We took commonground to Seattle's Safeco field this AM w/ our Due Diligence at Dawn forum. There was a really good discussion that originally started here in the community about how cutthroat the industry has gotten. A panelist offered up how important it is to keep your standards up and "not give your services away." Another suggested firms "make a choice w/ your business model to either go by level of service or lowest price, and stick to it."
One discouraged all EPs from playing the price game, noting that "when you downgrade your price, you devalue the Phase I services of everyone in the room."
Check out this "mug shot" from our morning forum. Maybe they'll become like the travelocity gnome and show up all over the world!
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The bulk of the pricing pressure I've seen is from the one-man private operations. I've seen several reports over the last few years that have been done by these small-time operations, and the quality is usually so low that it's virtually useless in my opinion. Some claim that they are in compliance with some version of the standard, so their clients don't question them, but they're missing lots of information and drawing questionable conclusions. I recently saw one that was completed in 2006, claiming to be compliant with the 1999 (?) version of the standard, it referenced the state's regulatory databases but didn't catch the LUST remediation on adjacent property. It had Sanborn maps included, but didn't note any of the fuel/service stations shown on the maps.
I've seen an even greater number of them that are completed by people that don't qualify as environmental professionals under the current standard. One of the worst was done by someone whose only noted qualifications were that they had been selling real estate for over 15 years. Personally, I don't necessarily agree with the criteria for environmental professionals (what makes a PE qualified to do an ESA? I work with PE's, and none of them would know an REC if it fell on them), but it's part of the standard so I live with it.
Bottom line with these people is that I can't do a complete and compliant ESA as cheap as they can do what they're doing. If their client is willing to accept their report, then I'm not going to win that client. I don't like turning my back on work that easily, but I'd rather let any future consequences fall on that client and their bargain consultant than having them land on me because I cut corners.
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This forum is for constructive dialogue in challenges we face as environmental professionals. Your comment on PEs is far from constructive and is unprofessional and disrespectful. I can assure you that many participants of Common Ground are PEs (bank risk managers, peers and your clients) and share my opinion of your comment. We all know that in all pofessions there are numbers of people who are not competent in their field. There are PGs, PEs, envrionmental scientist and non environemntal backgound professionals good and bad.
I share your concern and the low ball one person operations that produce the poor product hurt the business. Not the PEs, PGs, etc. I do not want the customers that want the product they produce. They are not going away. They exist in almost every line of business.
Please remain constructive.
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My comment wasn't intended to be disrespectful, but my choice of wording was obviously poor. Apologies for any offense taken, none was intended.
My point was that the blanket inclusion of PEs as environmental professionals doesn't seem warranted, and I know that that comment was not an unusual one in response to the initial release of the draft AAI standard in the Federal Register. The opinion of the writers was that a PE - any PE - has sufficient education to qualify as an environmental professional. I don't share that opinion. While there's no arguing that they have education, I don't see that that education automatically makes a PE capable of identifying RECs. The PEs I work with cannot, not because they're incompetent, but because their education does not provide enough familiarity with environmental conditions to enable them to adequately complete a Phase I. I'm sure that some do have that familiarity, but the standard allows any PE to do a phase I, and I don't agree with that idea.
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I understand what you intended. An electrical engineer who is a PE is probably not the best EP.
Thank you for the clarification.
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Fundamentally, what do we do about it as an industry? I'm currently arguing for a standardized, nationwide industry certification program to determine an environmental due diligence professional. Challenging yes, I believe it is what our industry needs to be on par with others and gain more credibility.
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I'd agree, particularly under the new AAI standard, that there needs to be a more standardized program to qualify environmental professionals. However, in our case I think that could be difficult. So much of a site assessment depends on observations and even the context of those observations that it's difficult to certify someone through a multiple choice test. There'd need to be some sort of practical examination, a run-through of a site, whether staged or not, to evaluate an individual's performance.
The immediate consequence of a certification would be that Phase I's would get more expensive for us to perform, and for our clients to purchase, and might very likely take these assessments out of the realm of the individual consultants and make them more the area of consulting firms. Also, I can see how it would increase our exposure to liability if something was missed. On the plus side, it would probably not take long to start weeding out the bargain-basement consultants that are cranking out inadequate assessments on the cheap, since they either wouldn't bother to get certified or would fail the certification.
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If we believe that the industry would be better served by a nationwide standardized training program then we as an industry should take it on and get it done. A rising tide raises all ships. Details are details, they will figure themselves out as long as we don't get anchored to one path. We are all smart people, we can figure this out.
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I like your suggestion that if we as an industry feel a national certification is necessary, than we should take it on-and i nominate you to take the lead. As i understand it, the EPA wanted nothing to do with this-i believe from a liability perspective.
