CHARGING FOR CIVIL ENGINEERING
SERVICES
Charges for Engineering Services are usually
computed using one of six methods
1. Salary cost times multiplier 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)
The client may wish the CE to undertake a
project characterized by an
1. Accelerated Schedule
2. Non-routine services
3. High risk activities.
Under these circumstances changes fir
engineering services may be based on
1. Value Pricing: Reflect a premium rate
not tied directly to the CE’s cost, but
based on the CE’s unique
qualifications of the extenuating
circumstances.
SALARY COST TIMES MULTIPLIER
PLUS DIRECT NON-SALARY EXPENSE
Compensation based on the salary cost times
an agreed multiplier is a frequently used
method of determining changes for
engineering services. With this method,
changes for engineering services are based
mainly on direct sales. It is advisable that the
CE reach the agreement with the client on
salary ranges for each classification. This may
help avoid future surprises,
misunderstandings, disputes.
✓ The salary cost times multiplier
method may be utilized as either a
1. Two multiplier version
2. Single Multiplier Version
Direct salary time multiplier ( Labor times
multiplier) similar to the salary cost time
multiplier wot the exception that it applies a
single multiplier to unburdened direct labor
cost. The direct salary times multiplier version
of this method is being utilized more
frequently due to the simplistic nature of
utilizing a single multiplier. Of the two
version of this method, the salary cost times
multiplier is more easily accountable due to
the basic premise of providing two separate
multipliers.
SALARY COST: Direct salaries plus
employee benefits,
MULTIPLIER: Applied to a salary cost is a
factor that compensates the CE for overhead
plus a reasonable margin for contingencies,
invested capital readiness to serve and profit.
The average multiplier should be between 2.5
and 3.0 times the average salary cost.
DIRECT NON-SALARY EXPENSES:
incurred in engineering engagements may
include the ff:
a. Living and travelling expenses
b. Identifiable communications
expenses-long distance telephone,
telegraph
c. Expenses for services and equipment
directly applicable to the project,
specialized technical equipment
d. Identifiable drafting supplies,
reproduction work (Blueprinting,
photocopying)
e. Business development expenses,
salaries of principals and employees
engaged
f. Provision for loss of productive time
of technical employees between
assignment
g. Cost of acquiring and maintaining
computers, development of software.
ACCOUNTING RECORDS: To segregate
and record the appropriate expenditures,
detailed hourly time records must be
maintained for principals, engineers and other
employees who devote time to the project,
must be available for inspection audit by the
client if required by contract.
HOURLY BILLING RATE: includes all
direct personnel expense, overhead and profit.
PER DIEM: refers to the eight-hour day
Suited to expert witness or other legal-type
services and to the other short-term
engagements involving intermittent personal
services.
COST PLUS FIXED FEE: CE is reimbursed
for the actual cost of all services and supplies
related to the project including;
1. Salary costs
2. Overhead
3. Direct non-salary expenses
4. Fixed fee, an amount to compensate
the CE for contingencies, interest on
invested capital
FIXED PRICE: used for investigation and
studies and for basic services on design type
projects where the scope and complexity of
the assignment are clearly and fully defined.
Calculated as the sum total estimated
engineering cost for salaries, overhead and
non-salary expenses, an allowance for
contingencies
PERCENTAGE OF CONSTRUCTION
COST: used to determine the compensation of
the engineer for services where the principal
responsibility is the detailed design for
construction supervision of facilities to be
constructed.
CONSTRUCTION COST: estimated total
cost of the constructing facility to be covered
by the proposed detailed design or
construction supervision services, including
the fees and other cost such service.
The percentage fee 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
a. Feasibility studies-three percent (3%)
b. Detailed engineering design -six
percent (6%)
c. Detailed architectural and engineering
design (8%)
d. Construction supervision (10%)
SCHEDULE OF MINIMUM BASIC
FEES: The PICE shall regularly update
the schedule of fees. Certain principle
should however be observed as follows
1. When doing work on foreign
assisted projects, the CE
performing similar work, should
accept compensation that
international standard rates
(Section 6.1.1 of the NEDA
Guidelines)
2. CE regularly employed in the
private sector shall have a
minimum compensation (10%)
more than the minimum wage
prevailing in the region as basic
monthly salary.
3. CE employed in the private sector
who signs and seals the CE plans,
specifications and other related
documents of a certain project
shall compensated with a
minimum if 10% of the
professional fee for the project,
over and above the basic monthly
salary.