Table of Contents

SECTION 3 THE SELECTION OF THE CIVIL ENGINEER ........................ 3

GENERAL ...................................................................................................... 3

BASIS FOR SELECTION ............................................................................ 3

CLIENTS SELECTION COMMITTEE ........................................................ 4

QUALIFICATIONS-BASED SELECTION PROCEDURE ....................... 5

SELECTION PROCEDURE FOR ‘LEVEL OF EFFORT’ CONTRACTS

......................................................................................................................... 7

Bidding ....................................................................................................... 7

Two-Envelope System ............................................................................ 9

SECTION 4 CHARGING FOR CIVIL ENGINEERING SERVICES ......... 10

GENERAL .................................................................................................... 10

SALARY COST TIMES MULTIPLIER PLUS DIRECT NON-SALARY

EXPENSE ..................................................................................................... 10

HOURLY BILLING RATE .......................................................................... 14

PER DIEM .................................................................................................... 14

COST PLUS FIXED FEE............................................................................ 15

FIXED PRICE ............................................................................................... 16

PERCENTAGE OF CONSTRUCTION COST ......................................... 16

SCHEDULE OF MINIMUM BASIC FEES ................................................ 17

SECTION 5 TOTAL PROJECT COST ......................................................... 19

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GENERAL .................................................................................................... 19

PROFESSIONAL ENGINEERING COST ................................................ 19

CONSTRUCTION COST ............................................................................ 20

LEGAL AND LAND COST ........................................................................ 20

OWNERS COST .......................................................................................... 21

CONTINGENCY ALLOWANCE ................................................................ 21

REFERENCES ................................................................................................ 22

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 SECTION 3
THE SELECTION OF THE CIVIL ENGINEER

GENERAL
Selection of a Civil Engineer is one of the most important
decisions to be made during the development of an engineering
project because no two Civil Engineers have the same training,
experience, capabilities, personnel, workloads, and abilities. Proper
selection will result in a well-planned and designed, economical, and
successful project.

BASIS FOR SELECTION

The client should establish administrative policy and criteria
for the selection of qualified Civil Engineers. The client should clearly
(1) define the proposed scope of the project, (2) give a general
statement of the performance requirements of the project, and (3) the
task to be performed.

Some of the factors that should be considered in the selection

process are:

1. The professional and ethical reputation of the Civil Engineer

and his staff as determined by inquiries to previous clients and
other references
2. Responsible Civil Engineers and its employee must be
registered professional Civil Engineers
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3. Civil Engineers should have demonstrated qualifications and

expertise, performing the services required for the project.
4. Civil engineers should be able to assign qualified engineering
staff who will be in responsible charge of the project and will
be able to provide and complete the required services within
the time allotted.
5. The Civil Engineer should have the necessary financial and
business resources to accomplish the assignment and
provide continuing services.

CLIENTS SELECTION COMMITTEE

One satisfactory procedure to help with the selection of Civil
Engineers is to utilize a selection committee of three or more
individuals, at least one of whom is a professional engineer of the
appropriate discipline. The committee is responsible for making
recommendations after conducting an appropriate investigation,
interviews, and inquiries.

• Choose individuals who demonstrate objectively in order to

avoid the appearance of a conflict of interest in the selection.
• At least one of the individuals should be thoroughly familiar
with civil engineering practices.

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QUALIFICATIONS-BASED SELECTION PROCEDURE

The selection procedure is considerably enhanced when the
client is fully familiar with the purpose and nature of the proposed
project, can describe the project in detail, and can prepare a project
scope and outline of services expected of the Civil Engineer. Though,
as long as the client had a satisfactory experience with the Civil
Engineer, it may not be necessary to follow all of the steps outlined.

1. The Client may issue a “Request for qualifications” (RFQ) or

“Request for proposals” (RFP). RFQs are normally used to
ascertain the general qualifications in a selected area of
expertise while RFPs are used to seek Civil Engineers for
creating “short lists” for selecting a Civil Engineer.
2. Prepare a budget for the staff time and costs that can be
expected from potential Civil Engineers prior to receipt of the
RFQs or RFPs.
3. Evaluate the statements of qualifications received. Select at
least three Civil Engineers or firms that may appear to be best
qualified for the specific projects. Though it should be noted
that often more than three Civil Engineers or firms may be
equally qualified, however in fairness to those who did not get
selected, it is best to keep it at a minimum.
4. Write a letter to each Civil Engineer or selected for further
consideration describing the proposed project in detail,
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including project scope and outline of services required, and

asking for a proposal describing in detail the Civil Engineer’s
plan for managing and performing the required services, the
personnel to be assigned, the proposed schedule, experience
with similar projects, office location in which services are to be
performed, financial standing, present workload, and
references.
5. On receipt of proposals, invite the Civil Engineers or firms to
meet individually with the selection committee for interviews
and discussions of the desired end results of the project and
the engineering services required.
6. Check the recent clients of each Civil Engineer or firm to
determine the quality of their performance.
7. List of the Civil Engineer or firms in the order of preference
taking into account their approach and understanding of the
project, reputation, experience, financial standing, size,
personnel available, quality of references, workload, location,
and other factors pertinent to the project being considered.
8. Invite the Civil Engineer considered to be best qualified to
develop a detailed scope. List deliverables and schedule, and
negotiate fair compensation for the services.
9. The compensation proposed by the Civil Engineer should be
evaluated on the basis of the client’s experience and budget

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estimate, taking into account the range of charges reported in

Section 4.
10. If a satisfactory agreement is not reached with the first Civil
Engineer, the negotiations should be terminated and the Civil
Engineer or firm be notified in writing to that effect.
11. When an agreement has been reached on scope, schedule,
and compensation, the client and selected Civil Engineer
should formalize their agreement in a written contract.

