Workplan

The workplan is a document that consulting firms use to organize a project. It outlines the
plan by which the company plans to complete a quality project within a given amount of
time and in compliance with a set budget. The heart of the plan is the timeline and budget.
Since the document is a "plan" and unforeseen events usually occur, it is necessary to
change the plan as needed. For example, if the project manager budgeted 2 weeks for
gathering background data, but you are still strugg ling to contact the proper person at the
State Department of Public Health and the Environment (CHPHE) to get the final discharge
standards for the plant, then the timeline will need to be adjusted.

Contents:

Introduction
Project Definition
Project Organization & Personnel
Project Schedule
Project Budget
Quality Assurance and Control
Task and Function Workplans

The workplan will be used continuously. It will be reviewed and updated if needed every 2
weeks. Since I will have a copy of your workplan, it will serve as a template for our
meetings on your project. Every 2 weeks your group will have the opportun ity to submit
revisions to your workplan (generally schedule changes, or more detailed personnel activity
plans).

Somewhat more detail on the content of individual sections is provided below.

Introduction

This section should include your company name, when the project was awarded, and the
client. It should contain a very brief (1 to 3 sentence) description of the purpose of the
project. It will outline the organizational contents of the workpl an. It will also describe how
the workplan will be used and processes for modifying the workplan.

Project Definition

This section should define the scope of the project. What is the problem? What is the firm to
"deliver" to the client to fulfill its contractual obligations? When are the project deliverables
due?

In engineering, consulting firms are generally hired for one of the following tasks:

feasibility studies
field investigations and data collection
 performance testing materials and equipment
environmental assessments and impact statements
estimates of construction costs
preparation of operation and maintenance manuals
preliminary and final designs, drawings, specifications, and construction bid
documents
construction oversight
assistance in start-up and operation of facilities

The scope of the contracted work was set forth in the "bid" or your companies response to
the RFP (request for proposals). When the client awarded your company the project, you
earned the contract on the basis of the work you stated would be performed for a given
amount of money. Therefore, the project definition should be clear on the basis of the
proposal.

Project Organization & Personnel

This section describes who will be working on the project and defines their responsibilities.
The lines of supervision and oversight should be clear. Again, in the proposal your company
used to win the project, the personnel, their work responsibilit ies on the project, and the
qualifications of the personnel were usually included.

Project Schedule

This is one of the most critical elements in the workplan. It demonstrates that your team has
carefully considered the amount of work required and can complete all the necessary tasks
within the amount of time available. When a project is awarded, co mpletion deadlines are
generally stipulated. The schedule should include all of the major elements within the
project and show the duration of each task. Dates of "deliverables" are also shown. Critical
elements of the timeline should be iden tified. For example, if you cannot design the layout
of the processes on site until they have been selected and sized. Therefore, the dependency
of starting one task upon the completion of another should be clear. Then the project
manager can easily se e if the entire timeline needs to be adjusted or if another task can be
on-going concurrently.

The specific deadlines for the alternatives assessment written report, oral presentation of
preliminary design, and final written report should be included in your timeline. If you
want, consider the deadlines you have in your other classes (midterms, etc) and schedule a
reduced number of hours to be worked during those busy times. I would hope that you
budget an average of 9 to 10 hours per week for the semester. Since the workplan will cover
Week 4 to Week 16, budgeting about 113 to 125 hours tota l per person for the project seems
reasonable. Schedule activities and time with weekly precision. Again, plan that the
schedule will likely need to be modified throughout the course of the semester.

Project Budget
Most contracts are awarded with the stipulation of an overall budget; for example, you have
$1 million to design a new wastewater treatment plant for the Smith City. The budget in the
workplan should be broken down into more details. Specifically, th e total budget for each
"sub task" should be shown. The amount of money alocated to personnel (either individuals
or a total labor dollars) should be shown separately from other expenses (such as
laboratory analysis costs, mailing, etc.).

