Charging for Civil

Engineering Services
PPT Prepared by:
Cris Ian Alombro
Clarys Iyoy
SALARY COST TIMES MULTIPLIER PLUS
DIRECT NONSALARY EXPENSE

This approach calculates the billing rate by multiplying the engineer's salary cost by a
specific multiplier and then adding 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. With this method,
charges for engineering services based mainly on direct salaries. It is therefore
advisable that the Civil Engineer reach an agreement with the client on salary ranges
for each classification of service applicable, as well as on the time period over
which they can be guaranteed. This may help- avoid future surprises,
misunderstandings, and disputes
 FACTORS OF SALARY COST MULTIPLIER

Salary cost Multiplier Direct non-salary expenses

- Living and traveling expenses of

principals and employees when
applied to salary cost is a factor that
defined as “direct salaries plus away from the home office
compensates the Civil Engineer for
employee benefits” and includes - Identifiable communications
overhead (as defined hereinafter)
salaries for partners or principals expenses
plus a reasonable margin for
and for technical, professional, - Expenses for services and
contingencies, interest or invested
administrative and clerical staff equipment directly applicable to
capital readiness to serve, and profit.
directly”. Chargeable to the project: the project
The size of the multiplier will vary
sick leave, vacation, holiday and - Identifiable drafting supplies,
with the type of service, the nature
incentive pay; unemployment and stenographic supplies, and
and experience of the civil
other payroll taxes; and he reproduction work
engineering firm, and the geographic
contributions for social security, - Expenses for unusual insurance
area in which its office is located.
worker’ compensation insurances and specialized health and safety
The average multiplier should be
retirement, medical, and other group programs and for special clothing
between 2.5 and 3.0 times the
benefits. for projects with extraordinary
average salary cost.
risks such as toxic and hazardous
waste conditions
FACTORS OF SALARY COST MULTIPLIER
Overhead
- Provisions for office expenses
- Taxes and insurance other than
those included as salary cost
- Library and periodical expenses
and other costs of keeping abreast
of advances in engineering
- Executive, administrative,
accounting, legal, stenographic,
and clerical salaries and expenses
- Business development expenses,
including salaries of principals and
employees so engaged
- Provision for loss of productive
time
- Costs of acquiring and maintaining
computers
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
expenditures. Adequately detailed
hourly time records must be
maintained for principals,
engineers and other employees
who devote; time to the project.
 HOURLY BILLING RATE

The hourly billing rate method of the compensation is very similar to the
salary cost times multiplier method in that the hourly billing rate
includes all direct personnel expenses, overhead and profit. Direct
non-salary expenses (as defined under the salary cost times multiplier
section) are a separate item for reimbursement, usually with a service charge.
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. This basis is particularly suited to expert witness or
other legal-type services and to other short-term engagements involving intermittent personal services.
For engagements in which the civil engineer is to appear as an expert, a per diem charge is considered to be
earned for each day of such appearance, even though the Civil Engineer is not called to testify or, if called, may,
finish testifying in only a part of the day.
Where per diem services are furnished, the Civil Engineer should be compensated for all of the time devoted to
providing them including travel and standby time. The per diem charge should be based on complexity, risk, and important of
the services and on the Civil Engineer’s professional standing, expertise, and breadth of experience. The Civil Engineer
is also reimbursed for travel and subsistence costs and for other out-of-pocket expenses incurred when away from the
home office.
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 than the
standard rates
 FIXED PRICE

The fixed price method of compensation is frequently used for investigations and studies and
for basic services on design type projects where the scope and complexity of the assignment are clearly and
fully defined. The fixed price amount can be calculated as the sum total of the 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. A fixed
price agreement should contain a clearly stated time period during which the services will be performed
and a provision for adjustment of compensation if the project is delayed for reasons beyond the
Civil Engineer’s control. For design services, there should be provision for changes required after
approval of the preliminary design, with a clear understanding as to where the final approval
authority lies.
Partial payments should be made to the Civil Engineer at stated intervals usually once a month
during the performance of the services. These payments are usually based on the Civil Engineer’s
statement of percent completion to date.
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.
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%); and
d. Construction supervision-ten percent (10%)
 SCHEDULE OF MINIMUM BASIC FEES

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

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.
 END OF
PRESENTATION
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