What is the primary reason for the stagnation of engineering consultancy fees in Malaysia since 1983?

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Primary Reason for Stagnant Engineering Consultancy Fees in Malaysia

The primary reason for the stagnation of engineering consultancy fees in Malaysia since 1983 is the prevailing procurement practice that overwhelmingly prioritises the lowest fee, coupled with an outdated scale of fees that has not been updated for decades. This situation is exacerbated by increased workload and complexity in modern projects, leading to a significant disparity between the actual effort required and the compensation received by engineering consultants.
Procurement Practices Favoring Lowest Bidders

A substantial majority of industry professionals, specifically 88.97 per cent, indicated that consultants are consistently or very often chosen based on the lowest fee. This practice is further underscored by the 51.84 per cent of respondents who expressed concerns that traditional tendering processes frequently favour the lowest bidder, potentially overlooking the intricate technical requirements and inherent risks associated with complex engineering projects. This focus on cost over technical merit can lead to a race to the bottom in terms of fee structures.
Outdated Fee Structures and Increased Workload

The scale of fees for engineering consultancy services has remained largely unchanged since 1998, meaning the established benchmarks are approximately 30 years out of date. This stagnation is particularly concerning given that respondents reported a tenfold increase in the workload required to meet current client demands over the past 24 years. The lack of a revised fee structure fails to account for the escalating complexity and demands of contemporary projects.
Impact on Service Delivery and Professional Development

The persistent low fee levels are raising significant concerns about the future quality of service delivery, with 65.35 per cent of respondents fearing that current fees could eventually compromise the standard of work. Furthermore, the entry-level engineer salary structure has seen minimal adjustments for nearly two decades, making it challenging to keep pace with the rising cost of living. This financial pressure often results in companies reducing salary adjustments first (81.30 per cent of companies) and cutting back on crucial investments in upskilling, impacting the long-term development and competency of the engineering workforce.
General Considerations for Professional Service Fees

Generally, the setting of fees for professional services, including engineering consultancy, is influenced by several factors such as the scope and complexity of the project, the expertise and reputation of the firm, the time and resources required, and the associated professional liabilities. In many economies, procurement policies have evolved to incorporate elements of quality-based selection or value-based procurement, aiming to balance cost with technical competence and long-term project outcomes. The potential consequences of consistently underpaying professional services can include compromised infrastructure quality, increased risks to public safety, and a decline in the overall capacity and innovation within the sector.

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What is the primary reason for the stagnation of engineering consultancy fees in Malaysia since 1983?

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