Interpretation d)

Interpretation (d) states that engineers shall not request, propose, or accept professional commissions on a contingent basis if, under the circumstances, their professional judgments may be compromised. Work on a contingent basis means an engineer is engaged in an open-ended project with no fixed outcome, and the engineer’s income derived from this work depends on the deliverables. The engineer may negotiate a fixed, dollar-per-hour professional service fee in advance.

This is essentially a conflict of interest issue (Canon 4). As noted in many texts, conflicts of interest can be perceived, potential, or actual conflicts of interest. When your reward, commission, or fee is dependent, or appears to be dependent, upon your judgment of successful completion of the work, it will be difficult to avoid, at a minimum, the appearance of a conflict of interest. If successful completion of the work is judged solely by external reviewers (e.g. the contractor, independent review process), then the conflict tends to disappear. Thus proposing or requesting a contingent fee arrangement is most likely not in your best interest as it will be difficult to avoid conflicts with your professional judgment. However, if the contractor proposes the arrangement and defines the performance measures, then a contingent fee arrangement is most likely acceptable.

Consulting engineers are sometimes contracted to provide engineering services for projects that are in various phases of development, and, depending on the project’s feasibility, the engineering services may continue to be needed. Thus there arises the potential conflict between the best interests of the consulting engineer and the client. Canon 4 should be reviewed, especially Interpretation (i), which states, “When, as a result of their studies, Engineers believe a project(s) will not be successful, they shall so advise their employer or client.”

Consider the following situations of a consultant engineer working on a contingent contract.

Mary Smith, P.E., a consulting engineer whose primary work is industrial product design, is requested by the XYZ Manufacturing Company to review an amplifier design. XYZ is under pressure to deliver a final model to a customer within three months, but has not yet developed an acceptable product. Smith spends a few days reviewing the XYZ design and makes several recommendations to improve it. She is paid her usual per diem fee, as agreed upon earlier. XYZ asks Smith for further assistance, to make the product fully acceptable, and proposes to pay her a fee for the additional service only if the amplifier, as a result of her assistance, will meet the company’s requirements. During this period XYZ will pay Smith’s out-of-pocket costs, such as travel, lodging and computer time.

Would it be ethical for Smith to enter into a contract arrangement as described?

It is important to note that XYZ made the offer to Smith; she did not propose the contingent arrangement as a device to secure work. It would be ethical for her to accept the offer, provided that her professional judgment will not be comprised by the outcomes of each phase of the project. Smith’s judgment should also be guided by Canon 4, Interpretation (i), which states, “When, as a result of their studies, Engineers believe a project(s) will not be successful, they shall so advise their employer or client.”