How Much Should a Structural Engineer Cost?

Last week’s piece argued that structural engineering’s time-based pricing model is breaking down under the weight of expanded scope, tightening regulation, and AI’s compression of billable hours. The diagnosis was, we think, fairly uncontroversial. The harder question, which is explored in this piece, is what the shift to value-based pricing actually looks like in practice. 

For most of the twentieth century, structural engineers, architects, and other design consultants in the UK did not have to figure out their fees from scratch. Professional institutes published recommended fee scales, expressed as a percentage of construction cost, calibrated to building type and project complexity. The idea was that clients chose a consultant on the basis of skill and availability, not price.

That system began to come apart in the 1970s and 1980s. The Monopolies and Mergers Commission started looking at professional fee structures in 1977. The Office of Fair Trading ruled mandatory fee scales anti-competitive in 1986. The RIBA’s mandatory scales became advisory in 1982, recommended scales were dropped in 1992, and the indicative fee graphs were finally abolished in 2009. Structural engineering went through the same process: institutes that once published recommended fees for structural design work had to abandon them, and bidding for consultancy work became, as the industry describes it, a free-for-all in a highly competitive market.

This is not just an architect’s problem. In 2002, the Association of Consulting Engineers (now ACE) publicly called for the reintroduction of fee scales, arguing that the consulting engineering industry was on the brink of collapse, with undercutting reaching 70% on some bids. The call did not succeed, and two decades later, the underlying conditions have not improved.

The vacuum was filled by time-based pricing. Not because anyone designed it as a coherent model, but because it was the easiest thing to negotiate. Three decades on, the industry has internalised this so completely that it is treated as the natural state of things, when in fact it is the residue of a regulatory shift that was meant to encourage innovation in pricing. It has so far produced very little.

Any conversation about value-based pricing has to acknowledge that the developer’s incentive structure is genuinely different from the engineer’s. As discussed last week, developer costs are pegged to the repayment value of the loan taken out to deliver the project. Time is the variable that defines their financial exposure. This is not an obstacle to overcome, rather it is the developer’s financing reality. The question is whether the contract structures the industry works within can accommodate both the developer’s time-incentive and the engineer’s value-incentive, without forcing one to subsidise the other.

Most structural engineering work in the UK sits inside one of three contract families: JCT (the traditional private-sector default, established 1931 by the RIBA), NEC (designed for engineering and infrastructure with a more collaborative ethos, first published 1993), and FIDIC (the international standard for engineering work, less common in UK domestic projects).

Each of these has historically been used in fixed-price form. The supplier gives a number, the client accepts it, the risk of overrun sits with the supplier. Variations are handled through formal change orders, but those processes are friction-heavy and frequently end in dispute. Most UK construction contracts are still drafted this way, and are being used to procure work that has materially changed in nature since the contracts themselves were designed.

The interesting shift is happening at the edges. NEC has long offered target-cost options (Options C and D), where the contract sets a target price upfront and the gap between actual cost and target is shared between client and contractor. If the project comes in under, both share the gain. If over, both share the loss. These options have been used on most of the UK’s largest infrastructure projects of the past two decades: Heathrow Terminal 5, the London 2012 Olympics, Crossrail, Thames Tideway, Hinkley Point C. JCT published its first Target Cost Contract in 2025, and the UK government’s Construction Playbook actively encourages collaborative contracting models. These contracts are imperfect and require trust and information-sharing that fixed-price contracts do not, but they are the closest UK construction has come to a structure where productivity gains land on both sides of the table. AECOM’s “gain share” mechanisms, discussed last week, are a natural extension of this thinking into the consulting fee.

The Building Safety Act has done something interesting to this conversation. Gateway 2 requires a frozen, technically resolved design before construction can lawfully begin on a higher-risk building. This effectively ends the traditional fast-track model, in which construction starts on partial drawings and the rest is resolved on the fly. That model relied on contract forms such as cost-plus and time-and-materials, in which the contractor is reimbursed for actual costs incurred (with a fee on top) rather than working to a fixed price. With fast-tracking effectively off the table for HRBs, these reimbursement-based forms have lost their main use case, and the contract structures that previously dominated are being reshuffled. There is, in other words, an unusual amount of contractual experimentation already underway. The question is whether structural engineers participate in shaping it.

Right now, the developer typically sets the tooling specification. Under the BSA’s golden thread requirements, the client is ultimately responsible for the project’s information record. In practice, this responsibility cascades through Exchange Information Requirements (EIRs), which the developer issues at the start of a project, dictating which tools, formats, and standards the supply chain will use. 

This matters for the pricing question because contracts are only as enforceable as the data they are built on. A target-cost contract that cannot evidence what work was actually done, what changes came in, and what each one cost, collapses back into a negotiation by assertion. The contract becomes a frame, the data becomes the substance. The data layer is determined by the tools, and the tools are determined by the EIR.

This is where the per-change pricing entry point set out in last week’s piece becomes operational. When the tools capture each design change with its cost attached, the engineer can show what a requested change will cost in the moment, and the conversation shifts from “how much time will this take” to “is this scope worth it.”

There is a structural barrier to individual action that any honest version of this argument has to acknowledge. Structural engineers are organised through professional institutions (IStructE, ACE, ICE) but not through anything resembling a union. A single firm cannot unilaterally introduce a new contract type, in the same way that a single employee cannot unilaterally negotiate a wage structure different from everyone else in the company.

The original fee scales worked because they were collective. The race to the bottom that followed their abolition is the predictable consequence of leaving individual firms to compete on price without any shared floor. Any durable version of value-based pricing in structural engineering will need similar institutional backing. Not as a return to mandatory scales, which the legal ground rules out, but as a published framework that firms can opt into, that clients can reference, and that gives engineering practices a defensible position when they try to price the work differently. 

The institutional shift will take time. In the meantime, there are a few moves within reach of any individual firm.

The first is being explicit about scope at the start of a project. The deliverables, the assumptions underpinning them, and the conditions under which a change triggers a new fee should be written into the engagement letter with enough precision that there is no question, six months into a project, about whether a particular piece of work was always in scope or has been added since.

The second is pricing design changes explicitly. Every change has a real cost in model reruns, drawing updates, calc pack revisions, and coordination with adjacent disciplines. Quantifying each change at the moment it is requested converts a category of work the industry treats as free into a category it treats as scope.

The third is engaging on tool specification. Where a developer or principal designer is issuing an EIR, the structural team has standing to ask whether the mandated stack captures the work being done and produces audit-defensible data. If the answer is no, that conversation is worth having before the contract is signed.

The fourth is paying attention to contract type. A lump-sum JCT contract handles change very differently from an NEC Option C target-cost contract. Firms taking on Gateway 2 work, or work for clients moving towards collaborative procurement, will increasingly find themselves in contract structures that explicitly accommodate gain-share. That is more hospitable to value-based pricing than the lump-sum default.

The shift is not unprecedented. Construction itself has moved towards target-cost and collaborative contracts on major infrastructure programmes. AECOM has built gain-share mechanisms into its consulting fees. What has not happened yet is the equivalent shift at the structural engineering consulting fee level.

The conditions for it are more aligned than they have been at any point in the last thirty years:

With so much in flux, structural engineers have a real opportunity to shape the future of their own practice. Taking part now, while new contracts are being written and new tooling is being built, will define what the next thirty years look like.

If your firm is thinking about any of this, we would love to hear how you are approaching it. Get in touch at [email protected], or reach out to any of us directly.