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SECTION 4

Charging for Civil


Engineering
Services

Charging for engineering services


are usually computed by 1 of 6
methods
1. Salary cost times multiplier plus direct plus
2.
3.
4.
5.
6.

direct non-salary expense (Reimbursable )


Hourly billing rates plus reimbursable
Per diem
Cost plus fixed fee (CPFF)
Fixed price
Percentage of construction cost
(Percentage)

4.2 Salary cost times multiplier plus


direct plus direct non-salary expense
Compensation on the basis of the salary cost

times an agreed multiplier is a frequently used


method of determining charges for
engineering services.
May be utilized as either a multiplier times
salary cost or a multiplier times direct salary
cost
The direct salary times multiplier is very
similar to the salary cost times multiplier with
the exception that it applies a single multiplier
to unburdened direct labor cost, i.e., direct
salaries without employee benefits

The following factor are


pertinent to the salary cost
times multiplier version of this
method:
1. Salary cost
2. Multiplier
The average multiplier should be between 2.5

and 3 times the average salary cost.

3. Direct non-salary expenses usually incurred in engineering

engagements may include the ff:


A. Living and traveling expenses of principals and employees when
away from the home office on business connected with the project.
B. Identifiable, communications, expenses, such as long-distance
telephone, facsimile, telegraph, shipping charges, and special
postage charges
C. Expenses for services and equipment directly applicable to the
project such as for specialized technical equipment, special legal
and accounting services, special computer rental and programming
services, computer run time and file storage, CADD charges, sub
consultants and subcontractors commercial printing and binding
and similar services that are not applicable for inclusion in general
overhead.

D. Identifiable drafting supplies, stenographic

supplies and reproduction work (blueprinting,


photocopying and printing ) as distinguished
from such supplies and expenses applicable to
several projects
E. Expenses for unusual insurance and
specialized health and safety programs and
for special clothing for projects with
extraordinary risks such as toxic and
hazardous waste conditions.

4. Civil Engineers overhead which comprises a major

portion of compensation generated by the multiplier on


salary cost includes the ff. indirect costs:
A. Provisions for office expenses
B. Taxes and insurance other than those included as salary
cost
C. Library and periodical expenses and other costs of
keeping abreast of advances in engineering, such as
attendance at technical and professional meetings and
continuing education courses.
D. Executive, administrative, accounting legal, stenographic,
and clerical salaries and expenses (other than identifiable
salaries included in salary costs and expenses) plus salaries
or imputed salaries of partners and principals to the extent
that they perform general executive and administrative
services as distinguished from technical or advisory services
directly applicable to particular projets

E. Business development expenses, including

salaries of principals and employees so


engaged
F. Provision for loss of productive time of
technical employees between assignments,
and for time of principals and employee on
public service assignments
G. Costs of acquiring and maintaining
computers, development of software and
training staff when not billed as a direct cost

4.3 Hourly billing rates plus


reimbursable
Is very similar to the salary cost times

multiplier method in that the hourly billing


rate includes all direct personnel expense,
overhead and profit
Are used on projects where the scope of
service is not well defined or to simplifyaccounting and record keeping.

4.4 Per diem


Per diem normally refers to an eight-hour day
Is particularly suited to expert witness or

other type legal-type services and to other


short-term engagements involving
intermittent personal services
Per diem rates can vary widely, depending on
employee classification, regional location and
period of service.
Rates for consultation in connection with
litigation and appearances before
commissions and courts are normally higher

4.5 Cost plus fixed fee


Under a cost plus fixed fee agreement, the CE

is reimbursed for the actual cost of all services


and supplies related to the project, including:
Salary costs
Overhead
Direct non-salary expenses
Fixed fee

The CPFF requires, as a prerequisite to equitable

negotiations, that the client and the CE define an


agree upon the scope of services the CE is to perform.
Can also be used when the CE is requited to start
providing service before the detailed scope of services
can be determined. In such cases, the ff.
considerations apply:
1. The general scale and intent of the project should
be fairly well defined, even if the full scope is
indeterminate
2. The type of service to be performed by the CE
should be agree upon and fully set forth.

4.6 Fixed price


Is frequently used for investigations and

studies and for basic services on design type


projects

4.7 Percentage of construction cost


Construction cost is defined as the estimated total

cost of constructing the facility to be covered by the


proposed detailed design or construction supervision
services, excluding the fees and other costs of such
services, the cost of land and right-of-way, and legal
and administrative expenses
Is seldom used raw because of increasing complexity
and large variation in task for projects
May be used to determined the compensation of the
engineer for services where the principal
responsibility is the detailed design or construction
supervision of facilities to be constructed

The validity of the percentage-of construction

cost method rest upon the assumption that


detailed design and construction supervision
costs vary in proportion to the cost of
construction.

The percentage for shall consider the type,


complexity location, and magnitude of
construction cost of the project and shall not
exceed the ff. percentages of estimated
construction cost:
Feasibility studies- 3 percent
Detailed engineering design- six percent
Detailed architectural and engineering design- 8

percent
Construction and supervision-10 percent

4.8 Schedule of Minimum Basic


Fees
Certain principles should be observes as follows.
1. When doing work on foreign assisted projects on in

projects where international consultants participate, the


CE performing similar or equivalent work, should accept
compensation that approximates the international
standard rates.
2. CEs regularly employed in the private sector shall have a
minimum compensation corresponding to 10% more than
the minimum wage prevailing in the region as basic
monthly salary. CEs employed in the government sector
shall have a minimum basic monthly salary
corresponding to appropriate entry positions provided by
the Civil service Commision

3. A CE employed in the private sector who

signs and seals the Civil engineering plans,


specifications and other related documents of
a certain project for and in behalf of his
employers shall be compensated with a
minimum of 10 percent of the professional fee
for the project, over and above the basic
monthly salary.

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