAN

Principal, Partner, Director

Lower quartile 50

50

Upper quartile 50

Senior Chartered Engineer

50

50

50

£ per hour Associate

Chartered Engineer

Incorporated Engineer Graduate Engineer

50 50 50 50

50

50

50

50

50

50

50

50

TABLE 1-5 Average hourly charge-out rates, size 11 to 30 engineering staff MEDIAN

Principal, Partner, Director

Lower quartile 50

50

Upper quartile 50

Senior Chartered Engineer

50

50

50

£ per hour Associate

Chartered Engineer

Incorporated Engineer Graduate Engineer

50 50 50 50

50

50

50

50

50

50

50

50

TABLE 1-6 Average hourly charge-out rates, size over 30 engineering staff MEDIAN

Principal, Partner, Director

Lower quartile 50

50

Upper quartile 50

Senior Chartered Engineer

50

50

50

£ per hour Associate

Chartered Engineer

Incorporated Engineer Graduate Engineer

6

M&E Engineers Fees 2022 edition

50 50 50 50

50 50 50 50

50 50 50 50

LE P M Y SA NL O

This sample is intended for evaluation purposes only, to show the type of information covered and examples of the layout. Data has been amended these are NOT the published tables / charts.

1.3 How charge-out rates vary by region TABLE 1-7 Average hourly charge-out rates, London MEDIAN

Principal, Partner, Director

Lower quartile 50

50

Upper quartile 50

Senior Chartered Engineer

50

50

50

£ per hour Associate

50

Chartered Engineer

50

Incorporated Engineer

50

Graduate Engineer

50

50 50 50 50

50 50 50 50

TABLE 1-8 Average hourly charge-out rates, South East MEDIAN

Principal, Partner, Director

Lower quartile 50

50

Upper quartile 50

Senior Chartered Engineer

50

50

50

£ per hour Associate

50

Chartered Engineer

50

Incorporated Engineer

50

Graduate Engineer

50

50 50 50 50

50 50 50 50

TABLE 1-9 Average hourly charge-out rates, Midlands / East Anglia MEDIAN

Principal, Partner, Director

Lower quartile 50

50

Upper quartile 50

Senior Chartered Engineer

50

50

50

£ per hour Associate

50

Chartered Engineer

50

Incorporated Engineer

50

Graduate Engineer

50

50 50 50 50

50 50 50 50

TABLE 1-10 Average hourly charge-out rates, North MEDIAN

Principal, Partner, Director

Lower quartile 50

50

Upper quartile 50

Senior Chartered Engineer

50

50

50

£ per hour Associate

Chartered Engineer

Incorporated Engineer Graduate Engineer

50 50 50 50

50 50 50 50

50 50 50 50

7

LE P M LY A S N O

This sample is intended for evaluation purposes only, to show the type of information covered and examples of the layout. Data has been amended these are NOT the published tables / charts.

2

M&E engineers fees 2.1 Fees overview Consulting M&E Services Engineers’ fees are expressed throughout this report as a percentage of the construction cost (contract value) which relates to M&E elements. This is the portion of the job in which M&E Services engineers will be involved and to which the fees charged will relate. To read about the relationship between construction cost and M&E elements please see page 18.

Overall, the level of fees charged, expressed as a percentage of the value of M&E elements, decreases as the value of M&E elements increases.

Charts 2-1 and 2-2 show, for example, that the estimated average percentage fee charged for a £1 million new build job (Normal Services) is per cent, compared with an average fee of per cent being charged for a £5 million job.

The fees analysis includes jobs where fees are calculated at a flat rate or an hourly rate. As we have data for both the fees charged and the value of the M&E elements we have converted all fees to a percentage of the value of M&E elements - standardising fees in this way is equally valid regardless of how the fee is actually charged. The percentage fee charged varies, depending on the type of project, its complexity, and the type of services offered. Data is analysed separately by broad sector for new build and refurbishment work.

Reported fees charged for work undertaken as Full Duties are higher than for Normal Services or Performance Duties.

