Asking for the Right Fee

It has been always hard for me to negotiate my fees or commercials of a project with my clients. Call it as a weakness or as a lack of acumen that I severely fall short in the “negotiation arena”. I am fine when it comes to technical discussions but become speechless or lose my words when someone asks me about my “price”. If I like the assignment, I don’t ask for money as generally charged in todays commercial world.

I remember my first consulting project on siting of continuous automatic air quality monitoring stations (CAAQMS) for Rashrtiya Chemicals and Fertilizers (RCF) Ltd in Mumbai. It was 1984.

RCF was directed by the Ministry of Environment and Forests to install three CAAQMS stations. The stations were costing nearly 10 million. Rs. Mr Y R Pakala was the General Manager. A technically very savvy and gentle chemical engineer.

I had just returned from Asian Institute of Technology (AIT), Bangkok after completing my doctoral dissertation on “Optimum Siting of Ambient Air Quality Monitors”. My research was published in three parts in a single issue of the Journal of Environmental Monitoring and Assessment (EMAS) by then Editor R E Munn. That was some achievement for me. On returning to India, I joined Centre for Environmental Science and Engineering (CESE) at IIT Bombay as a Lecturer.

Somebody told Mr Pakala that siting three CAAQMS is a trivial exercise and he should simply put 3 CAAQMS in “120 degrees cone” at the edge of the compound of the factory. You don’t need an expert they said. But, Mr Pakala did not agree with this simplistic approach and wanted an analytical study with rigor to support the decision on locations and that could be used to “defend” if asked by the MoEF

Somehow Mr Pakala found about my expertise, most likely through my Masters batchmate M G Rao, who was working in RCF under him on various pollution control related projects. Mr Pakala called me and proposed a visit to CESE for technical discussions.

I remember Mr Pakala, M G Rao and a team of five RCF engineers reached my office for discussing the methodology in their blue uniforms in the morning.

I proposed using a modelling approach. Idea was to use a dispersion model to simulate three pollutants (SPM, SO2, NOX) using emission and annual meteorological data for a variety of scenarios such as daily maximum, seasonal and annual average concentrations and prepare contours in the three km radius in and around RCF’a factory. A weighing scheme was then proposed to assign for every feasible coordinate a combined emission influence of the three pollutants to come up with two most source-oriented locations and one least oriented to serve as a background. Emission data available from neighbouring industries such as Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) was to be considered to understand relative emission influence in the above computations.

 “Will you be using Industrial Source Complex (ISC) model of US EPA”, Mr Pakala asked me. I told him that I would rather write my own code. I wanted to use some of the newer model coefficients and switches and importantly introduce the tilting plume concept as considered in some of the Norwegian models such as by NILU. Besides, I wanted to run the model on a Monte Carlo mode to generate a probability distribution of predicted concentrations to make the entire decision-making process as robust as possible. In 1984, all this was rather new.

So, will you make your software source code available to RCF? One of the RCF engineers asked. “Yes, I will” I answered. Mr Pakala smiled.

“I will follow IITs formality now to engage you Dr Modak” He said while patting on my back  

The institute followed consultancy assignments through the office of Dean (Research and Development). Professor Arvind Kudchadkar was the Dean (R&D). He taught Chemical Engineering at the University of Texas Austin and later at IIT Kanpur before moving to IIT Bombay.  

Professor Arvind Kudchadkar

Pakala must have contacted Professor Kudchadkar for the consultancy assignment on siting CAAQMS. His secretary called me to come to Dean’s office for discussions regarding the scope and the fees. I was called at 11 30. Pakala and his team were to reach by 1145.

Professor Kudchadkar was (and still is) a very warm person. After few preliminaries, he understood the scope of the assignment and my approach. He listened to me carefully and asked

“Prasad, who else can do the job that RCF is asking in this country?”

I had never thought of this question.

“Well Professor, there is Dr R N Sharma at the India Meteorological Department (IMD) who could but he cannot because he is on the panel of MoEF. Then there is Dr V V Shirvaikar of BARC who could, but I don’t think BARC will permit him to do consulting” I answered.