This discussion prompted me to open the AAI rule and review the pre-amble which explains much of the "logic" of the reg/neg committee for coming up with the EP definition. See link below (page 11)
http://www.epa.gov/brownfields/aai/proposed_rule.pdf
regardless of who they included or excluded from the rule;
The proposed definition first and foremost requires that to qualify as an environmental professional a person must ‘‘possess sufficient specific education, training,and experience necessary to exercise professional judgment to develop opinions and conclusions regarding the presence of releases or threatened releases to the surface or subsurface of a property, sufficient to meet the objectives and performance factors’’ that are provided in the proposed regulation.Be the first to rate this
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(3) An environmental professional should remain current in his or her field through participation in continuing education or other activities.
One of the challenges in the industry is that there aren't many hands on training programs for Phase I professionals out there to help them stay current. Many of course do their own training in house but our industry lacks the hardcore, widely-recognized accreditation programs that many other professions have.
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It is true that there aren't many hands on Phase I training programs; but ASTM does provide training, a list of their courses is available here:
http://www.astm.org/TRAIN/courses.html#ENVIRONMENTAL
Other training and continuing educations would involve anything related to Phase I reviews; i.e. tank regulations, waste disposal and storage requirements, etc. Unless someone offers a "historical records review" seminar specific to their area i can't see that changing without an accredidation program.
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Agreed
A national board, test, certification, etc is required.
ken
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I agree with you. I have fought against this blanket inclusion also. It takes years of specific training to make a good EP and that is not something that comes automatically with any certification or degree. We are more like environmental private detectives than general engineers. The skill set is not simple to obtain. A good EP sees two litle holes -- 4 inches apart -- in the mortar of building 10 feet off the ground and knows that an UST might have been located near that spot (vent pipe bracket mounting holes). This is a simple example of what is not usually taught in schools, and is not sought after by certification programs. I have no issue with an engineer that has that level of qualification in specific training being an EP, but automatic? I think not!
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There is a lot to discus here! My firm has produced an average of 200 AAIs or Phase 1s per year for 30 years. Regardless of price, we do exactly the same work. If I choose to perform an AAI for $1500 instead of $2000 because business is slow, I don't change how I perform that report. That is a matter or professionalism and adherence to standard that is not negotiable.
I have seen terrible reports produced by firms large and small. One of the most rampant problems years ago (less so with the new rule) was large firms using poorly-trained field individuals with little experience to perform their unprofitable phase 1s. Too often, a youngster with only a few years of total experience was turned loose on a project and the results showed the awful lack of expertise and usually ended up in an unnecessary phase 2 to compensate for uncertainty. Recently I reviewed the report of local company with 5 or 6 employees that is known for very cheap Phase 1s. The report was horrific. When I checked on the qualifications of the personnel, they had fictitious certifications from organizations where only a one paragraph bio makes you a "certified environmental professional," and they never even attended the universities or colleges that they purported to attend!
Teh bulk of our workload is AAI/Phase 1s and have been insanely profitable for many decades. Each of the last three years has been more terrible than the last, however, and yes, I have lowered our fees somewhat. We need the work. I have a lower boundary. I will refuse work -- as painful as that is -- rather than cheapen our work to that degree.
Keep in mind that AAI allows for an abbreviated report format. This is far less expensive but a perfectly acceptable court-ready format. We will not use that format for complex sites because we feel that the user needs to have the full story spelled out in these cases. However, it is available for your use.
Our reports have typically been about averge to slightly expensive, but tough times dictate different tactics. Please consider that there are many points of view on this subject and low cost does not necessarily mean low quality.
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I would be willing to lower my prices, only slightly, but the problem is, I haven't performed a Phase I in over 2 years. I feel like I'm being squeezed out by larger companies.
I worked for a medium sized engineering company for 15 years. I was laid off 3 years ago and have been trying for 3 years to make it as a sole proprietor. The first year I did 4 Phase I's and that was it. I have several architectural and engineering firms as clients and they know I do quality work, but every time I bid a job, it seems that other companies get the work because they will do it cheaper and I can't afford do do cheap work. My E&O insurance alone is $2500 a year.
I believe that I perform quality Phase I's because I am willing to spend the time it takes to perform adequate due dilligence. I find that time to do the site visit and interviewing occupants and looking for alternate sources of historical records is something that most larger companies won't do.
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I don't agree that the size of the operation has anything to do with it. I've seen poor quality work out of large firms as well as one-man operations. Often it is the larger firms that are willing to low-ball Phase I work hoping to position themselves for follow-up.
