Comments
Comments
I have said this before, you can not expect to make a big profit doing Phase Is, unless you are charging $3000. Sometimes you are going to lose money on Phase Is.....BUT, if there is a Phase II you can always recoup the cost.
Recently did a Phase I for $2800. only to find out that the previous Phase I had cost the owner $6000 and that previous Phase I did not provide the owner with a complete picture of his concerns onsite. My client is the buyer and struggling with the owner to pay for the Phase II. The owner understands the issues but wants to do the deal as an "as is" transaction.
Now for the shameless plug: We do have a Phase I special for $1500 that exceeds AAI and ASTM standards. If doing Phase Is for $1500 does not worth your time, send them over to us. We are fully insured and stand by our reports.
http://www.aeasinc.com/phase-i-environmental-site-assessment/
Thank you for a very good reply.
I tend to agree with your "B"
As client I would probably also want these same services. But it is funny to me, because I know that I am better at identifying area regulated sites than any of the current or recently-sold-out vendors. So the average user is unaware that the average consultant is probably taking the easy route by ordering a database report and not supplementing it with added research as only an experienced, local EP can do.
That's the funny thing about ASTM. An out-of-town EP can do a compliant Phase I ESA, and his lack of "actual knowledge" dosn't matter. There could be an EP who has lived next door to the Subject Property for 55 years, and he will have some "actual knowledge" that far exceeds the first guy. So we have a floating standard based on how familiar the EP is with the area.
If you have not yet experienced this, the day will come when one of your clients calls you up and tells you that his own search of The EPA Envirofacts website or review of a state site mapper identified a site that your big database company missed.
I guess I have seen enough regional groundwater maps, area geological data, and conducted enough interviews with the Tax Assessor, Planning Commission Chair, etc. and seen enough homeesque black squares on old topos, that I question what added value a Phase I has if completed as the OP discusses. I just don't see how the extras are worth another $2000. But it doesn't matter what I think or what she thinks; it matters what the client thinks.
The OP holds out a difference between a $1500 ESA that meets the standard and a Phase I ESA for $3500 that exceeds the standard in some way as to justify another $2,000. Yet the added value by her own comparison table comes down to review of a handful of added resources and inteviews with people whose job it isn't to be aware of environmental issues. In nearly 20 years of completing Phase I ESAs, I have seen many regional groundwater reports and reviewed more than enough geological maps. I just don't see $2,000 in added value there.
As i look back over this discussion, I find some clarity. Most consultants strive to not only meet the ASTM standard but also charge a little more so they can go a little beyond the standard so they have some footing if ever sued. This is the problem....we have consultants completing Phase I ESAs to a "this is less likely to get me sued" standard, rather than a "this meets the ASTM Phase I ESA" standard.
I guess I have always been willing to stand by my work as ASTM-compliant and willing to tolerate a lawsuit if needed. When we structure our work product around lawsuit fear instead of complying with a standard, everyone loses (money) - except the consultant.
I make less money when I provide a work product I'm willing to defend. Anyone can recommend the moon and stars to insulate them from a lawsuit. But this is never how I have seen my role.
The firms that are charging $3,000+ for ESAs are usually doing so because their accounting system simply doesn't work for jobs under $5,000. They bill their jr. staff out at $80+ per hour, which adds up quick on an ESA and there's not enough Phase II recommendations these days to make up for losing money on the Phase I. Most of these firms have simply given up and don't do ESAs any more. When the do, it's often as a favor to the client and they take a loss.
You are correct, in that It all comes down to how "nominal" would be interpreted either A) By a client or B) in a courtroom. I'm not sure the simple fact that a company earns a profit automatically deems the fee to be excessive.
You are also correct, that if you can find Sanborns in a local collection, you can often review them for free if you don't copy them.
I'm not saying you must pay EDR for Sanborns or that you must use EDR for database to meet ASTM. What I'm saying is
A) If you choose not to use EDR for Sanborns or you choose not to use a database vendor, and you miss something because of that decision, it will be difficult to justify your reasoning for doing the research on your own.
B) If I was a client, I would insist that the EDR sanborn collection be searched and that a database vendor be used. Not because it is required by ASTM, but because I want a report that is consistent with the way 99% of the industry does things.
Hi Manno,
I didn't mean to write the word "any"...will edit document. Thank you for noticing that. I agree, it would be highly unlikely that no regulations were being enforced.
"Before selling the property to my client, this Attorney (then the property owner) had the site paved over, leaving the tanks in the groundso they would not be discovered."
This statement just gave me pause. I try to avoid inferring motives to actions like paving the site. Even when the motives seem obvious, which I understand they may, but not with the information given. By your description, it would seem there are unexplained behaviors and perhaps the full story isn't known.
