Evaluating Methods of Calculating the Fixed Fee on Professional Service Contracts

The South Carolina Department of Transportation routinely retains Professional Consulting Engineering firms to provide engineering design and related professional services for the preparation of construction plans or design-build Request for Proposal bid packages for a wide variety of Federal-aid Highway Program roadway and bridge construction projects throughout South Carolina.The purpose of this project is to examine the current process of determining a "Fair and Reasonable" fixed fee for professional service contracts and to evaluate possible alternative methods including practices in other states that may improve the process, particularly in light of the considerable variation in audited overhead rates among consulting firms. In reviewing such alternative methods particular attention will be given to evaluating the potential impact of the method as an incentive to consulting firms to effectively manage their overhead costs.