Engineers starting their own practice generally have the technical capability sorted. The difficulties are commercial, and they are predictable.
Professional indemnity is the first decision
PI insurance is effectively mandatory. Councils frequently require evidence before accepting producer statements, and clients require it in engagement terms.
Three features matter more than price:
- It is claims-made. The policy in force when a claim is notified responds — not the one in force when the work was done. This is why continuous cover matters and why lapsing is dangerous.
- Run-off cover protects you for historic work after you stop practising or wind up. Under the Building Act’s long-stop limitation period, work done today can be examined many years later.
- The limit must reflect the exposure, not the fee. Losses relate to the project, and a small fee on a large project carries disproportionate risk.
Scope discipline
Most consultancy disputes come from scope that was never defined. Every engagement, including small ones for repeat clients, needs a written agreement covering:
- Deliverables, in what form and at what stage.
- An explicit exclusions list, which is more valuable than the inclusions list.
- Assumptions, including information you are relying on from others.
- Whether construction monitoring is included, at what frequency, and whether a producer statement will follow.
- Revisions included before variation applies.
- A liability cap.
- Who may rely on the documents, and for what purpose.
The producer statement question is the one that recurs. Being asked at project end for a PS4 covering construction you never monitored is a scenario to prevent at engagement, not to negotiate under pressure.
Pricing your time
A charge-out rate has to recover far more than a salary. Add non-chargeable time — business development, administration, professional development, CPD, quality review — which for a small practice is a substantial proportion of the week.
Realistic chargeable utilisation for a sole practitioner running their own business is well below full time. Building your rate on an assumption of high utilisation guarantees under-recovery.
Fee structures: lump sum suits well-defined scope, time and materials suits investigative work, and capped time and materials with a variation mechanism is often the practical compromise.
Cashflow
Consultancy is labour-heavy with no material cost to buffer the timing. You pay yourself and any staff continuously and get paid on client terms.
- Invoice monthly on progress rather than at completion.
- Take a deposit or mobilisation fee on new clients.
- Chase early and systematically.
- Credit-check clients you have not worked with, particularly developers.
Registration and professional obligations
Chartered Professional Engineer registration matters commercially for anyone in building-related practice, since producer statements and council acceptance frequently reference it. Registration requires ongoing continuing professional development and periodic reassessment, and letting CPD lapse creates problems at renewal.
Professional obligations around competence, conflicts and honesty apply regardless of business structure.
Winning work
Early work generally comes from your existing network — former colleagues, contractors and clients who know your work. That is legitimate, and it makes how you leave your previous employer commercially significant.
Check any restraint of trade in your employment agreement before resigning rather than after. Restraints must be reasonable to be enforceable, but a broad one will constrain you practically while it is argued about.
For public sector work, understanding procurement rules, panel arrangements and prequalification is a durable advantage worth investing in early.
The quality system
Even a sole practitioner needs a documented approach to checking and review. A second set of eyes on calculations before issue is the single most valuable quality control available, and arranging peer review with another practice is common and worth setting up before you need it.
Engineering New Zealand publishes practice guidance and model terms of engagement for members, and procurement.govt.nz publishes the government procurement rules.
General information only, not legal advice.