The analysis by type of work (Normal Services only) shows that average fees are higher for refurbishment work than for new build work. A £500,000 refurbishment job records an average fee of per cent, compared with per cent for a £500,000 new build job.

TABLE 2-1 Average Fees for Specimen Job Values ‘Fees’ for M&E Engineers relate to Full, Normal and Performance Duties as defined in ACE Agreements.

Other definitions - see page 4.

Average fees, New Build (per cent of value of M&E elements) Value of M&E elements

Full Duties Performance Duties

New Build

Refurbishment

All Work

All Work

£250,000

4.5

4.5

4.5

4.5

£1 million

4.5

4.5

4.5

4.5

£500,000

£2.5 million £5 million

£10 million

8

Normal Services

M&E Engineers Fees 2022 edition

4.5 4.5 4.5 4.5

4.5 4.5 4.5 4.5

4.5 4.5 4.5 4.5

4.5 4.5 4.5 4.5

LE P M Y SA NL O

This sample is intended for evaluation purposes only, to show the type of information covered and examples of the layout. Data has been amended these are NOT the published tables / charts.

CHART 2-1 Average Fees, Normal Services New Build & Refurbishment Jobs Refurbishment

New Build Per cent fee 10

8

5

3

0 0

2

4

6

8

10

12

14

Value of M&E elements £ million

16

18

20

8

9

10

CHART 2-2 Average Fees, Full & Performance Duties All Jobs Performance Duties

Full Duties Per cent fee 10

8

5

3

0 0

1

2

3

4

5

6

7

Value of M&E elements £ million

9

LE P M LY A S N O

This sample is intended for evaluation purposes only, to show the type of information covered and examples of the layout. Data has been amended these are NOT the published tables / charts.

2.2 How fees vary by region As in previous years, average fees are highest in London. The regional fees multiplier is substantially higher in the capital than elsewhere. This reflects substantially higher fees for large jobs in London than elsewhere. Next highest

are the South East and the North, while fees are closest to the UK average in the Midlands/East Anglia and Wales and Scotland. The multiplier is lowest in Northern Ireland and the South West.

CHART 2-3 How much fees in each region are above or below the overall average, selected job sizes Normal Services only Regional Fees Multiplier UK average Multiplier equals 1.0 1.0

0.95 Lower

Higher

0.95

0.95

0.95

0.95 0.95

0.95

0.95

The Regional Fees Multiplier relates to jobs reported by consulting civil and structural engineers. There is insufficient data regarding M&E jobs to create a regional analysis for M&E work. The Multiplier is calculated by comparing the mean average of the percentage fees calculated for typical values in each region, with the same average nationally. The national average figure becomes the Multiplier base of 1.0. Regional Multipliers over 1.0 imply the average percentage fees for these typical values in that region are higher than the UK average; and vice versa.

The Regional Fees Multiplier is based on the largest civil/structural sector only, i.e. new build Normal Services jobs. The base for each region is all civil/structural jobs reported. The spread by type of work, building sector, size and complexity can vary considerably between regions. The data has not been weighted to reflect these variations.

10

M&E Engineers Fees 2022 edition

LE P M Y SA NL O

This sample is intended for evaluation purposes only, to show the type of information covered and examples of the layout. Data has been amended these are NOT the published tables / charts.

TABLE 2-2 Average Fees, by Main Sector New Build and Refurbishment Jobs, Normal Services

4.5

3.5

6.5

5.5

Normal Services, value of M&E element

Per cent fee

£250,000 £500,000 £1,000,000 £2,500,000 £5,000,000

NEW BUILD

Private Housing

4.5

4.5

4.5

4.5

4.5

Leisure

4.5

4.5

4.5

4.5

4.5

Offices

4.5

Industrial

4.5

4.5

Retail

4.5

4.5

Education

REFURBISHMENT

4.5

4.5

4.5

4.5

4.5

4.5

4.5

4.5

4.5

4.5

4.5

4.5

4.5

Health

4.5

4.5

4.5

4.5

4.5

4.5

4.5

Private Housing

4.5

4.5

4.5

4.5

4.5

Leisure

4.5

4.5

4.5

4.5

4.5

Offices

4.5

4.5

4.5

4.5

4.5

Industrial

n/a

n/a

n/a

n/a

n/a

Education

4.5

4.5

4.5

4.5

4.5

Retail

n/a

Health

n/a

4.5

n/a

4.5

n/a

4.5

n/a

4.5

4.5

CHART 2-7 How much fees in each sector are above or below the overall average, selected job sizes. New Build Normal Services only Below average fees

