Thanks Zeke F. But I would argue that clients are paying for integrity, and I find it hard to believe that the obligations of prevailing practices have been adequately fulfilled during the typical $700 or even $1,200 Phase I ESA. If such obligations have not been fulfilled, then there is no value at $700 (money out the window), unless the client doesn't want or need to fulfill the obligations of the Phase I ESA to understand site risk, but they do need the "title" of the Phase I ESA on their document; and the client is not concerned with CERCLA liability of any variety. In order to make the deal, the consultant can't be too concerned with litigation, either.

I understand that EVERY industry has similar concerns, but if there was absolutely zero enforcement in our industry, there would not be an industry, and that's what makes our industry a bit different. Enforcement of many varieties (penalties) is the only thing keeping us employed, and when it increases to the point where there are real penalties, then we see the cost of Phase I ESAs increase, because real Phase I ESAs take time and effort and experience. That's not a supply and demand equation. Consultant "A" is selling a different scope that consultant "B", and that's the problem.

Essentially, this whole issue is no different than a toy manufacturer from China selling lead-painted toys cheaper than an American company that sells the same non-leaded toy for more $$. Where is the level playing field? Supply and demand -- sure, I get it, but supply and demand of what? Toy A is different than Toy B! Where is the enforcement? If there will be none -- then fine -- I guess we're all in the lead-painted toy business. At least then we can compete head to head or call it a day.

A Phase I ESA should take about 30 to 40 hours. SO, for 700, you're telling me that a degreed professional with just five plus years experience, overhead expenses such as gas and printer cartridges, insurance, student loan payments, house payments (or rent), car payments, tickets to the game, etc. is going to pay himself less than $200 a day, and likely have intermittent work at that? With invoices out two months? Or six? What kind of professional are you hiring? I didn't say it was impossible Matt, I'm just saying that the liklihood that ASTM and AAI practices are not followed increases as the fees get lower. I think we can agree on that. 

Futhermore, historical data? The data still has to be thoroughly reviewed, and unfortunately it is not yet perfect. Look at your typical Polk searches. They might suffice sometimes, but not normally. Not when there's a historical address shift, street name change, or new town, or reworking of roadways, etc. Now, for 700, you also have to drive 120 miles to the county seat or someplace and research historical data? What about historical structures? Can you research the past uses to 1940 or to first developed use, whichever earlier, on a structure built in 1890 for $700? Who is going to pay for the rest of the Phase I?

But, you could be right Matt. I appreciate the conversation for certain. Thanks, Jon

I agree and disagree with several points above...rather than fill up the forum with a long winded response, I posted it on my "Risky Business" blog in the blog forum.  the two main points I make are:  1) Unsophisticated are not aware of the difference between a Phase I and other products, and 2) competition is making pricing go down in a very mature industry.  What do you think?

Phase I should take up to 40 hours?  Wow, that strikes me as being very inefficient.  Every property is different, of course, but a typical commercial property (not industrial) should not take anywhere near that amount of time, in my opinion, to fully comply with the ASTM 1527-05 Standard (and not do a nickel's worth more - unless the client requires it, in which case more fee is warranted).  

Excluding travel time, I don't usually need to spend more than about 12 hours on one.

Well, 30-40 hours is a bit of time, but out here (in the West), that Phase I can be 200 miles away in a city that is not the county seat, so when it's said and done, you've spent at least 12 hours, plus overnight time, just visiting the site and gathering records. This is NOT that unusual. When I think of the average scenario, I presume this:

Site is within 100 miles (one-day site visit), Site is within familiar municipality and/or county where I know where to gather records, or I have them already (this comes from experience), Site (on average) was developed from vacant land in the 1960s (this means I don't have to research prior to 1940), Site (on average) does not have industrial past uses, or "guilty until proven innocent" uses such as gasoline stations, dry cleaners, or vehicle repair facilities -- that kind of thing. Site includes less that 20 acres and only one or two parcels of commercial real estate. Site visit will be easy to coordinate, and contact and interviews will be easily ascertainable . . . etc.

There is more -- but the point is, if any of these above things go haywire, I'm still on the hook to proivde the appropriate answers given the practices we utilize and within the lump sum fee we agree to. If there are USTs, then I need to do more, if there is a problem scheduling the site visit, then I spend more hours on that. Typically there will be something coming from left field, and you just have to be prepared.

