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11.10

By Steven F. Barrett, PH.D., P.E.

Have you ever thought about performing some consulting work? Or thought about starting your own consulting company?  If you have, you’re not alone, but there are several things you need to consider before you become a consultant. 

As an electrical engineer you have vital skills in great demand by other individuals and companies.  Many need the design services and skill set of an electrical engineer, but do not have the resources or long-term requirement to add one to their permanent staff.  Consulting engineers fill this need.  

There are many benefits to serving as a consulting engineer.  Aside from the obvious financial incentive, serving as a consultant allows you to practice and refine your engineering and design skills.  Also, consulting work may provide a much needed bridge between more permanent positions.  This is especially important in the rapidly changing and challenging economic landscape we currently face.  Furthermore, some engineers have relied on fulltime consulting work as their primary source of income.

If you have considered offering your engineering services as a consultant, there are several items you need to consider including governing laws, liability concerns and compensation models.  Each of these items is discussed below, followed by a case study.

Governing Laws           

The practice of engineering is governed by the National Council of Examiners for Engineering and Surveying (NCEES) Model Law.  The Model Law is developed and maintained by all professional engineering societies under the coordination of NCEES.  The Model Law regulates the practice of engineering in order to safeguard life, health and property and to promote the public welfare in the practice of engineering.  It must be emphasized that Model Law is exactly that – a model.  Each jurisdiction (typically a state board) must adopt into state law the provisions of the Model Law.  Most states adopt a large percentage of the model law, but each jurisdiction is different.  It is essential that you familiarize yourself with the licensing requirements of your state.  This information is easily accessed by going the NCEES website, which provides links to each jurisdiction.

One item that all jurisdictions have adopted in one form or another is the definition of the practice of engineering.  Paraphrasing from the Model Law: “The term ‘Practice of Engineering’ shall mean any service or creative work, the adequate performance of which requires engineering education, training, and experience in the application of special knowledge of the mathematical, physical, and engineering sciences to such services or creative work as consultation, investigation, expert technical testimony, evaluation, planning, design and design coordination of engineering works and systems…”

The Model Law also makes it perfectly clear that one must be licensed to practice engineering: “It shall be unlawful for any person to practice, or to offer to practice, engineering in this jurisdiction, or to use in connection with their name or otherwise assume, or advertise any title or description tending to convey the impression that they are a licensed engineer, unless such person has been duly licensed.”  The Model Law also requires that one practice only within his or her area of expertise.

The first step to becoming a consultant is becoming a licensed professional engineer.  As before, check with your state board for specific requirements for your jurisdiction.  Generally, the following steps described by NCEES must be followed:

1. Earn a degree from an ABET-accredited engineering program.

2. Pass the Fundamentals of Engineering (FE) exam.

3. Gain acceptable work experience (typically a minimum of four years). In most cases, this must be completed under the supervision of a professional engineer (P.E.)

4. Pass the Principles and Practice in Engineering (PE) exam in the appropriate discipline.

In addition to your individual license, you may need to register your company within your jurisdiction.  Again, check with your state board for requirements.  It is also helpful to involve a lawyer to ensure all state requirements are met.

Personal Liability

As a licensed professional you have an ethical responsibility to practice engineering.  As stated in the preamble of the National Society of Professional Engineers (NSPE) Code of Ethics:

“Engineers are expected to exhibit the highest standards of honesty and integrity. Engineering has a direct and vital impact on the quality of life for all people. Accordingly, the services provided by engineers require honesty, impartiality, fairness, and equity, and must be dedicated to the protection of the public health, safety, and welfare. Engineers must perform under a standard of professional behavior that requires adherence to the highest principles of ethical conduct.”

Even when practicing engineering in the most ethical manner, mistakes may occur and you may be held personally liable for engineering work you have performed.  It is highly recommended that you protect yourself and your company with personal liability insurance.  IEEE provides personal liability insurance to their members at a reasonable cost.

