July 1, 2006
May 2006: Editor's NoteI enjoyed your Editor's Points. How true this is. In the 50-plus years that I have been involved with surveying, and since I more or less semi-retired nine years ago, it is surprising how one has to dig out of [one's] mind things [one hasn't] used for awhile and refresh [one]self to what once was almost a no-brainer. I attempt to solve the problems in the magazine or the [bi]weekly POB eNews just to hopefully keep my feeble mind active.
Charles L. Dowdell, PLS
May 2006: The Acquisition DecisionThe cost/benefit analysis presented for Scenario 1 in the article "The Acquisition Decision" is deeply flawed. In the first place, no explanation is given for the unlikely decision to use straight-line depreciation in the cash-purchase calculations instead of taking the full purchase price as a Section 179 deduction. Second, while opportunity cost is listed as an element of the cash-purchase option ("Interest that would have been collected on the money saved"), it is missing from the lease option costs, and the lease option benefit "Interest collected on money not spent" is bogus. Third, the payback time calculations reflect only Year One costs.
By my reckoning, adjusting the calculations shown for these items makes the first-year payback times for the lease and purchase options about [the] same, if that's of any significance. More importantly, buyers need to remember that a lease is just a specialized form of a loan. While leasing has its place in the realm of business acquisitions, it will almost always cost more than outright purchase.
Author Emery Gale responds:
Thank you, Jim, for responding to the "Acquisition Decision" article. Based on your comments it seems the article is accomplishing exactly what it set out to do, that is, to make readers aware that an acquisition decision deserves a thorough review of all possible options and their ensuing financial implications. The analyses that accompany the article should be seen as a framework to get started with detailed cost benefit analysis including intangible aspects, specific factors individual to [a] business/situation, extended outlook, etc.
Unfortunately, an in-depth, long-term analysis for the two scenarios exemplified could not be illustrated in the length of this article, so only the most pertinent factors leading to the final outcomes were included. Moreover, to explain each company's background and reasons for making the specific moves they did, i.e. the use of straight-line depreciation versus Section 179 deduction or hesitation to incur further long-term debt, would have meant devoting almost the entire May issue to this subject. That may be an exaggeration; regardless, I'm sure you get my point.
I appreciate your feedback and hope you will continue to be as analytical in your own business ventures.
May 2006: Point of ViewI read your article on POB Online. Great article-could not agree with you more. I am 35, went to college and received my B.S. in surveying. My old boss told me back in 1991 that if I ever wanted to make a decent living in this profession, I had to get my surveying degree and pass my exam. I have worked for three companies in my life [including] a 500-person civil engineering firm where all surveyors were the laughing-stock of the company and treated with no respect. After leaving, I worked for probably the best surveyor in the state of New Jersey for three years. I learned what surveying was and how to do a job correctly"¦ since this was a surveying business, I was treated with respect and I fell in love with my profession again. I now work for a smaller engineering/surveying firm where I am a department head. A client will not blink twice about the fees of an engineer or an architect, but when they see the fees for the survey they always seem to make a comment. It really is a shame. However, until we are treated with respect from engineers and architects first, our profession will always be looked down by everyone else.
Patrick A. Cibellis Jr., PLS
Unfortunately, Matthew Mokanyk has missed the point two ways.
First, when Matthew says this is not a taboo subject, he is right: it is ILLEGAL. Just ask the many members of local chapters of land surveyors' associations around the country who have been ARRESTED and charged with conspiracy to fix prices by the U.S. Justice Department. While no member went to jail, almost all paid severe fines in the thousands of dollars. Unless your state law regulates the fees you can charge as a professional, fees are free and open and negotiable, and can be regulated by the federal government.
More to the point, though, Matthew missed the point in another, very important way. On the surface, the prices a professional charges are dictated by his or her basic cost of doing business. But a seasoned professional knows that [his] fees are based more upon professional reputation than just the cost of doing business. If a potential client gives their work to the "$90 surveyor" it is for one of two reasons: 1) that is all they could have afforded in the first place, or 2) YOU, as the professional, didn't do enough to educate that potential client about what constitutes a professional survey.
The surgical analogy fails in that the patient probably died, not because he retained the lowest cost doctor, but because the patient lacked the knowledge to write a comprehensive RFP. Without being a doctor himself, the patient could not possibly prepare thorough specifications. In the same way, how can a potential client make an informed choice on which land surveyor to retain if the client has little or no knowledge of the land surveying profession?
Thirty-three years of experience have shown me that the way to eliminate the $90 surveyors is to teach those surveyors how to educate their clients. Don't talk about price fixing in association chapter meetings. Teach surveyors what the law requires a survey to show, teach surveyors how to adequately explain that to clients and encourage surveyors to pledge to follow the law on EVERY survey. Clients driven by price alone will always go to the $90 surveyor. But if all the surveyors in a community always provide the same level of service, if they all explain to clients the long-term cost benefits of a lawful survey, and if every potential client is made aware of the increase in property value a professional survey provides, the effect of the $90 surveyor will decrease dramatically.
Reputable attorneys command higher fees than lesser known attorneys. Good specialty surgeons command higher fees than lesser-experienced general practitioners. And establishing a reputation is where most surveyors fail. It is the local surveying industry that needs to improve its reputation rather that conform their prices to some standard. Bad work comes at all ranges of price. So, rather than swat the $90 surveyor with your price-stick, educate him on how to do lawful surveys and educate him on what a lawful survey is worth, and my bet is the $90 surveyor dies a rightful death.
Donald Day, PLS
Author Matthew Mokanyk responds:
Donald Day misunderstood my "fee range" concept. The article is not about price fixing. The article is about recognizing the fact that we are professionals and we need to command professional fees (and professional respect). I agree with some of Don's points but I disagree with his most emphasized point regarding "educating" the $90 surveyors. You cannot "educate" the $90 surveyor to enlighten his mind and change his ways. The $90 surveyors chose to become what they are and they will not change. They typically scoff at peers and rarely comprehend the repercussions caused by their wanton disregard for professionalism. Hence, we must all work harder to overshadow the $90 surveyor and promote professionalism among our peers, other professions and the public at large.
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