BUT, for $700, or even $1,750, I suspect that more often consultants are citing "data failure" or they're cutting corners in the process because there is really not enough budget to ascertain the appropriate information for the Phase I ESA. This is what I mean by having two different scopes. Either you're providing a Phase I ESA to the best of your ability, given your experience and knowledge of process (and sometimes you're over budget and sometimes you're not); or you're providing something less, and that's a different scope of work. All I am saying is that if we are providing a different scope -- let's be up front about it. Call it a $700 Preliminary Assessment or something -- then we can all compete on a level playing field.

The Phase 1s being done for less than $1,500 are typically being done by sole proprietors working out of their homes.  A full service environmental firm will never be able to compete on price alone with these individuals.  Nor should we even try to compete on price alone with them, since there are things that an actual environmental firm can bring to the table that the SP cannot......deeper pockets, national coverage, ability to do Phase 2's, etc.

But it's a mistake to assume that the SP is providing a lessor quality product simply because they have the ability to do the work for less money.  I'm not a SP, but if I was, I could easily do a Phase 1 for about 1/2 the cost of what my firm would charge, especially if it happened to be a really slow week, and close to my house.  The client would still be getting the same quality report by an EP with 15 years of experience in the industry.

As for the amount of time required to do an ESA out west, I still have to disagree.  I've been doing ESAs out of California since 1995 and have worked for 3 different companies.  Very rare that I would need more than one day to do the onsite and historical research and one day to write the report for a property anywhere in the western US.  Maybe another 1/2 day to cover proposals, client calls, etc.  And of course, there will be exceptions for proeprties with issues.  But for the most part, 2 days is plenty of time.

Although there are some long days when flying is involved.

You have to know the model to understand what is happening here. I'm sure many of you do but some probably do not. There was a large national firm specializing in Phase I's that started much of this low end work (the firm went bankrupt in 2008; another firm bought its assets and is continuing the model to this day). This firm was largely a virtual firm, they had several small offices across the country but had a tremendous network of 100s that they called "PAs" or "Professional Associates".....LOL.....

The PAs would do Phase I work for a cut throat rate and then the firm would take it, mark it up and send it to the client (usually large banks, insurance companies, etc. that liked their rates of $1500-$1900) and their great turnaround and capability to produce anywhere in the country. The large firm employees/reviewers never met most of the PAs other than over the phone. Incredibly, they had minimal legal problems, as I understand, because they demanded  a report that was very thorough. It required visits and phone calls to every agency you could dream of.  The weakness of the process was usually the eyes on the ground (i.e., the experience of the assessor). The PAs, all independent and many of them living in remote areas or outside of large cities, were usually glad to work for what was esentially $15 to $17 per hour because these reports took 40 hours+ with all the demands.  Most of them would get 1-3 jobs per month and thus make $10-25K per year working part time while it lasted. 

I should have added that there are, of course, cost cutters beyond just the few nationwide "virtual office" firms. My experience with the Vapor Encroachment Screening is that I have had little luck getting most clients to spring for the extra assessment dollars unless the plume condition was egregious. It seems that most business clients just do not want to open this can of worms......especially with all of their other concerns at the moment (such as a Depression looking them in the face).

Manno, I did some work for LAC when I first went out on my own.  They paid $700 to $800 for a Phase I not including the database.  This helped me tremendously when I was first getting started.  However, as time went on and expenses increased I could no longer make money at $800.  And thier reports took a ridiculous amount of time (30 to 40 hours).  I got a call from the company that bought LAC today.  They wanted me to do a Phase I for $800 and a similar report to what LAC had.  I said thanks, but no thanks.  My time is worth more than $20 per hour.

MattFox, I don't see how it would be possible for a sub to make six figures.  Lets say a sub could do six of these Phase Is a month (which would be a stretch) that's only $57,600 for a year.

Matt.....I knew several persons that worked for this firm..........verrry wellll...... that did Phase Is and PCAs for the firm and yes.......there were a few well-connected persons that got the best assignments: small portfolios with combined Phase Is and PCAs for example where they could make a decent living.  And yes, some of the well-connected folks did make $100K. I would estimate there might have been 10-15 that knew the insiders well enough to get a steady stream of "good" projects to make that kind of money. But the vast majority DID NOT make anywhere near that.

And yes, some of the PAs were good, well-credentialed assessors.  Look back at my post...I did not state that the associates were inexperienced as you stated. 

Manno, I'm sure you are correct that there were many that didn't make six figure incomes.  My understanding of how LAC worked was that the PAs that did quality work, were easy to work with and were willing to go anywhere, anytime got the most work.  PAs that didn't do such a great job or had personal limitations obviously didn't get the same volume. Your original post stated "The weakness of the process was usually the eyes on the ground (i.e., the experience of the assessor)." which is what I was referring to.

