August 2009 » Columns

Public-sector benefits
I wish when you publish salary surveys you would include public employee benefits. Here in California, the public employee wage for engineers and surveyors is [equal to] or greater than the private sector. The big differences are public employees have: jobs for life, platinum parachute retirement plans, great health coverage, 15 paid holidays (about seven [in the] private [sector]), three-plus professional days, over two weeks vacation accrued the first year, et cetera. Just log on to almost any California state, county, or city employment site and view the benefits. Public employee unions have made public service very lucrative and, unlike the private sector, their retirements are guaranteed. Public employee wages and benefits are on track to bankrupt every public agency in California.

Allowing elected officials that accept campaign donations from public employee unions [to] vote on approval of public employee wage packages should be a conflict of interest, but it—€™s not; it—€™s graft.
W.T. Foster, P.L.S.
Santa Ana, Calif.

Great Park engineering
Thanks for sharing the Great Park Comprehensive Park Design in a recent issue of CE News (April 2009, page 16). I thought you should know that Fuscoe Engineering, Inc., of Irvine, Calif., is the master civil engineering firm working with Ken Smith, master designer. We are proud to be associated with such a prestigious project and will continue to keep CE News abreast as the project develops.
Robin L. Robinson
Fuscoe Engineering, Inc.

Participation in the political process
I—€™m a regular —€œskimmer—€ of CE News, but when I saw [Bill Siegel, P.E.—€™s] headline on the last page (—€œA day on Capitol Hill: an engineer—€™s adventure,—€ July 2009, page 50), I was immediately intrigued. Of course, I ended up reading every word, plus I encouraged several friends to read the article too.

I—€™ve worked with engineers for many years. When pressed to do anything out of their comfort zone (i.e., anything other than pure engineering!) there is immediate resistance, attributed to many reasons. I was so happy to see [Siegel] state right up front in the article the goals for the Capitol Hill meetings, plus recognition of the unknown return on investment for the trip. I—€™ve found for many engineers, stating the expected end result makes them more inclined to participate. I hope [the] article will encourage more technical professionals to expand their boundaries and participate in our political process. We are fortunate to live in a country that allows such participation, yet so few take advantage of it, especially [in] the A/E/C industry. We are far outspent in lobbying dollars from fellow professional service providers like doctors and attorneys.

Maybe [Siegel] can start a movement! Thank you for the initiative to take your team to Capitol Hill and share the experience with CE News readers.
Carrie Stallwitz

Free work
I always enjoy reading the Business Q&A column written by David Wahby. However, I think that his June 2009 column, —€œPay rates for public-sector work,—€ neglected to point out a very fundamental problem. That is, firms are not being paid for those —€œovertime—€ hours on cost-plus public-sector work. Let—€™s take a look at the math.

Using the —€œFirst method,—€ we have an employee whose —€œweekly salary is $1,000, equal to a standard hourly payroll cost-per-hour of $25.—€ Let—€™s say the firm has an overhead rate of 1.54321. If all that employee—€™s time one week goes to the cost-plus contract, the firm gets to bill the public-sector client $2,543.21 (40 x $25 x 2.54321).

The example continues: —€œIf that individual worked 50 hours one week —€¦ the effective rate [is] $20.—€ Again, if all that employee—€™s time went to the cost-plus contract, the firm still only gets to bill the public client $2,543.21 (50 x $20 x 2.54321). The public-sector client essentially got 10 hours of professional services for free! Another way to understand this is to view the calculation as follows:

(40 x $25 x 2.54321) + (10 x $0 x 2.54321) = $2,543.21

And using the —€œSecond method—€ is not any better; the firm still only gets to bill $2,543.21. Because of the —€œpayroll variance —€¦ reducing the firm—€™s calculated overhead cost,—€ the overhead rate is only 1.03457, and the calculation is now 50 x $25 x 2.03457. And again, the public-sector client gets 10 hours of professional services for free.

Also, please note that the situation cannot be gotten around by working only 40 hours on the project, and the other 10 hours on non-billable types of work. However, there are (at least) two ways firms avoid this happening. First, no overtime is allowed, and extra people are used on the project, as necessary, to meet deadlines. Second, firms doing significant amounts of public-sector cost-plus work may pay their people straight-time for all hours worked. Either way, no hours are —€œfree—€ anymore; hours are billable at an unreduced rate.
Michael A. Webber, All.
And Managers Know Why

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