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Michael Grochala May 19, 2011 Page 2 With Tony's level of experience, capabilities, and our experience working together as a team, we think that his efforts would be more than half of the hours. At a lower hourly billing rate, this would reduce the total fee by up to $10,000. The total fee for these 1800 hours would then be approximately $172,000. This represents an average billable rate of $95 per hour. You also indicated that half the hours should be provided by a licensed engineer with extensive municipal experience and the remaining half could be performed by an engineering technician or graduate engineer. We will also use support staff at lower billable rates where possible to provide more value for you. Assuming the licensed engineer time was split between Tony and I and that the rest of the time was by a graduate engineer or technician at $75 per hour, then the total fee for these 1800 hours would be approximately $153,000. This represents an average billable rate of $85 per hour. Our hourly billing rates include overtime premiums, computer costs, cell phones, and routine copying and postage. Travel mileage is billed out at the IRS rate which is currently $0.51 per mile. Since SEH is located closest to the City of Lino Lakes of the firms you are considering, travel time and cost will be less. In fact if the City Engineer travels directly from home to City Hall there will be no charge for travel time or mileage. Reproductions of reports, plans and specifications are billed at cost and vary by size and type of document. These costs should be very minimal for General Engineering services. In conclusion, for the General Engineering services indicated in your letter, assuming half is by the City Engineer and half by the Assistant City Engineer, the total estimated fees would be approximately $182,000. This is an average billable rate of $101 per hour. In reality, we think that we can provide more value for you by providing a more effective team and reducing the fees for these 1800 hours so it is closer to $150,000, or an average billable rate of $85 per hour. With our goal of working closely with you to provide the right size engineering effort, and with our City Engineering experience in similar Cities, we think the 1800 hours can be significantly reduced to provide even more value for the City of Lino Lakes. We are excited about this opportunity and welcome the chance to review this with you in more detail. Please contact me if you have any questions, need further information, or would like to review this together. Sincerely, SHORT ELLIOTT HENDRICKSON INC. /irk° 91 3()-1 Todd M. Blank, PE Principal tmb s:\ko\1 \Iinol \connnon \city eng rfp \ce gen service rates Ietter.docx