Very interesting discussion, as we are experiencing the same issues in the seismic/PML report field.  Fees have drastically been reduced over the past several years, even with the publication of two new ASTM standards.  The main issue is that there are several firms that continue to quote $500 to $800 for a seismic report, and continually provide the services by non-building engineers (i.e. structural engineers).  At best, the services provided are a Level 0 or "desktop" review.

Several years back I was asked to perform some of these reviews for a large national virtual office firm, who would pay me as a sub between $50 and $150 per report.  They indicated that no site visit was conducted by the reviewing engineer, and no drawings would be provided for review.... but hey, I could do a lot of them!  Essentially, the person conducting the site visit would provide some generic data to which I could base my conclusions on.  To this day, I'm not sure how one is supposed to assess whether the building has stability problems, what the potential damage is, or any other deficiencies based on a standard form provided by someone not experienced in building reviews.

And as for the quality of that firms work, I have seen dozens of their reports where they did not even get the lateral force resisting system correct for the building (there is an obvious difference between steel braced frames and plywood shear walls).

The issue we face now, is many of our clients (or potential clients) question why our fee is $3k for a seismic study when they are used to paying less than $1k.  The difference lies in the ability to accurately assess building deficiencies (typically by performing a site visit by a structural engineer AND performing calculations). 

Good luck to all the environmental professionals out there dealing with this same issue.  I for one will not be performing ESAs, as my expertise lies elsewhere.

Colloquial info. Most buyers these days want to pay $0 for a Phase I, acccepting an old report or flying totally blind. Who cares when you're getting the site at 10 cents on the dollar? Nobody wants to do these and if they can get out of it, they will.

With respect to PCA training, an aspect associated with the inspection portion would be a Home Inspectors organization that offers training and/or seminars.  Obviously there are differences between a Home Inspection and PCA, however many of the basic concepts used in the evaluation process (e.g. electrical, plumbing, roofing, etc.) are very similar or at a minimum provide a good foundation of knowledge.  Also this would not be an end all as the report writing portion of a PCA is very different.  I have joined such an organization and found it to be an extremely cost effective means of training along with the added benefit of making professional contacts. 

If the good companies in our industry do not stop the "dumping" of sub-par Phase Is by the "mills," we will be run out of the Phase I business. 

In our case, we prefer to perform comprehensive projects - a Phase I with an asbestos, lead, miscellaneous toxic materials (universal wastes) survey, or PCA.

While the lenders seem to just want a "clean"  report, I'll bet the consultants who "understand their risk tolerance" will be among the first sued when something goes wrong.

My company has also seen some sad, but humorous examples of missed items:

1) A grocery-anchored shopping center where a previous Phase I report missed several,  yes several, former filling stations in different locations on the subject property!  The aerials gave  strong clues, and the city directories confirmed them.

2) A site where a previous Phase I missed that a vehicle maintenance facility, part of a large power plant site, and been on the subject property which now contains an office building.  Sanborns existed, and went way back, but they had not bothered to order them! 

This appears to be a fairly common experience these days.  As the economy has slowed and companies need work to stay in business, ethics seems to have been set aside in favor of revenue.  I am trying to spread the word about our ethical business obligations.  I am also working with lending institutions to re-educate the loan officers and bank officers about the importance of proper due diligence, their liabilities and the new concern with VI issues.  Many of the loan officers are new and unfamiliar with environmental requirements as there has been so little activity over the past few years.  I am involved with several cases where RECs were specifically ignored in favor of a loan.  Very frustrating in one case and very costly to a business owner in another.  Stand our ground; the low-cost providers will fall by the wayside as the economy improves and third-party claims increase.

My favorite was the site I did where the previous consultant missed two bulk plants on adjoining properties, and a dry cleaner 2 blocks upgradient.  They claimed that Sanborn maps and Polk directories were not available, and ownership records only went to 1980.  Polks and Sanborns were at the local library, dating into the early 30s, and ownership went to the late 1800s, once you stepped past the subdivision of the parcel in 1980.

When my client went back to the previous consultant and asked about my findings, their responses were that one bulk plant was not on the property, it was adjoining property (because of the 1980 segregation), the dry cleaner wasn't 2 blocks away, it was 2.5, and that all three were off-gradient because groundwater flow was to the south or southeast.  My flow was estimated based on topography and surface water flow (west), my previous work in the area, and over 4 years of groundwater monitoring reports from a property 1/2 mile upgradient.

Unfortunately, my client wanted a clean site, so after I declined to alter my findings, I never heard from them again.