Your blog states that......." (the lawsuit) sheds light on the department of Health and Environmental Control (DHEC) and the Environmental Protection Agency’s (EPA) failure to enforce any environmental regulations upon the plant."
Having worked a few years in this industry, and in particular to maintain the regulatory compliance of power plants, I highly doubt that the state and EPA have failed to enforce any environmental regulations on the plant! It just doesn't work that way. Power plants draw significant regulatory scrutiny and especially surface impoundments.
The South Carolina regulatory environment could be a huge exception......but I doubt it.
I agree with Mark. From what I understand, you have too many relationships here. Personally, I would run, not walk, from this job.
You can pay for a $1500 Phase I ESA and buy your own environmental insurance for $500 that covers $2million in cleanup liability.
What would you rather have?:
A. a $2,000 Phase I ESA (that may or may not be better than a cheaper Phase I ESA)
or
B. a $1,500 Phase I ESA (that may or may not be just as good as the $2000 Phase I ESA) and pay $500 in insurance that will cover costs to achieve NFA if a problem is ever found.
The cold, hard facts are that $1500 is a pretty reasonable fee for an insured consultant to complete a Phase I ESA with an EP doing 90% of the work...(for not hugely complex sites) and still leave a few hundred bucks profit.
You can pay $1,000 more and have a national/multinational firm complete your Phase I under a $10million insurance policy.
What we are talking about is protecting oneself when buying property. There is AAi, and then there are many other issues (lead, asbestos, radon, mold, that leaky roof, PCB caulk, ghosts)....and many possible guarantees/insurance policies/environmental warranties available.
What is unfortunate is that firms conducting a Phase I ESA/wetlands review/asbestos inspection/lead paint evaluation/ paranormal screening/ threatened and endangered species assessment/depth-to-bedrock-guess/historical registry review/Stormwater compliance evaluation/universal waste compliance review are saying “A good Phase I ESA can’t be had for under $3,000.” They seem to forget what a Phase I is vs. what extras they include in their Phase I ESAs. But AAi compliance doesn’t require anything “extra.”
$1,500 buys a complete Phase I. You pay more for added insurance and other added value (read, non-scope considerations).
But some clients just want a Phase I.
If I understand correctly, you, as the environmental consultant, will be stuck square in the middle of two banks, one of which is an active client, the other of which is connected to a different client and also has a connection to the property through ownership by one of its employees. This reeks of potential lawsuits down the road with you right there in the middle....I would step back and avoid the project. Call it a conflict or something else, but it doesn't sound like a good position in which to become involved.
Although the AAI/ASTM items, and how efficiently they can be put together for a Phase I ESA, are very important to determine an appropriate fee, I think an overlooked concern over low-cost providers has to do with contract formation.
Consider:
- Are they agreeing to provide the limit of their insurance (or more?) as the limitation of liability for certain lenders / SBA loans?
- Are they agreeing (intentionally or otherwise) to "defend" their clients in any claim, or agreeing to other potentially onerous indemnification provisions in client-provided contracts?
- What is the value associated with these matters? Is an additional $1,000 too much (or too little?) to compensate?
If properly addressed, these issues would certainly lead to larger fees. I find it hard if not impossible to believe such provisions are properly funded with a $1500 Phase I fee under any case.
My worry is that too many in our industry do not understand or attempt to address these (and other) contractual issues. It doesn't catch up to you until it catches up to you, so that many get away with ignoring these issues, for a time. I hope I'm wrong. I hope everyone properly accounts for such things.
Peter - it really looks like a dry-type unit. Federal Pacific is very much still in business. I would call them directly and see if they can help you.
To reiterate the comment of several on this topic, cost does not equate to quality. My own experience: a woman who used to work for me left to start a business on her own. Her Phase I ESA cost generally is significantly lower than that of my firm - call it overhead or whatever - but the quality of her work is excellent. Her deliverables are among the best (completeness, accuracy, documentation, technical insight) I have seen in the market (perspective: my experience goes back to the mid-1980s). One difference: many clients are requiring that consultants be thier insurer through contracts provisions for unlimited indemnification, exceeding the $1 million or $2 million policy many small businesses hold. Larger firms that still will perform a Phase I under those conditions charge a higher fee (if we are still comparing the example of $1500 v. $3000) in support of being able to provide that level of indemnification.
Here is another photo
transformer 001.jpg (1.5MB)JG is correct. Whether the property was paved over or not, a Phase I ESA would (or, at least, should) have found that the property had been a gas station. While the owner who paved it over may have been sneaky, it may be a case of caveat emptor - buyer beware. Unless there are specific laws in your state regarding disclosure, court may be the only place that your question of liability gets answered. And, from another consultant who has seen this happen before, if "all appropriate inquiry" was not performed by the purchaser, he may be facing an uphil battle - environmental counsel can provide the best advice. This is why we consultants recommend a Phase I - so that we don't have stories like this to pass to our next client.