Charging

For Civil
Engineering
Services
 Contents
Salary Cost Times
Multiplier plus Direct Schedule of
Non-salary expense Basic Minimum
(“Reimbursable”) Per diem Fixed Price Fees

2 4 6 8

3 5 7
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Hourly Billing Cost Plus Fixed Percentage of

GENERAL
Rates Fee(“CPFF”) COnstruction
Cost
(“Percentage”)
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General
 GENERAL
There are usually 6 methods of computing how
much engineering services charges and those are

1.) Salary cost x multiplier + direct non-salary

expense (“reimbursable”)

2.) Hourly billing rates + reimbursable

3.) Per diem

4.) Cost plus fixed fee ("CPFF")

5.) Fixed price

6.) Percentage of construction cost

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("Percentage")
 Combinations of methods of payment for
different phase of the contract may be used.
The method or combination of methods used
depends upon the nature, scope and
complexity of services required by the client.

The first four methods are based upon the

civil engineers cost to perform services. They
are particularly applicable to assignments
where the scope of services is not self-
defined. While the fixed price and the
percentage of construction cost methods are
based upon a specific deliverable and do
require that the project scope be well defined.

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Salary Cost Times
Multiplier plus Direct Non-
Salary Expense
Salary Cost x (Multiplier) + Direct Non-Salary
Expenses
✓ Compensation on the basis of the salary
cost times an agreed multiplier is a
frequently used method of determining
charges for engineering services.
✓ Two Versions: Multiplier x Salary Cost
(Two Multiplier Version) Multiplier x
Direct Salary Cost (Single Multiplier
Version)

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✓ The following factors are pertinent to
the salary cost times multiplier version
of this methods:

a) Salary Cost – is defined as

“direct salaries plus employee
benefits and includes salaries
for partners or principals and
for technical, professional,
administrative and clerical
staff directly”.

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b) Multiplier – which is applied to
salary cost is a factor that
compensates the Civil Engineer for
overhead plus a reasonable margin for
contingencies, interest or invested
capital, readiness to serve, and profit.
The size of the multiplier will vary with
the type of service, the nature and
experience of the civil engineering
firm, and the geographical area in
which its office is located. The
average multiplier should be between
2.5 and 3 times the average salary
cost.
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c) Direct non-salary expenses (reimbursable)
usually incurred in engineering engagements may
include the following:

o Living and Traveling expenses

o Identifiable communications expenses

o Expenses for services and equipment

O Identifiable drafting supplies, stenographic

supplies and reproduction work

O Expenses for unusual insurance and

specialized health and safety programs and
for special clothing for projects

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d) The Civil Engineer’s overhead which comprises
a major portion of the compensation generated by
the multiplier on salary cost, includes the following
indirect cost:

o Provisions for office expenses

o Taxes and insurance

o Library and periodical expenses

o Executive, administrative, accounting

legal, stenographic, and clerical salaries
and expenses

O Costs of acquiring and maintaining

computers, development of software and
training staff
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e) Accounting Records. The Civil Engineer who
performs services under a salary cost times
multiplier agreement or other cost-based
agreement must provide the accounting
necessary to segregate and record the
appropriate expenditure.

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Hourly Billing Rate
Charge per hour

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Hourly Billing Rate
Charge per hour

Similar to the Payment on the

basis of time
salary cost times
reasonably spent
multiplier method
on a project

Includes all direct Direct non-salary

personnel expenses are
expense, overhead separate item for
and profit. reimbursement

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PER DIEM
Per Day

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“
This basis is particularly
suited to expert witness or
other legal-type services and
to other short-term
engagements involving
intermittent personal services.

