NSPE's Gateway to Private Practice September 2011 

Welcome from the New PEPP Chair
Andrea N. Martinez-Graves, P.E., F.NSPE, CFM PEPP Chair 201112

I want to begin my very first chair’s message by saying that it is truly an honor to serve as the PEPP Chair for 2011–12. I’ve been actively involved in the PEPP group for many years and look forward to helping to lead this organization. I am following some outstanding leaders that have had a tremendous impact on NSPE, PEPP, and the industry, and I promise to work hard to live up to these same standards.

I kicked off my term as chair at the NSPE Annual Meeting in Las Vegas where I discussed my goals and visions for PEPP over the next year. We have spent the last few years making the changes necessary to adapt to the new NSPE structure. This year, my goal is to return PEPP’s focus to our members.

To that end, we will be revising and publishing Guidelines to the Practice of Professional Engineering in four parts over the year. We’ll also continue to improve engineering contract documents by participating in EJCDC, provide knowledge and information through the Professional Liability Committee, and promote and encourage the work of our Young Engineers Advisory Council.

As part of our newest activity, we also plan to broaden PEPP’s outreach through social media initiatives. We will be looking to generate or organize content, and quickly and easily distribute information that our members may find helpful and/or beneficial. Hopefully, we can also engage our members to share information that they may have to benefit the entire PEPP community.

If you have any suggestions on topics we should look at or information you would like to share, please send it to NSPE staff member Kim Granados at kgranados@nspe.org so she can forward to the board. We look forward to your feedback and engagement.

Risk Management Through Fee Collection

One of the most valuable, proactive risk management tools a design firm possesses is the ability to collect fees. Receiving payment for services in a timely manner is essential to the financial health of a business. Establishing and enforcing contractual payment provisions can help a firm avoid professional liability claims. Professional service firms are cash-flow operations. They are not in a position to finance their services to their clients. Firms are also incapable of staying in business for long if they allow clients to dictate all payment terms or write off a significant amount of professional time on projects.

Firms can preserve their right to payment, reduce the need to surrender part of their fee, and avoid the time, deductible costs, and the insurance impact of retaliatory claims. Retaliatory professional liability claims from clients sometimes result from attempts to collect fees. Firms should execute written agreements with their clients that contain: payment terms; a schedule when payments are to be made; and clear invoicing and collection procedures. Enforcing the contractual right to payment should be considered a key practice management procedure.

Evaluate Whether Fee Collection May Be a Problem

During the risk analysis stage of a prospective business arrangement, successful firms routinely check the financial capability of the client. The client selection process works best if the firm understands the availability of funds for the services to be performed. Looking at the client’s history with other firms, internal systems, and payment authorization procedures can give an indication of how long a client takes to pay its bills and the likelihood that fees might not be collected when due.

Establish Payment Terms in a Written Agreement
Oral agreements create problems. Collecting the appropriate payment for services can be nearly impossible unless a written agreement exists. The agreement should carefully tie the fee to measurements that can be understood by the client and documented by the firm. Unclear or unspecified payment terms and untimely billing and collection often generate disputes.

A contract should also clearly state who is authorized to approve payments on behalf of the client and to increase the scope of services. While the basis for payment can vary from hourly to value-added, the application of the fee system should be documented.

Retain Control Over Services and Deliverables
Firms should retain the right to the project documents at least until all fees are paid. The right to suspend the firm’s services if payment is not received according to the contractual obligations of the client is essential.

Avoid financing the client by demanding a significant retainer. This is a basic element of good business practice. Firms that accept a termination for the client’s convenience provision should be careful to negotiate the specifics of such an option, including who has control over the documents in progress and whether lost profits are recoverable.

Avoid Giving the Client the Right to Withhold Payment
Increasingly, firms are faced with clients who want to be able to withhold fees on an arbitrary basis with no independent finding of fault. Fee negotiations can be rendered meaningless if a client can withhold professional fees to a firm at the client’s own discretion.