£250,000

-3

-2

-1

0

1

£500,000

-3

-2

-1

0

£1 million

1

-3

-2

-1

0

£5 million

1

-3

-2

-1

0

1

How many percentage points each sector’s average fee varies from the ALL work sectors

11

LE P M LY A S N O

12

This sample is intended for evaluation purposes only, to show the type of information covered and examples of the layout. Data has been amended these are NOT the published tables / charts.

M&E Engineers Fees 2022 edition

LE P M Y SA NL O

This sample is intended for evaluation purposes only, to show the type of information covered and examples of the layout. Data has been amended these are NOT the published tables / charts.

market sectors

4

Private Housing 26

Offices 29 Leisure 31 Industrial 34 Retail 35 Education 36 Health 38 Heritage 40

Statistical Basis

This section presents a detailed analysis of the fee data. A total of five market sectors have been identified as suitable for analysis. Data is analysed separately for new build and refurbishment. The permutations presented reflect the number of jobs for which data is available.

The results presented here are derived from data relating to specific jobs gathered by way of a survey.

Individual job data has been checked and any unusually high or low values have been excluded.

Each average fees line showing a specific sector and service type (e.g. private housing, normal services, new build) is based on a minimum number of ten jobs. Occasionally, even where at least ten jobs have been reported, if the variance between jobs data and the ‘line of best fit’ is high these sectors have been excluded.

The ‘line of best fit’ is calculated using a modified regression analysis. This line should be regarded as an indication of the pattern of fees charged for various sizes of jobs.

The scales on each chart reflect the sizes of the jobs reported in that specific sector. The size range of new build jobs tend to be larger than that for refurbishment jobs.

13

Education

LE P M LY A S N O

This sample is intended for evaluation purposes only, to show the type of information covered and examples of the layout. Data has been amended these are NOT the published tables / charts.

Education New Build Normal Services Per cent fee 10

8 6 4 2 0 0

2

4 6 Value of M&E elements £ million

8

10

8

10

Education Refurbishment Normal Services Per cent fee 10

8 6 4 2 0 0

2

4

6

Value of M&E elements £ million

Education - All Work, Normal, Full & Performance Duties Average fees (per cent of value of M&E elements) Value of M&E elements £250,000 £500,000 £750,000 £1,000,000 £2,500,000 £5,000,000

14

Normal Services

Full Duties

Performance Duties

New Build

Refurb

New Build

Refurb

New Build

Refurb

4.5

4.5

4.5

4.5

4.5

n/a

4.5

4.5

4.5

4.5

4.5

n/a

4.5 4.5 4.5 4.5

M&E Engineers Fees 2022 edition

4.5 4.5 4.5 4.5

4.5 4.5 4.5 4.5

4.5 4.5 4.5 4.5

4.5 4.5 4.5 4.5

n/a n/a n/a n/a

Education

Education New Build Full Duties Per cent fee 10

8 6 4 2 0 0

2

4 6 Value of M&E elements £ million

8

10

8

10

8

10

Education Refurbishment Full Duties Per cent fee 10

8 6 4 2 0 0

2

4

6

Value of M&E elements £ million

Education New Build Performance Duties Per cent fee 10

8 6 4 2 0 0

2

4

6

Value of M&E elements £ million

15

Other publications from The Fees Bureau: Engineers Fees Architects Fees Architects Fees - Minor Works Quantity Surveyors Fees Architects Earnings Engineers Performance Architects Performance Architects Markets Construction Futures (quarterly) The Fees Bureau is a division of Mirza & Nacey Research Ltd. Southdown House Ford, Arundel West Sussex BN18 0DE Tel: 01243 555302 www.feesbureau.co.uk