For the costs of people, the salary of the individual is significantly different than the "billing
rate" of the person. For example, John is a new engineer with less than 1 year of experience
and is an "engineer-in-training". His yearly salary is $36K, which is about $18/hour.
However, the billable rate for an EIT at the company is $50. Why is there such a large
difference? The billable rate includes the "benefits" such as health insurance, vacation, 401K
contribu tion, etc. that the company must pay. It also includes "overhead" such as rent for
the office space of the company, paying the electrical and water bill of the company, John’s
computer, etc. Companies either have set billable rates for di fferent positions or use a
multiplier on the employee’s salary to calculate a billing rate. (see a more detailed
discussion on billing below.)

For the project manager, the total "budgeted" costs for the project at this stage should NOT
equal the "fee" or amount the company was awarded to complete the project. There is
usually a 10% "contingency" built in to the fee. So, of the $1M that Smith City will pay for the
design, the project manager should have $0.9M available to spend on labor and "other"
expenses for all of the subtasks involved in the project. As you can imagine, it is very
difficult t o accurately estimate the cost (and time) of large projects. Therefore, most
projects have unexpected costs (such as information gathering took twice as long as
expected, and therefore cost twice as much) and go over the "initial" budget. Howe ver, the
project manager (PM) must make sure that the company doesn’t lose money on the project
by exceeding the budget. The PM will therefore track expenditures versus budget, and
watch how fast the "contingency" pot dwindles. Any extra unspent money in the
contingency budget is either extra profit for the company (which is usually spent as bonuses
for the employees) or can be spent to deliver a bit more than the minimum that was
stipulated in the contract (for example, an extra document to help with a smooth start-up of
the wastewater treatment plant).

sidenote: Billable rates reported to me by a variety of engineers in the environmental

engineering consulting world.

  Billable Rates, $/hr

Position FirmA FirmB FirmC FirmD FirmE

Senior scientist / 125 90-   125-  

Principal 120 135

Project 98 70-85   90- 100-

Manager/PE 100 115

Mid level 68-88 60-75 50-60 62 70-90

engineer/geologist/
scientist (3-6 yrs
experience)

Entry level 46-58   30-40 62 55 -

engineer/geologist/ 65
scientist (0-3 yrs
experience)
 CADD 50 40 25-35 50-65 45-65
operator/field
technician

administration 40 40 40 50  
staff

In addition, some contracts have billing rates set by the client. For example, a certain type of
project for the Iowa Department of Natural Resources has a set bill rate of $50 / hr for
engineers. It is then up to the consulting firms to decide if th is is an adequate profit margin
for their company, and to bid for the project or not.

sidenote2: Calculate the billing rate as:

Bill Rate = (direct labor rate + overhead rate)(1 + gen&admin costs)(1 + profit)

Direct labor rate is the salary of the employee = yearly salary / 2000 hrs

Overhead rate consists of employee fringe benefits and company operating expenses.
Fringe benefits includes medical insurance (about $3K/yr), retirement fund (about 10 to
15% of salary), vacation days, sick leave, holidays, and disability/life ins urance. As
employees are more senior and gain more vacation and benefits, their overhead rate
increases above "starting" employees. The industry average overhead rate is 140% of the
direct labor rate.

Company operating costs includes some or all of the following: business insurance, rent and
utilities for the office space, stationary and office supplies, office equipment (FAX, phone,
computers, copy machine), qualified travel, accounting and legal a ssistance, technical
books and journals, marketing, professional society memberships, and professional
seminars/conferences. Depending on your company, some will support the professional
development of its employees by paying for professional society mem berships, technical
journals, and conferences. Others are cutting these as a way to be more competitive when
bidding for projects. In the long term, professional development pays off, but in today’s "job
hopping" culture companies may not benefit from investing in employees.

General and administrative costs are generally about 12 to 20% to cover business
management, payroll and tax administration, and contracts administration. This is higher at
larger companies.

Profit: 10% is most common.

Example: The pay for a project manager is $72.8K / yr. What is his billing rate?