Remember that any client-written provision that empowers the client to make a unilateral determination of fault or responsibility for damages creates a business risk. Professional liability insurance is intended to respond to allegations of professional negligence. The withholding of fees is not the same as a demand for money or services that would trigger professional liability insurance coverage.

Develop a Collection Strategy
The professional services agreement should contain appropriate payment terms, a payment schedule, and invoices that follow that schedule. If a firm does not have a system of pursuing unpaid balances or of resolving payment problems, it is increasing its business and professional exposures. A collection strategy should incorporate contractually provided steps, such as the charging of interest on late payments and the suspension or termination of services for payment defaults. Such a collection strategy must be followed consistently.

A collection strategy can be used at all stages of the billing process. The strategy should include:
•    Frequent communication with the client so that there are no surprises to either party;
•    Timely and accurate billing; and
•    Invoicing procedures that meet the client’s information needs and accounting requirements.

Positioning a firm through researching a client’s history, contractual language that details fees and procedures, and practice management systems that carry out the fee collection process is basic to firm viability and professional liability risk management.

© 2011, Victor O. Schinnerer & Co. Inc. Statements concerning legal matters should be understood to be general observations based solely on our experience as risk consultants and may not be relied upon as legal advice, which we are not authorized to provide. All such matters should be reviewed with a qualified advisor. Victor O. Schinnerer & Co. Inc. is managing underwriter for the CNA/Schinnerer Professional Liability Insurance Program, commended by NSPE/PEPP since 1957.

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Field Guide for Inspection of Sewerage and Drainage Construction

An inspector plays a crucial role in any construction project. The job demands knowledge, awareness, keen observation skills, and the ability to deal with contractors and project owners. A Field Guide For Inspection of Sewerage and Drainage Construction, published by the Professional Engineers in Construction, provides the inspector the necessary knowledge to inspect sewerage and drainage construction projects.

The guide, specifically written to advance the mission of high-quality construction standards, provides a series of proven policies, established procedures and techniques, and helpful resources such as “Inspection Checklists” that are applicable to construction projects on any size or scale.

This guide is available a in ShopNSPE.

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Educate Yourself; NSPE Fall Webinar Series

NSPE’s Fall Webinar lineup covers everything from Ethics to Career Development. Check out the list below to find the course you are looking for and fulfill your PDH requirements. Click on the title for the full course description.


Project Management and Ethics
October 4, 12:30–1:30 p.m. (E.S.T.), 1PDH
$149.00/$99 Member Price

Confronting an Ethics Disaster: What Can Professional Engineers Do?

October 19, 2011, 12:30–1:30 p.m. (E.D.T.), 1PDH
$149.00/ $99.00 Member Price

Whistleblowing: What Are the PE’s Obligations to Report Misconduct?
November 9, 2011, 12:30–1:30 p.m. (E.S.T.), 1PDH
$149.00/ $99.00 Member Price 

Business Development

IT Solutions for AEC Professionals
November 3, 2011, 12:30–1:30 p.m. (E.S.T.), 1PDH
$149.00/ $99.00 Member Price

Harnessing the Power of Change
November 15, 2011, 12:30–1:30 p.m. (E.S.T.), 1PDH
$149.00/ $99.00 Member Price

How to Conduct Effective Meetings
November 29, 2011, 12:30–1:30 p.m. (E.S.T.), 1PDH
$149.00/ $99.00 Member Price

Strategic Planning
December 13, 12:30 p.m. – 1:30 p.m. (E.S.T.), 1PDH
$149.00/ $99.00 Member Price


Designing For High Winds
November 1, 2011, 12:30–1:30 p.m. (E.S.T.), 1PDH
$149.00/ $99.00 Member Price

Project Management

Project Management and Ethics
October 4, 12:30–1:30 p.m. (E.D.T.)
$149.00/ $99.00 Member Price, 1PDH

The Legal Realities of Project Scheduling
October 18, 2011, 12:30 p.m.–1:30 p.m. (E.D.T.)
$149.00/ $99.00 Member Price, 1PDH

