SIP Ceilings on Forester Fees

KMorrisD kmorrisd at
Fri Aug 28 20:11:52 EST 1998

They've been setting their 65-75% cost-share rates for years, thereby limiting
the fees that foresters can charge.  Now they're doing the same with their
grants.  Is this actually legal?  Does the government do this with any other
profession?  (I know insurance companies do it with doctors, but that's
different.)  What can be done about it?  I got so annoyed at a recent incident
involving this practice that I wrote the following letter.  

August 26, 1998

Steve Anderson, Coordinator
Massachusetts Forest Stewardship Program
463 West Street
Amherst, MA  01002

Dear Steve:

     We've never met, so by way of introduction, I'm a consulting
forester working out of Northampton.  I've been doing forestry
work in the Connecticut River Valley for over 20 years.  I'm
writing concerning a $500 SIP grant that you recently approved
for a 25 acre woodlot recently acquired by a long-term client of
mine.  You know who I mean.  I understand that you told this
client that the $500 would cover the entire cost of a SIP plan.  

     I learned this after quoting the client a price of $750
based on my rate of $600 plus $6 per acre.  This is the amount
that I have to charge to make my hourly rate doing management
plans--less about $200.  That is, I lose about $200 on every SIP
plan that I write at this rate.  Enclosed is a spreadsheet that
documents my time spent on SIP plans in a recent year.  The
spreadsheet breaks down my time into all the different aspects of
writing plans.  

     So now a long-term client thinks I'm overcharging and trying
to exploit them--all because you, a bureaucrat with no experience
in forest management, told them how much a management plan should
cost.  I think this is an outrageous form of meddling that
requires an apology to myself and to my (former) client.  

     I really don't know how you arrived at the $500 grant amount
in the first place.  Nor do I know how you arrived at the
cost-share rates for private landowner SIP plans--or any of the
other SIP cost-share rates for that matter.  In any case, I don't
think they are enough.  They are, in fact, insultingly low.* 
Therefore, in order to improve this unsatisfactory situation,  I
would like to suggest an alternative procedure for determining
cost-share rates in the future.

     First, given my experience and background, I think my hourly
rate--and those of other consulting foresters--should be at least
equal to your hourly rate.  However, for the purposes of this
letter, I'll submit that we should receive equal hourly
rates--which should also be about equal to DEM forester rates
(`service` and `management`). 

     Second, from what I have been able to gather, you and they
receive about $40,000 per year salary, plus benefits (an
additional 30%), office supplies and equipment (an addtional
25%), travel (an additional 10%), secretarial and bookkeeping (an
addtional 25%), and office rental (an addtional 20%).  So
your/their total budgets should be about $90,000.  Am I correct
in these calculations? 

     Third, I can allocate about 30 hours per week to specific
jobs.  The other 10-15 hours go to small bits of job time that
don't get allocated, general adminstrative time for bookkeeping
and organizational matters, professional research and reading,
etc.  Based on a 50 week year, that comes to 1,500 hours per year
of allocatable time.  

     But you and DEM foresters probably can't allocate that much
time to specific jobs/tasks because of all the time you and they
spend going to meetings, drinking coffee, etc.  Nevertheless, I
would credit you with 1,500 hours of allocatable time per year. 
If your total budget of $90,000 is divided by 1,500 hours, that
would mean you would have to charge $60 per hour to cover your

     Finally, at the rate of $60 per hour, how much do you think
you would have to charge for SIP plans?  According to my
calculations, and assuming my time records indicate realistic
amounts of time for this work, you would have to charge
approximately $1,000 plus $10 per acre.  Do these calculations
seem correct, or am I missing something here?

     Would you and your advisory committee agree to such a
procedure for determining cost-share rates for SIP plans?  If you
would agree, I would be glad to assist you in determining time
costs for other cost-shared management practices.  If you would
not agree, would you please state in writing why you do not
agree?  I will be very interested in reading your response.    

     Steve, I understand from your recent interview in a recent
Massachusetts Woodland Steward that you have no experience in
forest management.  So perhaps you can be excused for not
understanding the costs of management plans.  I don't know about
your predecessor or any of the members of your advisory committee
either.  Have any of them ever written forest management plans?

     Do you or they have any idea about the amounts of time
needed for initial landowner contact, writing a work order,
ordering aerial photographs and mapping the property on them,
laying out cruise lines, doing the cruise, entering cruise data
into a computer program, processing the data, writing the first
three pages for each plan, writing stand type descriptions and
management practices (usually a minimum of three stands per
plan), preparing maps, making and sending copies, billing, and
finally, helping the landowner with the filing process?

     The evidence unfortunately indicates that you and they don't
realize the amounts of time involved in all this work.  So until
you actually have that experience, I would suggest that you and
DEM foresters refrain from saying anything about the cost of
management plans--or any other forestry practices for that

     You may say what you and your program are willing to pay. 
That's entirely your right.  But you have no right to say what
the cost of a plan should be until you've actually done the work
yourself--unless of course you presume that consulting foresters
are worth considerably less than yourself and DEM foresters.  If
this is the case, then we have a different and very serious


                                             Karl Davies

cc: former client
     Massachusetts consulting foresters
     Usenet newsgroups bionet.agroforestry, alt.forestry
     DEM bureaucrats
     State Senators and Representatives for Hampshire and
     Franklin Counties
     Governor of Massachusetts               

*With the possible exception of the new cost-share rates for old
field restoration.  It appears that the implicit forester's
hourly rate ($47) for this practice is somewhat realistic.  Why
is this hourly rate different from the ones implicit in other
cost-shared practices?   

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