Charging For Civil Engineering Services

CHARGING FOR CIVIL
ENGINEERING
SERVICES
GENERAL CHARGING FOR ENGINEERING SERVICES ARE USUALLY
COMPUTED BY 1 OF 6 METHODS
1. Salary cost times multiplier plus direct plus direct non-salary expense
(Reimbursable)
2. Hourly billing rate plus reimbursable
3. Per diem
4. Cost plus fixed fee (CPFF)
5. Fixed price
6. Percentage of construction cost (“Percentage”)
1. 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 FACTORS ARE PERTINENT TO THE SALARY
COST TIMES MULTIPLIER VERSION OF THIS METHOD:
I. Salary cost
II. Multiplier
• The average multiplier should be between 2.5 and 3 times the average
salary cost.
III. Direct non-salary expenses usually incurred in engineering
engagements may include the following:
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 postage charges
C. Expenses for services and equipment directly applicable to the project such
as for specialized technical equipment, special legal and accounting services.
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
hazardous waste conditions.
IV. Civil Engineers overhead ± which comprises a major portion of
compensation generated by the multiplier on salary cost includes the
following 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.
E. Business development expenses, including salaries of principals and
employees so engaged.
F. Provisions 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.
2. 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 simplify-accounting and record keeping.
3. 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 employees classification,
regional location and period of service.
• Rates for consultation in connection with litigation and appearances before
commissions and courts are normally higher than the standard rates.
4. 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 cost
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 required to start providing service
before the detailed scope of services can be determined. In such
cases, the following consideration 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.
5. FIXED PRICE
* Is frequently used for investigations and studies
and for basic services on design type projects.
6. 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 determine the compensation of the engineer for services
where the principal responsibility is he detailed design or construction
supervision of facilities
* 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.
SCHEDULE OF MINIMUM BASIC FEES
• Certain principles should be observe:
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.
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 an in behalf of his employees shall be
compensated with a minimum of 10% of the professional fee for
the project, over and above the basic monthly salary.
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 simplify-accounting and record keeping.
THE

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CHARGING FOR CIVIL

A. Provisions for office expenses.

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