Compensation Models

It is appropriate to receive fair compensation for completed engineering consulting work.  There are many models that may be used for fair compensation.  You may choose a specific model or use different models in different situations depending on the nature of the work, the anticipated length of the project and other project aspects.  Here is a brief summary of models that might be employed:

• Hourly compensation.  In the hourly compensation model, one charges by the hour for the engineering time required to complete the project.  To establish a fair hourly rate, check with other consultants within your area of practice.  Your state board might also provide some data on hourly rates.  This model is especially useful if all aspects of the project are clearly understood and defined.

• Hourly compensation with boundaries provided.  This model is especially useful when the full extent of the project is not known.  In this case an hourly rate is charged for the engineering service with a provided lower and upper bound for the total project.

• A fixed compensation amount for the entire project.  This model is especially useful when the extent of a project is fully understood and defined.  This model also provides your client a concrete cost for your engineering services.

• Royalty on produced units.  This model is useful if you are providing design work for a device that will go into production.  Negotiating a fair percentage of gross sales for a product that will enjoy a long production run is appropriate.

• It is appropriate to request a portion of your anticipated compensation at the onset of a project.  This quickly separates whether a client is serious about employing your services.  It is most appropriate to commit details of the project with defined compensation into a contract.  Again, it is most helpful to involve legal counsel in this area.

Case Study    

In prior IEEE-USA Today’s Engineer articles, I have detailed the thought process in becoming a licensed professional engineer (“To P.E. or not to P.E.”, July 2009).  I wish I could say that I took the same studied approach to becoming a consultant engineer — but I didn’t.  I came upon a very good, long-term consulting job via my oldest son.

My son Jon and his best friend Dave have been good friends since they were in middle school.  They played hockey together through middle school and high school, roomed together in college, and Jon served as one of Dave’s groomsmen in his wedding.  Even though their career paths have placed them in separate states, they frequently get together and talk on the phone.  Over the years Dave spent a lot of time at our home and vice versa.  About ten years ago, Jon was over at Dave’s home.  Dave’s father is a brilliant engineer who develops custom control boards for industrial access points, such as clean room doors, secure areas, etc.  His products have been based on application-specific integrated circuit (ASIC) technology.  Dave’s father was lamenting with Dave and Jon that he really needed to find someone to help convert his controller line from ASIC-based technology to microcontroller-based.  Jon said, “I think my dad works in that area” and so began my consulting career.

I was already a licensed professional engineer, but before the products I helped design went into production, I thought it was important to formalize my business relationship and also formalize my company.  I took the following steps to establish my consulting company:

• Met with a lawyer to discuss the most appropriate business model for the company and complete state licensing requirements for the company.

• Formalized the relationship between my company and Dave’s father’s company with a written contract that included a compensation model agreeable to both companies.  The agreement also stipulated personal liability agreements between the two companies and nondisclosure agreements (NDAs) to protect proprietary information.

• Established a company bank account separate from my personal accounts.

• Committed myself to developing an ethical company that delivered quality products when promised and committed myself to returning a portion of company proceeds to the community.

• Received formal, written permission from my university to engage in consulting work.

It is worth mentioning that I have been asked on several occasions to serve as an expert witness in a court of law, but have declined these opportunities. Although the specific cases were in the realm of electrical engineering, I did not have the specific, detailed expertise to render a professional testimony.

As a result of performing consulting work, I believe I have become a better engineer.  Also, my consulting work has resulted in a number of real-world examples that I can use in the classroom.  Therefore, I highly recommend venturing into the consulting world.  Take the time and make sure you do it professionally by following the guidelines provided by the NCEES and your state board.

Steven F. Barrett, Ph.D., P.E., is the Associate Dean for Academic Programs and an associate professor of electrical and computer engineering at the University of Wyoming in Laramie, Wyoming, and a member of IEEE-USA’s Licensure and Registration Committee.

Comments may be submitted to todaysengineer@ieee.org.