SELECTION PROCEDURE FOR ‘LEVEL OF EFFORT’

CONTRACTS
“Level of effort”

• Type of contract for engineering services is a contract

procedure used to supplement a client staff, either by
providing an extension to existing disciplines and capabilities
already on board or by adding special disciplines not available
on the client’s staff.

Bidding
Selection of the Civil Engineers and related service professionals,
including consultants and sub-consultants on construction projects,
should result from competition based on the qualifications and
resources best suited to complete a project successfully in terms of
performance quality and cost-effectiveness. That’s why professional

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engineering and architectural societies, recognize QBS as the

preferred method for procurement of professional services.

There are many reasons why

bidding for consulting Civil
Engineering services often produces
unsatisfactory results for the client.
Principal among these are;

1. Bidding does not recognize professional judgment.

2. It is virtually impossible to completely detail in advance the
scope of services required for an engineering project.
3. In-depth studies and analyses by the consulting Civil
Engineer are not likely to be performed.
4. The consulting Civil Engineer’s ability to be flexible and
creative in meeting the client’s requirements is severely
limited.
5. The engineering designs are likely to be minimal in
completeness with the details left to the contractor.

For these reasons, bidding for professional services is not

recommended.

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Two-Envelope System
The two-envelope system involves the submission of a
technical proposal in one envelope and a price proposal in a second
envelope. The client then evaluates the technical proposals and
selects the best qualified Civil Engineer based on that consulting Civil
Engineer’s technical proposal.

Bid
Submission
Technical Financial

Technical • Committee Evaluates Technical

Evaluation
Proposal

Financial • Committee Evaluates

Evaluation Financial Proposal

Final
Decision

Figure 1. Two-Envelope System

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SECTION 4
CHARGING FOR CIVIL ENGINEERING SERVICES
GENERAL
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 rates plus reimbursable
3. Per diem.
4. Cost plus fixed fee (“CPFF”)
5. Fixed-price
6. Percentage of construction cost (“Percentage”)

Note: A combination of methods of payment for different phases of

the contract may be used.

SALARY COST TIMES MULTIPLIER PLUS DIRECT NON-

SALARY EXPENSE
It is dependent on the cost of consultants who carry out the service
and it is specifically suitable tasks in which the extent or range of the
engineering services is not clearly outlined. Therefore, it is advisable
that the Civil Engineer reach an agreement with the client on the
salary ranges as well as the time period over which they can be
guaranteed.
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The salary cost time multiplier method can be utilized in two ways,
(1) multiplier times salary cost (two multiplier version), or (2) multiplier
times direct salary cost (single multiplier version).

The direct salary times multiplier or as it is frequently called the direct

labor times multiplier version 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 employees’
benefits. The single multiplier includes costs associated with
employees’ benefits, overhead, and a margin for contingencies, risk,
and profit.

The following factors are pertinent to the salary cost times multiplier
version of this method (they may also apply to other methods of
charging for civil engineering services)

1. Salary Cost
o It is defined as “direct salaries plus employee benefits”
and includes salaries for partners or principals and for
technical, professional, administrative, and clerical staff
directly”.
2. Multiplier
o Which is applied to salary cost is a factor that
compensates the Civil Engineer for overhead plus

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reasonable margin contingencies interest or invested

capital readiness to serve, and profit.
o The size of the multiplier will vary with the type of
service, the nature, and experience of the Civil
Engineering firm, and the geographic area (location).
o The average multiplier should be between 2.5 and 3.0
times the average salary cost.
3. 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, etc.
c. Expenses for services and equipment directly
applicable to the project.
d. Identifiable drafting supplies, stenographic supplies,
and reproduction work. (Blueprinting, photocopying,
and printing).

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4. The Civil Engineers’ overhead which comprises a major

portion of the compensation generated by the multiplier on
salary cost, includes the following indirect costs:
a. Provisions for office expenses – light, heat, telephone,
rental furniture, rent, drafting equipment and
engineering instruments, transportation expenses, and
office and drafting supplies not identifiable to a specific
project.
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.
(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. Provision for loss of productive time of technical
employees between assignments, and for the time of
principals and employees on public assignments

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g. Cost of acquiring and maintaining computers,

development of software, and training staff when not
billed as a direct cost.
5. Accounting records
o Civil Engineer who performs services under a salary
cost times multiplier agreement must provide the
accounting necessary to segregate and record the
appropriate expenditures.