Direct labor rate = $72.8K / 2080 hrs = $35 / hr

Overhead
Yearly fringe benefits: medical insurance $3K, retirement 0.15 * 73K = $11K,
vacation 20 d * 8 h/d * 35 = $5.6K, sick leave 10 d * 8 h/d * 35 = $2.8K,
holidays 8 * 8 * 35 = $2.24K, life insurance $600 = $25,240

Hourly fringe benefits (based on billable hours = 2080 - vacation - sick - holidays = 2080 - 304
= 1776 hrs; $25240 / 1776 = $14.21/hr

Company operating costs per year per employee:

business insurance $600, rent and utilities $3000, supplies $2000, office equipment $2500,
travel $2500, accounting and legal $2000, technical books and journals $500,
marketing $8000, 3 prof. society memberships $600, 1 prof. conference $1500 = 23,200 $/yr

$23200 / billable hrs per year = 23200 / 1776 = 13.06 $/hr

Overhead rate = 14.21 + 13.06 = 27.27 $/hr

Bill Rate, $/hr = (35 + 27.27) (1 + 0.2) (1 + 0.1) = 82.20 $ / hr

sidenote3: As reported to me by a project manager with a PhD (a former classmate of

mine)....

A simple approach to billing rates is to use a MULTIPLIER, with 1.7 to 2.8 an average range.
The lower multiplier can be used for companies that charge separately for miscellaneous
materials (computer paper, computer time, copying, telephone calls, etc.) and the mid to
higher range can be used as a more general numbers. Usually, they come out to about the
same amount of money charged to the project. Companies struggle to keep their billing
rates low, by lowering overhead (rental space, secretaries, technical editors, proposals and
other non-billable project work), and by lowering the amount of fee (or estimated profit)
they charge. A 10% fee for engineering firms is common, but some will cut this in half if it
means that they can win a large project. They would have to make up for the lowered fee by
finding ways to reduce overhead, to still make money. A 2.5 to 2.8 multiplier includes the
profit fee.

If your company wants to seem competitive by using a lower multiplier, your should justify
this by explaining how you will lower your rates.

For example, an employee earns $75,000/year. Each year has 2,000 working hours. So their
hourly rate is $37.50. At a 2.8-times multiplier, their billing rate is $105/hour. For someone
making $45K/year, their billing rate would be about $63/hour.

You should be able to find common engineering salaries on the web. The salary ranges
typically depend on the number of years of work experience. A project should have a
pyramid-like structure where the higher the salary, the less work on the proj ect, where
most of the work is done by mid-level engineers. For example, at Battelle, a project manager
may manage 5 to 10 projects at any one time. With 5 projects, the project manager only puts
in 20% time on any one project. Her group manager may pu t on 1 or 2% time (a couple of
hours a month), because she is managing the entire group of 40 or more people, where
there are 50 or more projects. A large portion of the work will be done by masters and
bachelors graduates, and interns if possible.

Position Annual Salary Annual Salary

(1) (2)
 Executive (VP, group $110K to $67K to $120K
manager, etc.) $140K

Manager (PhD, 3+ $70K to $100K $65K to $83K

years)

Manager (BS or MS, 5+ $55K to $70K $55K to $68K

yrs)

Engineer (MS) $40K to $55K $58K

Engineer (BS) $25K to $50K $52 to $56

Technical staff (BS or $20K to $45K  

MS)

Non-technical (support $18K to $40K  

staff)

Interns and summer $14K to $18K  

hires

(1) information from a project manager PhD at a large environmental engineering

consulting firm
(2) information from Environmental Protection journal salary survey

sidenote3: In the August 1999 "Environmental Protection" journal, it was reported that the
average bonus salary of all "respondents" was $2672 / yr and $1824 / yr for engineers! The
average engineer salary at consulting firms was $40K.

Quality Assurance and Control

This section of the workplan outlines the procedures that the design team will use to ensure
that a high quality product is produced for the client. This outlines review at critical points
and who is in charge of the review. It includes the way in wh ich design calculations will be
presented and reviewed. (Note: In today’s litigious society the company needs to protect
themselves both legally and their reputation. NOTHING should be released to the client
without at least 1 review by someone oth er than the original engineer, and documentation
of this review.)