Career Development

How to Get Your Next Job
October 25, 2011, 12:30 p.m. – 1:30 p.m. (E.S.T.), 1PDH
$49.00/ $25.00 Member Price

Career Transitions
November 10, 2011, 12:30 p.m. – 1:30 p.m. (E.S.T.), 1PDH
$49.00/ $25.00 Member Price

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Become a PEPP Sustaining Firm

Now through October 31, get 10% off the price of becoming a 2012 PEPP Sustaining Firm and ensure your firm is listed in PEPP’s online searchable directory. Your support is needed for the efforts of the Professional Engineers in Private Practice (PEPP) as we strive to promote the hard-earned Professional Engineer (PE) designation and enhance the image of the PE in private practice.

As a 2012 PEPP Sustaining Firm, you will receive the following benefits:
•    Online exposure: You’ll be included in a searchable directory that includes a complete description of your firm’s specialties. NSPE’s Web site receives more than 75,000 user sessions per month. Let owners and other customers and partners find you! All PEPP Sustaining Firms are listed at: www.nspe.org/PEPP/Supporters
•    Recognition: Listing in an issue of NSPE’s PE magazine (circulation is approx. 40,000) and in PEPP Talk, a monthly electronic newsletter sent to more than 11,000 PEPP members.

•    Valuable discounts: 25% discount on ads in PE magazine, monthly e-newsletter NSPE Update, Web banners, and Job Board postings.

Your options to participate include the following (*Price reflects 10% discount for payments received by 10/31/11).

Bronze Level $153*
(regularly $170) Listing only. Includes listing and link to firm’s Web site and e-mail address.

Silver Level $216* (regularly $240) Listing plus Facebook and Twitter. Includes Bronze level package plus companies can provide a non-self-promotional tip of the day (250 words or less) to be featured on the NSPE Facebook page and Twitter page, with a direct link to your firm’s Web site and/or social media platform. E-mail tip (.gif or .jpg file, up to 10KB) to jcoleman@nspe.org (703-684-2833).

Gold Level $517* (regularly $575) PEPP Featured Firm package. Includes Silver level package plus complimentary registration ($495 value) to the 2012 Synergy HR & Finance Roundtable in Alexandria, VA.

Please complete the form and MAIL or FAX them back today! Your participation will not only help you reach potential clients and partners, it will also provide valuable support for our industry and profession. Please visit www.nspe.org/PEPP for a complete list of PEPP programs. 

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ADCOMM Engineering Company

AEC Engineering Design & Construction Services PLLC

Almost Home Inc

ARIS Engineering, Inc.

B & E Jackson & Associates Inc

Bain Medina Bain

Baird, Hampton & Brown, Inc. Engineering & Surveying

Barr Engineering Company

Bartel & Associates

BBFM Engineers Inc

Beardsley Design Associates

Becht Engineering BT Inc

Bernard R Berson PE LS PP, Consulting, Forensics, Seminars

BMJ Engineers & Surveyors

Borton Lawson Engineering Inc

Brite Engineering Consultants, Inc

C Allan Bamforth Jr. Engineer-Surveyor, LTD

Coad Engineering Consulting

Commonwealth Associates Inc

Cosgrove Computer Systems Inc

Cowen & Associates

CRW Engineering Group LLC

CT Consultants Inc

Davy Engineering Company

To become a PEPP Sustaining Firm visit our Website for the contribution form.

Visit NSPE at Booth #110

PEPP 2010-11
Executive Board

Andrea Martinez-Graves
Tampa, FL

Dawn Edgell
Chair Elect
Aurora, IL

Mark Davy
Past Chair
La Crosse, WI

Eric West
Midland, TX

Aaron Thrush
Maumee, OH

Charlotte Anne Maddox
Vice Chair
Tampa, FL

Chris Richard
Vice Chair
Lafayette, LA

Karen Stelling
Vice Chair
Kansas City, MO



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