HOURLY BILLING RATE

The hourly billing rate method of compensation is very similar to the
salary cost time multiplier method in that the hourly billing rate
includes all direct personnel expenses, overhead, and profit.

• Civil Engineering firms may elect to utilize this method of

compensation on projects where the scope of service is not
well defined or to simplify accounting and record keeping.

PER DIEM
• The term per diem normally refers to an eight-hour day where
rates can vary widely, depending on employee classification,
region, and period of service.
• Per diem is particularly suited for Direct personal services,
where appearances are needed for an expert witness or other

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legal-type of services and to other short-term engagements

(expert opinions, review, or investigations).
• In Per Diem Civil Engineers should be compensated for all of
the time devoted to providing them, including travel and
standby time.
• Per diem charge should be based on the complexity, risk, and
importance of the services and on the Civil Engineer’s
professional standing and expertise.
• If the Engagement requires periods longer than the normal
eight-hour day. An understanding should be reached with the
client.

COST PLUS FIXED FEE

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:

• Salary costs
• Overhead
• Direct non-salary expenses
• Fixed fee, an amount to compensate the Civil Engineer for
contingencies, interest on invested capital, readiness to serve,
and profit.

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FIXED PRICE
The fixed Price method of compensation is frequently used for
investigations and studies and for basic services on design type
where the scope and complexity of the assignment are clearly and
fully defined.

The fixed price 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.

Fixed price compensation for basic services on certain design-type

projects can also be computed as an appropriate percentage of
estimated construction cost.

Fixed price agreements should contain a clearly stated time period

and a provision for adjustment of compensation if the project is
delayed.

PERCENTAGE OF CONSTRUCTION COST

The Percentage of construction cost method may be used to
determine the compensation of the engineer for services where the
principal responsibility is the detailed design or construction
supervision of facilities to be constructed.

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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.

The Percentage fee shall consider the type, complexity, location,

and magnitude of construction cost of the project and shall not
exceed the following percentages of estimated construction cost:

a. Feasibility studies – three percent (3%)

b. Detailed engineering design – six percent (6%)
c. Detailed architectural and engineering design – eight
percent (8%)
d. Construction supervision – ten percent (10%)

Note: the above percentages are only ceilings and it does not
necessarily mean that the said percentages shall always be
adopted for each project.

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

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performing similar or equivalent work, should accept compensation

that approximates the international standard rates.

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 a 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 on 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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SECTION 5
TOTAL PROJECT COST
GENERAL
Total project cost is made up of:

1. Professional Engineering costs

2. Construction cost
3. Legal and land costs
4. Owner’s costs, including project administration, staffing,
financing, and other overhead.
5. Contingency allowance for unknowns,

PROFESSIONAL ENGINEERING COST

A civil engineer is often engaged to make a study and to render a
planning report on the contemplated project including alternative
solutions, layouts, and locations along with initial estimates of the
probable project cost. This may involve alternative or phase
implementation schemes that add flexibility to the project.

The study & report phase includes cost for field surveys, planning
analysis, and geotechnical exploration analysis in addition to direct
engineering cost. The cost of coordination, evaluation
implementation, and compliance increased correspondingly

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CONSTRUCTION COST
Is 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, such
as:

• Compensation paid to the architect and consultants

• the cost of land and right of way,
• another cost that is defined in the contract documents as
being the responsibility of the owner
• and legal administrative expenses of the agency.

The estimated construction cost must be approved by the client

before the invitation to submit a technical proposal is issued.

LEGAL AND LAND COST

These costs include;

• audits,
• the cost of issuing bonds,
• land costs,
• and interest for borrowed money during construction.

This is part of the probable total project cost and can be estimated
in cooperation with the client because they are usually outside the
knowledge and control of the Civil Engineer.

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OWNERS COST
Related to the administration, staffing, financing, and overhead.

CONTINGENCY ALLOWANCE
• A contingency allowance is an amount of money that is set
aside in a project or plan to cover unexpected events or
costs that may occur during the project.
• Or Unknown Expenses

A contingency may be included in an estimate to provide for

unknown costs which are indicated as likely to occur by experience,
but are not identifiable. The estimate of probable total project cost
should be periodically revised by the engineers as the design
moves forward and more information becomes known.

To provide for intangible costs, contingencies should routinely be

added to the basic cost estimate.

• It is common practice to add 20% or more to the estimated

probable cost.
• 10% at the completion of final design
• 5% when the construction bids become known.

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REFERENCES

Philippine Institute of Civil Engineers, Inc. (2007). Manual of

Professional Practice for Civil Engineers, 43 – 59.
Kagan, J. (2022). What Does Per Diem Mean, and What Are Per

Diem Rates? Investopedia. Retrieved from

https://www.investopedia.com/terms/p/per-diem-

payments.asp#:~:text=Per%20diem%2C%20from%20the%2

0Latin,fees%20and%20tips%20for%20services.

Hamakareem, M. I. (2017). Methods for Calculating Cost of

Engineering Consultant Services. The Constructor. Retrieved

from https://theconstructor.org/construction/cost-engineering-

consultant-services-calculation-methods/17879/

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