To me the bottom line is that by educating our clients and providing a quality services at a fair price we build our reputations in the marketplace which enables us to compete during tough economic times such as these. I think as a small business, or one-man operation there are many ways to keep our overhead down which should still allow us to provide fair and competetive (not low-ball) pricing at a profit. We'll always loose some work to clients focused on price only; often those firms come back after they get burned.
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Scott,
As a PE conducting Phase I ESAs for nearly 10 years, I do know what a Recognized Environmental Condition (REC) is, thank you. I've never (never say never) had a lawyer, much less a client, question my reports. I do consider myself an environmental professional.
Christopher A. Workman, P.E.
Director of Investigative Engineering
KOONTZ-BRYANT, P.C.
1703 North Parham RD, Suite 100
Richmond, VA 23229
(804) 200-1920 Direct
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I don't think a nation-wide EP certification would be that much help with regard to distinguishing qualified and experienced EP's to perform Phase I's. Whatever happened to 'let the buyer beware'. As some of you have noted, the buyer that is looking for the least expensive Phase I and doesn't care about the potential liability and/or risk in buying an impacted property out of ignorance, may not be a good client anyway. The best experience that I know of for doing Phase I's incorporates a knowledge of your local and State's regulatory agencies, regulations, local and regional geologic and hydrogeologic environmental conditions, manufacturing practices, and a lot of experience doing Phase II investigations to 'know where the bodies are usually buried'.
There are probably other areas of experience I have left out that make a good EP, but my point is that alot of 'local' knowledge is needed. You cannot properly evaluate local knowledge and experience with a nationwide test. Many states, like California, have state tests for certifying or registering professionals including geologists, hydrogeologists, and various types of engineers.
I think the best way to improve the EP situation is to educate the potential client better. Also, a good resume, good examples of your quality work, and referrals is the best way to justify your price. I have several clients now that orignially went for the cheap Phase I or didn't have one done at all. Sadly for them, instead of doing a Phase I for them now, we are investigating and remediating their properties.
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Going back to the original question on pricing, beware....once you lower you price to ride out this market, you will never get it back to where it was. You are much better served educating your client on why it is more and what they get for that price or not bidding the job. This market will weed out the low cost providers to some extent, but it's encumbent on us as quality providers to illustrate our value and the difference between a $1,000 or $2,000 Phase I ESA that likely does not meet ASTM, and a Phase I with an EXPERIENCED inspector, reviewer, and firm that fully complies with ASTM and protects and informs the client at a fair price point (north of 2k!)
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Very interesting. I have seen so many so called 1527-compliant reports that in no way meet the minimum requirements. I even see them that say they are in "general compliance with AAI" - it's black and white - you either are, or are not in compliance. That's like being pulled over by a traffic policeman and telling him that, yes, while you were speeding, you stopped at each stop sign and obeyed lane markings and as such are in "general compliance" with the rules of the road! These arguably non-compliant reports are usually the cheapest.
My feeling is that as an industry we know that the chances of our ESAs being used in support of an innocent landowner defense are low, and as such we (as an industry) accept that reports meet most of the requirements of AAI, but probably not all. And we usually get away with it.
I wonder how your (that's anyone out there!) price would be altered if the client told you that they wanted the Phase I in association with an innocent landowner defense, and the report will definitely be presented and picked apart in court. Do you think a $1,000 or $2,000 ESA would past muster in front of a judge, or do you think it would be thrown out as non-compliant? My guess is the latter and my guess is also that under such circumstances we would be demanding a much higher price for the ESA.
So, how much more would you charge for a Phase I that was going to be thoroughly reviewed in court? 10% more? 100% more? ...I used to work with a lab in the UK which offered a service providing legally defensible lab analyses for soil, vapor and groundwater that was 300% more than its standard costs, with guarantees that every standard of care had been met.
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The phase 1 factories tend to skimp on historical searches and fall a few dollars short on exercising sound professional judgment for historical conditions. Ive seen too many instances of world war 2 bombing ranges, closed USTs in place and former dry cleaners missed by these firms. There is no way that a firm can comply with a detailed 40 page scope of work for $800.
If you want to see more of my rants about commodity shops, visit the discussion about BERs.
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You have hit the nail on the head regarding where the cost cutting usually lies. This also coincides with the most demanding part of the process requiring the most attention by a qualified professional. Some firms will cut prices temporarily during a downturn and this should not be confused with the commodity shops.
I have question though: What is the 40 page scope of work you are talking about?
