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Professional Work on a Contingent Basis  
  Interpretation (b) states that engineers shall not request, propose, or accept professional commissions on a contingent basis if, under the circumstances, their professional judgments may be compromised. Work on a contingent basis means an engineer is engaged in an open-ended project with no fixed outcome, and the engineer's income derived from this work depends on the deliverables. The engineer may negotiate a fixed, dollar-per-hour professional service fee in advance.

Consulting engineers are sometimes contracted to provide engineering services for projects that are in various phases of development, and, depending on the project's feasibility, the engineering services may continue to be needed. Interpretation (b) advises engineers how to carry out their duties as faithful agents for their clients under these circumstances, and it is consistent with Canon 4 Interpretation (i), which states, "When, as a result of their studies, Engineers believe a project(s) will not be successful, they shall so advise their employer or client."

Consider the following situations of a consultant engineer working on a contingent contract (adapted from http://www.onlineethics.org/cases/nspe/nspe77-12.html):

Mary Smith, P.E., a consulting engineer whose primary work is industrial product design, is requested by the XYZ Manufacturing Company to review an amplifier design. XYZ is under pressure to deliver a final model to a customer within three months, but has not yet developed an acceptable product. Smith spends a few days reviewing the XYZ design and makes several recommendations to improve it. She is paid her usual per diem fee, as agreed upon earlier. XYZ asks Smith for further assistance, to make the product fully acceptable, and proposes to pay her a fee for the additional service only if the amplifier, as a result of her assistance, will meet the company's requirements. During this period XYZ will pay Smith's out-of-pocket costs, such as travel, lodging and computer time.

Would it be ethical for Smith to enter into a contract arrangement as described?

It is important to note that XYZ made the offer to Smith; she did not propose the contingent arrangement as a device to secure work. It would be ethical for her to accept the offer, provided that her professional judgment will not be comprised by the outcomes of each phase of the project. Smith's judgment should also be guided by Canon 4, Interpretation (i), which states, "When, as a result of their studies, Engineers believe a project(s) will not be successful, they shall so advise their employer or client."