What percentage of the total cost does the design fee account for?
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Well, the questions I want to ask are something like this: for example, what percentage of the total cost of a device does its design cost account for? And then, for an engineering project that includes processes, equipment, building structures, electrical systems, piping, and so on, what percentage of the total cost of such a project does the overall design cost represent? It’s okay roughly; the size range doesn’t matter either. I’m just asking. . . Does anyone know?
3% to 5% – this is the proportion of design fees for various specialties incurred by design institutes or engineering companies relative to the total investment. Foreign-owned engineering companies have a higher percentage (reaching up to 10%), and this is due to the use of foreign process packages. But in reality, when it comes to the design of equipment (a term that includes machinery, electrical systems, instruments, etc.), suppliers try to keep the design costs as low as possible in order to win bids; as a result, this ratio is hardly ever achieved, unless there is a monopoly.
The estimation of design costs for engineering projects is based on the \"Standards for Determining Design Costs\"
The standard mentioned upstairs is just a \"standard\"; in reality, the design cost depends entirely on the quotes provided by various design firms. Basically, the one with the lower bid wins.
Profits are low now due to fierce competition; if it weren’t for monopolies, 5% would be considered a high rate for regular projects