Title Page
Technological Institute of the Philippines
Charging for Civil
Engineering Services
CE593 - CES41S2 Group 1
Title Page Outline
Group Members
Group 1
Members
Carolina Duquez Fiedacan Hernando Nucum
Group 1 CE593 — CES41S2
Title Page Outline
Topic Outline
Topic Outline
1. Introduction of Charging for Civil Engineering Services
2. Six methods of Charging for Civil Engineering Services
Salary Cost * Multiplier + Direct Non Salary Expense
Hourly Billing Rate
Per Diem
Cost Plus Fixed Fee
Fixed Price
Percentage of Construction Cost
3. Schedule of Minimum Fees
Group 1 CE593 — CES41S2
Title Page Outline Introduction
Charging for Civil Engineering Services
ILO’s
Understand the importance of selecting
appropriate pricing methods for civil engineering
services.
Identify and explain the six different methods
used to charge for civil engineering services.
Evaluate the advantages and disadvantages of
each pricing method in different project
scenarios.
Group 1 CE593 — CES41S2
Title Page Outline Introduction
Charging for Civil Engineering Services
Introduction
The method or combination of methods to be use depends upon the:
NATURE SCOPE COMPLEXITY
Group 1 CE593 — CES41S2
Title Page Outline Introduction
Charging for Civil Engineering Services
Factors Affecting Civil Engineering Services Cost
1. Project Complexity
2. Location and Project Site Conditions
3. Regulatory and Permitting Cost
4. Technology and Equipment (Utilities)
5. Material Cost
Group 1 CE593 — CES41S2
Title Page Outline Introduction
Charging for Civil Engineering Services
Factors Affecting Civil Engineering Services Cost
6. Degree of danger and exposure
7. Labor Cost
8. Proposed Project Schedule
9. Project Management and Supervision
10. Other Contract Restrictions
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods
Salary Cost * Multiplier + Direct Non Salary Expense
Salary Cost * Multiplier +
Direct Non Salary
Expense
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods
Salary Cost * Multiplier + Direct Non Salary Expense
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 are based
mainly on direct salaries.
It recommends that the Civil Engineer and the client agree on
the pay rates for different types of work and how long those
rates will stay the same. This helps prevent any surprises,
confusion, or disagreements later on.
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan
Salary Cost * Multiplier + Direct Non Salary Expense
Multiplier * Salary Multiplier * Direct
Cost Salary Cost
Two Multiplier Single Multiplier
Version Version
Overheard Cost Combined factors that accounts
for both overhead and profit
Profit Margin margin
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Salary Cost * Multiplier + Direct Non Salary Expense Factors
Salary Cost * Multiplier +
Direct Non Salary
Expense Factors
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Salary Cost * Multiplier + Direct Non Salary Expense Factors
1 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.
Note that salaries or imputed salaries of partners or principals, to
the extent that they perform technical or advisory services directly
chargeable to the project, are to be reimbursed in the same way as
are other directly salary costs
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Salary Cost * Multiplier + Direct Non Salary Expense Factors
2 Multiplier
-is applied to salary cost it is the factor that compensates the
“Civil Engineer” for overhead plus a reasonable margin for
contingencies, interest or invested capital readiness to serve
and profit.
- Average multiplier should be between 2.5 and 3.0 times the
average salary cost.
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Salary Cost * Multiplier + Direct Non Salary Expense Factors
3 Direct Non - Salary Expenses
- usually incurred in engineering engagements may include the
following:
• Living and Travelling Expenses
-Living and traveling expenses of principals and employee's
when away from the home office on business connected to the
project
• Identifiable Communication Expenses
-Expenses such as long distance telephone, facsimile,
telegraph, shipping chargers, and special postage charger.
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Salary Cost * Multiplier + Direct Non Salary Expense Factors
3 Direct Non - Salary Expenses
- usually incurred in engineering engagements may include the
following:
• Expenses for services and equipment directly applicable
to the project
-Such as for specialized technical equipment, special legal and
accounting services, special computer rental and programming
services, computer run time and file storage, CADD charges, sub
consultants and subcontractors commercial printing and binding
and similar services that are not applicable for inclusion in
general overhead
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Salary Cost * Multiplier + Direct Non Salary Expense Factors
3 Direct Non - Salary Expenses
- usually incurred in engineering engagements may include the
following:
• Identifiable Supplies
- Such as drafting supplies, stenographic supplies, and
reproduction work (Blueprinting, photocopying, and printing)
charged to the client's projects as distinguished from such
supplies and expenses applicable to several projects.
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Salary Cost * Multiplier + Direct Non Salary Expense Factors
3 Direct Non - Salary Expenses
- usually incurred in engineering engagements may include the
following:
• Expenses for health and safety related factors
- Expenses for unusual insurance and specialized health and
safety programs and for special clothing for projects with
extraordinary risks such as toxic and hazardous waste
conditions. Such projects may require special insurance which is
also billed as a direct cost to the project.
