At a Crossroads— Is Value-based Compensation the Answer?

Abstract

This paper acknowledges three major issues facing the civil engineering profession today: (1) civil engineering salaries have not increased at the pace of most other professions and engineering disciplines; (2) civil engineering practice is increasingly being viewed as a commodity; and (3) civil engineering leaders have concluded that an expanded body of knowledge, requiring additional education compared to today’s requirements, will be required to successfully practice in the future. At the same time, U.S. enrollment in engineering is declining. The paper suggests that one cause of these problems is inadequate compensation for civil engineering work due to almost exclusive use of time-based fee structures. It draws an analogy between the use of time-based fee structures and fee bidding, the latter practice being one that ASCE went on record opposing in 1987. However, the paper presents data that show the practice of fee bidding has diminished little in the intervening years. Based upon this fact, the paper concludes the appropriateness of fee bidding or time-based fees is a function of project complexity. Simple, straightforward projects may be suitable for fee bidding and time-based fees, while more complex projects are not. A methodology for implementing value-based compensation similar to a system used by the medical profession is described.