“There you go. So, you are the only one – with all the jazz and ability to write the software code and introduce ideas like Monte Carlo” He smiled

“So, Prasad, what is the consulting fee you propose?”

I had not thought about this either as I was so excited about the assignment. I thought the Dean (R&D) decides the fees.

I thought for a while.

“It should be Rs 5000 Professor” I said in a rather embarrassing tone.   

“Alright Prasad now leave the matter to me” said Professor Kudchadkar.

In the next 10 minutes, Mr Y R Pakala and his team arrived. Tea was offered.

I realized that being chemical engineers, Professor Kudchadkar and Mr Pakala knew each other very well. So, they talked about common friends, about the chemical industry and the RCF. There was no discussion regarding my consultancy assignment. I was not comfortable but stayed as a patient listener to their conversations.

After 15 minutes of “gup shup”, Mr Pakala, as if an ending piece of the conversation, asked Professor Kudchadkar

“And about this young man, what will be the Institute’s fee for his work for us?”

Professor Kudchadkar said 30,000 Rs. and fees to be paid 100 percent in advance.

I was shell shocked with this number.

I knew that this was not going to work. I thought my first ever consultancy assignment was not going to happen.

For a while, I thought Professor Kudchadkar was like a devil in disguise or a sadist.

My mouth went dry.

Mr Pakala got up and asked in a calm voice

“By crossed cheque or a demand draft?”

When the RCF team left the room, Professor Kudchadkar gave a warm smile and said

“I did notice that you were shocked. You must first learn to know your value. Rest will follow. I am sure that the value you will give to RCF will be more than 30,000 Rs!” And indeed, I lived to his expectations.

I have never forgotten his advice even today.

Remember however that one does not get mentors and mediators like Professor Kudchadkar each time!

So, I always wish that I get to work with those clients who understand the value of my efforts “on their own” and propose the “right fee” to me without asking or bargaining.

And I am really fortunate that this has generally happened.

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  1. Very well said.
    Unfortunately, we don’t see much of high value quality of reports from professional institutions of domain expertise. They seem to serve interest of clients even by compromising academic value. Professional fees seem to be decided on the basis of stakes of client and ability of institution to get used and “help”..

  2. Wonderful…it is sad that the Indian public and some Industrialists thinks nothing of dropping several crores on brand ambassadors, but penny pinch on expert consultant fees, and even delay payment after work is satisfactorily completed!

  3. It was refreshing to read along since I had also known Mr.Pakkal & Mr.MGRao and the situation about Dispersion Models and of course your dilemna about fees to be charged. And we had also lost out on one of the joint Projects offer- for what reason- was not told. Keep working on your own technical merits and contribute to Society in general the way you know the Best. Regards

  4. Dear Dr. Modak,

    Very interesting read indeed. I fully agree with you. Making a proposal for an offering which is unique and does not have bench marks is a highly complicated case. Bravo!

  5. Dr Modak had a unique Assignment and the client was not bound by quotation/tender rules. Presently , in civil Engg sector there is tough competition for design and consultancy jobs and the fee rate can be extremely low. The rules of the game do not place any premium on high quality, only qualifying criteria needs to be satisfied. Where as a senior Govt Engineer with a secure job and life long benefits may be getting paid Rs15000/ working day, the Pvt sector Consultant contributing much more can not expect even a matching amount . Consultancy firms are forced to pay very modest salaries, and those with high overheads/ even Govt/PSU pay structure make losses. Firms like EIL are in sectors where there is very little Indian competition. Bechtel India takes only overseas projects for their financial sustenance.
    Architecture design &consultancy work on high fees, similarly Management consultancy is also very lucrative .
    It is unfortunate that good payments are available only to Academic/Research institutions for their Stamp being a mandatory requirement for the client.This has given rise to unethical practices at even premier institutions( well known but disclosure avoided).
    The tragedy is that even CEAI and Consultancy Development centre are unwilling to take up low fee issues(For structural design the fee could be 0.1%).
    Very few talented will like to go for a career in civil –Environmental Engg consultancy in India,whereas Management consultancy could be among the best options . Let’s do something at Govt level.

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