The QA/QC (Quality Assurance/Quality Control) process will be more involved if data
collection and analyses are required. EPA has specific guidelines to ensure the quality of
data. For example, when water samples are analyzed, the analysis should ideally be
conducted by an EPA certified laboratory. If not, it must be documented how replicates are
run, frequency of standard curves, blanks, and spike analyses. Of particular importance is
ensuring that the selected analytic method can give satisf actory detection limit (can
measure below the required regulatory limit) and confidence in the data (standard error).
Task and Function Workplans

A large project is generally broken into a variety of subtasks to make the project more
manageable. Each subtask should have a more detailed schedule, who is responsible for
completing various tasks, and a sub-task budget. There may be engineers that are the
"managers" for these subtasks, and then pass information on to the overall project
manager. Each subtask should have goals, specific items or jobs to be completed within the
subtask, personnel with time and budget allocations.

Proposal

The proposal used to win a project for your engineering company has been frequently
referred to in the above discussion of the workplan. Generally, engineering work is
acquired by responding to a Request for Proposals (RFP). In the RFP a client state s a need
and solicits bids from various engineering firms. The client’s goal is to select the most
qualified team that can deliver a quality product for the least amount of money. The content
of a typical proposal is outlined below (but will vary s ignificantly depending on the specific
project).

Introduction

This section should convince the client that you have a complete understanding of their
problem and needs. State the interest of your company in working on the project. Write in
terms that the client will understand. Attempt to persuade the client that you are the best
team for the job. (this will be further evident in a qualifications statement provided later)

Statement of Work

This is the heart of your proposal where you describe how you will fulfill the expectations
of the client. Be as specific as possible. Describe the technical scope of the project and limit
the bounds of the work. Make any unique ideas that y ou have clear. Also tell the client
what "deliverables" you will give them, including reports and presentations. Outline the
content of the reports. This should give the client a good idea of what you will be producing
for them, and allow the m to select between the range of proposals.

Schedule, Price, and Personnel

This section gives a timeline for the project, with specific estimates of the length of time
needed for various subtasks. It shows the exact times where you will deliver specific
products to the client. It describes who will be responsible fo r the various tasks of the
project (and resumes of relevant experience of the major personnel are included in an
"appendix" of the proposal). It gives the price that you will charge the client for the work.
The budget should be given in enough detail to convince the client that money is being well
spent.

(Note: if your company is awarded the project, the proposal becomes the binding document
specifying what the client gets for his money. Therefore, it is important that the time and
money projections are reasonable. If your proposal significantly unde restimates the time
or money needed to complete the project, your company will appear inexperienced.
Alternatively, excessive padding of the time or money schedule will make your proposal
less appealing than the more reasonable estimates of competing fir ms. Due to the critical
nature of the proposal, these are often prepared by senior and most experienced personnel
in the company.)

Qualifications

An end section of the proposal may describe your company philosophy, its history, and
relevant experience on similar projects. The resumes of key project personnel should also
be included, and state explicitly their qualifications that are per tinent to the project at
hand.

Other specifications for the proposal content and format may be given in the RFP. Be sure to
comply with all client-specified constraints. Late proposals are always disqualified, so be
sure to make all deadlines. Proposals can range in length from 5 to 100 pages. In general, a
concise proposal that contains all the pertinent information is best, rather than diluting
your strong points with excessive detail.

In some cases, before a client invites full proposals from specific engineering companies,
they may issue a "Request for Qualifications" (RFQ). They may keep "Statements of
Qualifications" on file, classifying available firms on th e basis of various areas of expertise.
Information included in the qualifications statement are:

firm name, year established

business address, telephone number and name of person to contact
type of services particularly qualified to perform
names of principles of the firm and states where they are professionally registered
names of key personnel, experience of each including education and years in the firm
number on staff at present time
outside consultants and associates usually employed
completed similar projects where the firm was the principal engineer
present activities: number and identity of projects, estimated total construction cost

This information may be provided on a form used by the client (such as the federal
government’s standard form), or may be provided through a "brochure" type of submission.
Information on a qualifications statement should be brief - basi cally a "resume" for the
company. (As such, for our class 1 page is optimal, 2 pages a maximum length.)