CHARGING FOR

ENGINEERING
SERVICES

Alenton, Neil
Dysuangco, Zeus
Quinto, Jerwin
Venzon, Enrico
GENERAL
Charges for Engineering Services are computed
using one of the six methods:
• Salary cost times multiplier plus direct non-
salary expense
• Hourly billing rates plus reimbursement
• Per Diem
• Cost Plus Fixed Fee
• Fixed Price
• Percentage of Construction Cost
Salary cost times multiplier plus
direct non-salary expense
 Frequently used method of determining
charges for engineering services

 The charges is based mainly on direct salaries

 May be utilized as either a multiplier times

salary cost (two multiplier version) and a
multiplier times direct salary cost (single
multiplier version)
Salary Cost
 Direct salaries plus employees benefits
 Includes salaries for partners or principals and for
technical, professional, administrative and clerical staff
directly

Employees Benefits
• Sick leave
• Vacation leave
• Holiday and incentive pay
• Contributions for social security
• Worker’s compensation insurance retirement
• Medical
Multiplier
 It is applied to salary cost which 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

Direct Non-Salary Expenses

 Living and traveling expenses
 Identifiable communications expenses
 Expenses for services and equipment directly
applicable to the project
 Identifiable drafting supplies
 Expenses for unusual insurance and specialized
health and safety programs and for special clothing
for projects with extraordinary risks
 Cost Plus Fixed Fee
Under Cost Plus Fixed Fee agreement, the Civil
Engineer is reimbursed for the actual costs of all
services and supplies including

• Salary cost
• Overhead
• Direct non-salary expenses
• Fixed Fee
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

Conditions:

• The general scale and intent of the project should

be fairly well defined, even if the full scope is
indeterminate

• The type of service to be performed by the civil

engineer should be agreed upon and fully set forth
Hourly Billing Rate
 The same with salary cost times
multiplier method.
 Includes all compensation.
 Non-Salary expenses are a separate
item of reimbursement usually with
service charge.
PER DIEM
Per Diem service are Furnished
 5 Charges in Per Diem

 Complexity
 Risk
 Services and professional standing of the
Civil Engineers
 Expertise
 experience
For Engagement
 On Occasion

 Requires Civil Engineer’s time regularly for

periods longer than the 8-hour day.
 Understanding
 Per Diem rate increased accordingly
Per Diem Rates Can Vary Widely

 Employee Classification
 Regional Location
 Period of service
FIXED PRICE
 Sum total of estimated engineering costs for:
• salaries
• overhead and nonsalary expenses
• an allowance for contingencies
• 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 costs.
FIXED PRICE
 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.

 Partial payments should be made to the

Civil Engineer at stated intervals.
PERCENTAGE OF CONSTRUCTION
COST
 The percentage of construction cost method is seldom
used raw.

 Increasing complexity and large variation in task for

projects.

 This method may be used to determine the

compensation of the engineer for services.

 The validity of this method rests upon the assumption

that detailed design and construction supervision costs
vary in proportion to the cost of construction .
PERCENTAGE OF CONSTRUCTION
COST
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:

 Feasibility – three percent (3%)

 Detailed engineer design – six percent (6%)
 Detailed architectural and engineering design –
eight percent (8%)
 Construction supervision – ten percent (10%)
Factors that affect service fee
 Revisions
 Time
 Design
 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.

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, aver and above the basic monthly salary.
Schedule of Minimum Basic Fees

 Part A- prime professional

 Part B- professional not prime
Part A: prime professional
 Group I
 Group II
 Group III
Part B: professional not prime
 Group IV
Minimum Compensation for Civil Engineer’s for
rendering the following Services

1. Value Engineering 25% of Professional Fee+ 25% ofsavings

2. Expert Witness P2000 / appearance
3.  Academic Services
a) BS degree holder P75/hr-P150/hr
b) Master degree holder P150/hr-P250/hr
c) Doctorate degree holder P250/hr-P400/hr
d) Lecturer  P500/hr
e) Conducting Tutorial/refresher courses P500/hr
f) Resource Speaker P500/hr
g) Writer/Author P3000/article