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Salary Cost * Multiplier + Direct Non Salary Expense Factors
4 Overhead
-comprises a major portion of the compensation generated by
the multiplier on salary cost, including the ff. indirect cost
Provisions for office expenses- utilities, rentals, furniture,
equipment, transportation expenses
Taxes and insurance
Library and periodical expenses
Executive, administrative, accounting, legal, salaries expense
Business development expense
Provision for loss of productive time of technical employees
Cost for acquiring and maintaining computers, digital
software, training staffs
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Salary Cost * Multiplier + Direct Non Salary Expense Factors
5 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.
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods
Hourly Billing Rate
Hourly Billing Rate
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods
Hourly Billing Rate
Is a method of compensation is very similar to the salary cost
time multiplier method.
Hourly Billing Rate includes all direct personnel expense,
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.
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods
Per Diem
Per Diem
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods
Per Diem
The term per diem normally refers to an eight-hour day. Direct
personal services of the type described in section 2 which are
frequently charged on a per diem basis. This basis is
particularly suited to expert witnessor other legal- type
services and to other short-term engagements involving
intermittent personal services.
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan
Per Diem
Ideal Service for Per Diem
CONSULTATION AND GEOTECHNICAL
SITE INSPECTION
LEGAL SERVICES ENGINEERING
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Per Diem
FACTORS THAT INFLUENCES
PER DIEM RATE
Professional Standing, Expertise and
Experience
Location
Risk And Importance
Time Devoted (Travel and Work Time)
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods
Cost Plus Fixed Fee
Cost Plus
Fixed Fee
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
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, as previously defined
Overhead, as previously defined (The Civil Engineer
should be prepared to support the basis of the
overhead charges.
Direct non-salary expenses, as previously defined
Fixed fee, an amount to compensate the Civil
Engineer for contingencies, interest on invested
capital, readiness to serve, and profit
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Cost Plus Fixed Fee
The cost plus fixed fee basis requires, as prerequisite to
equitable negotiations, that the client and the Civil
Engineer define and agree upon the scope of services
the Civil Engineer is to perform.
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Cost Plus 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. In such cases, the following
considerations apply :
1. The general scale and intent of the project should be fairly well
defined, even 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.
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Cost Plus 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. In such cases, the following
considerations apply :
2. 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
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods
Fixed Price
Fixed Price
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
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
estimated engineering costs for salaries, overhead and nonsalary
expenses, an allowance for contingencies, interest on invested
capital, readiness to serve, and a reasonable amount for profit.
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
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 if the
project is delayed for reasons beyond the
Civil Engineer's control.
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods
Percentage of Construction Cost
Percentage of
Construction
Cost
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Percentage of Construction Cost
The percentage of construction cost
method is seldom used raw. Because of
increasing complexity and large variation in
tasks for projects, the percentage of
construction cost fee curves no longer have
a direct correlation to the required
engineering fees for specific projects.
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Percentage of Construction Cost
This method is primarily used for determining engineer compensation
for detailed design or construction supervision. Construction cost
refers to the estimated total cost of facility construction, excluding
land acquisition, legal, and administrative costs. Over time,
engineering experience has established correlations between
engineering and construction costs, leading to widely used fee
schedules.
Group 1 CE593 — CES41S2
Title Page Reporters Introduction Overview Plan Process
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 Studies
3
Construction Supervision
10
Detailed Engineering Design
6
Detailed Architectural and Engineering Design
8
Title Page Outline Introduction Methods Plan Process
Percentage of Construction Cost
These percentages represent general guidelines, not fixed rates, as
actual fees depend on project specifics. Larger projects typically
have lower percentage fees than smaller ones. Additionally, fees
should be reduced if certain tasks are performed by the client.
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods
Schedule of Minimum Fees
Schedule of
Minimum Fees
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Schedule of Minimum Fees
Rates of compensation for Civil Engineers engaged in various
capacities are given in Annex B. The PICE shall regularly update the
schedule of fees stipulated in the Annex. Certain principles should
however be observed as follows.
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 (see Section
6.1.1 of the NEDA Guidelines).
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Schedule of Minimum Fees
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.
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process
Schedule of Minimum Fees
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.
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process References
References
References
Pice Manual of Professional Practice For Civil Engineers
Group 1 CE593 — CES41S2
Title Page Outline Introduction Methods Plan Process References
End note
Any
Questions?
Group 1 CE593 — CES41S2
Title Page
Technological Institute of the Philippines
Charging for Civil
Engineering Services
CE593 - CES41S2 Group 1
