I was lucky enough to win a traffic study project last week. Wins are always nice in this economy. I bring this up because I think the situation is indicative of the new economy. The study is being done for a site civil engineering firm that I've done a lot of work with over the last eight years – most of it sole source. Their client wanted them to bid out the study to make sure they got a fair price, so they sent a thorough RFP (which I reviewed for them) to four qualified firms. Since the bids/proposals were based on a well defined RFP, all four proposals had the same scope of work.
Three of us were within 10% of each other (I sharpened the pencil and was about 10% lower than the next two). The three of us have a good handle on current pricing. The weird part is that the fourth firm was 3.5 times more than my bid. Not 35% more, 250% more. They are not 250% better engineers than the rest of us.
Here's what I think is going on with the really expensive firm. Most of their traffic studies are done as "independent" consultants for cities. The city will have a developer escrow funds for the traffic study and then give the traffic study to this firm. There's no price competition and there's no incentive to be cost conscious (the decision maker – the city engineer in this type of situation – is paying with someone else's money).
I think I just got bumped out of another traffic study because the city engineer wants to use his "independent" consultant instead of the "developer's" consultant. I hope city engineers will start to review the estimating matrix I posted a little while ago. It doesn't benefit anyone to gouge developers.