Eight hour day / 8-hr

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 The per diem charge should be based on

Professional Experience Complexity

Risks Importance

Professional Standing Professional Expertise

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 Civil Engineer should be
compensated for:

1 2 3

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PER DIEM Rate Variations
Per Day

Employee Regional
Classification Location

Period of Litigation and

Service Appearances 19
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percentage
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Cost Plus Fixed Fee

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Cost Plus Fixed Fee
✓ A COST-PLUS FIXED FEE
CONTRACT is a type of contract in
which the contractor is paid for the
project's normal expenses as well as an
additional fixed fee for their services.
These allow the contractor to profit from
the project and promote economic
production in a variety of industries.

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Under a cost plus fixed fee agreement, the Civil
Engineer is Reimbursed for the actual costs of all
services and supplies related to the project,
including:

1
3

2
4

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Cost Plus Fixed Fee
✓ In most cases, the expenses in a cost-
plus fixed fee are calculated based on
market values. The "fixed fee" portion
of the contract, on the other hand, may
be subject to negotiation between the
parties and thus vary depending on the
needs of each project. Contracts for
cost-plus fixed fees are also known as
CPFF contracts, cost-plus contracts,
cost-reimbursement contracts, and
cost + fixed fee contracts.

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The cost plus fixed fee method can also be used when the Civil
Engineer is required to start providing service before the
detailed scope of services can be determined. In such cases,
the following considerations apply:

The general scale and intent of the

project should be fairly well defined, if
the full scope is indeterminate; for
example, the number, size, and
character of buildings or other facilities,
the type of utilities, and other such
essential information should be
available.

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The types of service to be performed by the
Civil Engineer should be agreed upon and
fully set forth. The agreements should also
provide for appropriate adjustments in the
fixed fee. In the event that the physical
scope of the project time of completion, or
level of effort and services required are
materially changed over those
contemplated during the negotiations.

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Some advantages of a CPFF
contract can include:
The final cost may be They can often
lower than in a normal ensure higher-quality
contract, as the output than normal
contractor usually will contracts
not “inflate” prices to
cover risks

The contractor also has

less incentive to control
the project costs (in
contrast to other types
of contracts, such as a
fixed-price contract)

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Fixed Price

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“ The fixed price amount can be calculated
as the sum total of estimated
engineering costs for salaries overhead
and non-salary expenses, an allowance
for contingencies, interest on invested
capital, readiness to serve, and a
reasonable amount for profit.

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“ Fixed price compensation for basic
services on certain design-type projects
can also be computed as an appropriate
percentage of estimated construction
costs; this method and its limitations are
discussed in the following section.
Results using the percentage method and
the direct calculation method are
frequently used to check each other.

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The Percentage of
Construction Cost
What is Percentage of Construction Cost?

✓ It is defined as the estimated total cost of

constructing the facility to be covered by the
proposed detailed design or construction
supervision services.
✓ This is used to determine the compensation of
the engineer for services where their principal
responsibility is the detailed design or
construction supervision of facilities to be
constructed.
✓ The percentage of construction cost method
is seldom used raw.

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The percentage fee shall consider the type, complexity, location, and
magnitude of the construction cost of the project and shall not exceed the
following percentages of estimated construction cost:

FEASIBILITY DETAILED
STUDIES ENGINEERING
DESIGN

DETAILED
ARCHITECTURAL
AND
ENGINEERING CONSTRUCTION
DESIGN SUPERVISION

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Schedule of Basic
Minimum Fees
Schedule of Minimum Basic Fees

Principles to Observe:

1.) When doing work on foreign assisted

projects, or in projects where
international; consultants participate, the
Civil Engineer performing similar or
equivalent work, should accept
compensation that approximates the
international standard rates.

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2.) Civil Engineers 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. Civil
Engineers employed in the government sector shall have
a minimum basic monthly salary corresponding to
appropriate entry positions provided by the Civil Service
Commission.

3.) A Civil Engineer 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% of the professional fee for the project,
over and above the basic monthly salary.
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End of
Presentation
Prepared by:
Group 3
✓ Baybay, Ericka
✓ Cena, Ziegfred
✓ Maberit, Edgar Allan
✓ Magno, Kim Ahyeza
✓ Tabernilla, Chester Troy
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