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If we are 1 to 5 years away from regaining the kind of economy that will produce robust demand for our work, and we all stay in the business and keep bidding at yesterday's prices, survival will go to the one with the deepest pockets, or some alternative source of work. I have found that the typical project destined to us is now shopped out. Our clients are intelligent people and are aware of my competitors our there, having used some of them when the pie was divided up, or because of aggressive marketing activity to compensate for the weakened demand. They are only a phone call away from opening the bidding up. I need to work to survive and if it takes adjusting my pricing, I will have to do that on simple economic grounds. I've always priced fairly based on complexity, risk, size and time. As far as the risk involved, I always do the same comprehensive scope and I practice the "can I sleep at night" philosophy of completing my work so that I never worry about being sued. Also, there are occasional Phase II's that are spawned from a well done and reasoned-out Phase I, so that's where I might pick up some extra cash. We are kidding ourselves if we are too proud to adjust our pricing based on sound economic reasons. Staying in game is important. You never know when a bargain-priced Phase I will lead to a very profitable relationship.
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I am in favor of some sort of minimum licensing. That being said, licensing only establishes that a person has the minimal skills required to competently perform at a level expected of the average person in a certain industry. An applicant doesnt need to "ace" the exams, just pass them. Licensing will never serve as a proxy for identifying those persons who exercise good professional judgment. But having to take a test, though would filter out lots of lazy and unskilled people. They'll probably become sub-prime mortgage brokers instead.....
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Maybe we should all become sub-prime mortgage brokers. The work is easier and they make a lot more money than we do. The one thing I can say for us E.P.s - it's an adventure. I have more fun doing my job than any banker. Being good at what I do, I would be happy to test out for licensing. Anything that would help eliminate firms doing sloppy Phase I's for low $ is good for me.
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I've found recently that I am getting priced out of the Ph1 ESA market in my area. At one time a typical ESA (for instance: a commercial, non-industrial, non-rural site) would go for around $3000. Now I am to understand local competitors are offering ESAs for $1500. I simply cannot compete with that! I work for a large engineering firm with a broad range of expertise. I cannot compete with the guy working out of his house or garage. This has become very frustrating for me!!
National licensing or not, these lowball fees are too low to compete with. Did I say I was frustrated?
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I think national licensing could help this problem since it would require passing a test, having minimal amount of insurance and perhaps even imposing reporting obligations on the individuals as agents of the state like NJ. Lots of folks wont want to go through the ordeal of taking a test........
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National licensing would still not help as the larger firms couls still have inexperienced people conducting the site visits, wiritng the report, etc. only to have a licensed "EP" sign off on it. The solution would be to have a requirement that the entire report needs to be conducted by a licensed and qualified individual and that their licensing would be in jeapardy should they create a subpar report.
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The problem with the Due Diligence market is that anyone can basically do a phase 1 and have a buddy who is an EP signoff on the report to make it AAI compliant. The supply of EPs needs to be constrained just like the supply of lawyers, doctors and accountants. Otherwise, the industry is going to be ruled by the few dishonest and incompetents who are taking the industry on downward death spiral....just like the dishonest mortgage brokers took down the subprime market.
My proposal is that AAI is amended so that:
(1) EPs have to obtain licenses
(2) The reports must be done by EPs, not simply supervised
(3) States create licensing boards that issue and take away licenses
(4) The EPs become agents of the state so that they have an obligation to report historical contamination
(5) States have to adopt licensing programs to be considered a "state response program" that qualifies for the federal enforcement deferral of section 128 of CERCLA.
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I second the motion.
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2 questions:
1. would these state boards be similar to what NJ just did w/ remediation professionals?
2. when AAI was being negotiated, EPA was pretty adamant that they didn't have the interest/resources to set up a national board nor force states to do this. Are you hearing that things have changed along those lines now that it's 3 years later and that it might be in the realm of possibility under Jackson's lead?
Dianne
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Larry, I like your idea, and I've certainly pushedhard in the ASTM discussions to require that EPs perform site visits. Unfortunately, just having a license or certification means little if none are ever revoked. I've seen horrible asbestos and lead survey reports (some recent one especially bad), but am unaware that any asbestos or lead consultant in California has ever lost their certification due to producing such garbage. Several have been at it for years.
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After reading the guidance documents that NJDEP issued, I like the direction they are going. I think it will help screen out the incompetents, criminals, languid, lethargic, lifeless, listless, loafing, sluggish, and slothful types.
As far as EPA, I have not heard anything either way. The comments you refer to came from an administration that as a very different perspective of environmental issues that this one. In my opinion, it will not be the influence of Lisa Jackson as much as Mathy who has been a tireless advocate for community issues. I would suspect that we are starting with a clean slate.....
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Impressive string of adjectives.
I hope you're right. The marketing pieces I'm seeing get more and more worrisome.
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I was also going to mention apathetic, careless, derelict, Indifferent, inattentive, lackadaisical, loafing, neglectful, phlegmatic, shiftless, unindustrious, and unscrupulous but I figured I had gotten my point across :)
,
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