CHARGING FOR

CIVIL
ENGINEERING
SERVICES
 Based upon the Civil Engineer’s cost to perform services
1. Salary cost times multiplier plus direct non-salary
expense (“Reimbursible”)
2. Hourly billing rates plus reimbursement
3. Per Diem
4. Cost plus fixed fee (“CPFF”)
Based on specific deliverable and well defined scope
5. Fixed Price

GENERAL 6. Percentage of Construction cost (“Percentage”)

OVERVIEW
 Initial estimate of maximum engineering cost
for projects of uncertain scope are requested
by client for budgeting purposes

FOR BASED ON
REIMBURSEMENT “not-to-exceed “ amount
METHOD
Require the civil engineer to inform the client
when engineering costs are approaching 75
percent of the stated budget
FOR FIXED based entirely on the
PRICE & scope of services.
PERCENTAGE F
CONSTRUCTIO The cost is within the
N
civil engineer’s control
CIVIL ENGINEERS WITH UNIQUE
QUALIFICATIONS/EXPERTISE
Civil engineers with unique qualification and expertise that is not readily available, computer programs
that materially decrease the time required for project execution. In some instances, the Civil Engineer
may demonstrate that his/her proposal will make the project easier, faster, safer or less expensive to
achieve the client’s objective.

The client may wish the Civil engineer to undertake a project characterized by:
1. Accelerated schedule
2. Non-routine services
3. High-risk activities
Charges for these may be based on value pricing which reflects a premium rate not tied directly to
the civil engineer’s cost, but based on the civil engineer’s unique qualification.
 frequently used method of determining charges for
engineering services.

SALARY COST
TIMES Charges are based mainly on direct salaries.

MULTIPLIER
PLUS DIRECT Civil engineer and the client must reach an agreement
on the salary ranges for each classification of services
NON-SALARY applicable, as well as on the time period over which they
can be guaranteed.

EXPENSE
A provision in the agreement should state that payments
will be made to the civil engineering during the progress
of the service, based on monthly invoices, and within
reasonable time after billing.
DIRECT SALARY TIMES MULTIPLIER

01 02 03
Also known as direct Applies single Single multiplier is
labor times multiplier multiplier to associated with:
version unburdened direct employee benefits,
labor costs. overhead, or a margin
for contingencies, risk
and profit.
 • Defined as “direct salary plus employee benefits”
• Chargeable to the project: sick leave, vacation, holiday and incentive
SALARY pay; unemployment and other payroll taxes; contribution for social
COST security, workers’ compensation insurance retirement, medical, other
group benefits.
 Which is applied to salary cost is a factor
that compensates the civil engineer for
overhead plus a reasonable margin of
contingencies, interest or invested capital
readiness to serve and profit.

Multiplier varies with the type of services,

MULTIPLIER nature and experience of the civil

engineering firm and the geographic area
which its office is located.

Average multiplier should be between 2.5

and 3.0 times salary cost.
 a. Living and travelling expenses of
principals and employees when away
form the home office on business
connected with the project.

DIRECT NON- b. Identifiable communications

SALARY expenses, such as long-distance
telephone, shipping charges, etc.
EXPENSES
c. Expenses for services with
equipment directly applicable to the
project,
 d. Identifiable drafting supplies, stenographic
supplies and reproduction work (blueprinting,
photocopying and printing) charged to the
client’s project as distinguished from supplies
DIRECT NON- and expenses applicable to several projects.

SALARY
EXPENSES e. 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.
OVERHEAD

a. Provision for office expenses-light, heat, telephone, depreciation, rental furniture, rent,
drafting equipment and engineering instruments, transportation expenses, and office and
drafting supplies.

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,
OVERHEAD
d. Executive, administrative, accounting, legal, stenographic and clerical salaries and
expenses (other than identifiable salaries included in salary costs 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 assignment and
for time of principals and employees on public service assignments

g. Costs of acquiring and maintaining computers, development of software, and training

staff when not billed as direct cost.
 ACCOUNTING RECORD
• The civil engineer who performs services under salary cost times
multiplier agreement of 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

• Applicable payroll records, together with receipts or other documents to

substantiate chargeable expenditures, must be available for inspection
audit by the client if required by contract.
HOURLY BILLING
RATE
• Very similar to the salary cost times
multiplier method in that hourly billing
rate includes direct personnel
expense, overhead and profit.
• Direct-non-salary expenses are
separate for reimbursement.

• Used for services not well defined or

to simplify accounting and record
keeping
PER DIEM

• The term per diem normally refers to an 8

hour day
• Direct personal services
• This basis is particularly suited to expert
witness or other legal-type services and to
other short-term engagements.
• Civil engineer should be compensated for all of
the time devoted to providing them including
travel ,standby time and out-of-pocket
expenses.
• Rates for consultations in connection to
litigation and appearances before commissions
and courts are normally higher than the
standard rates.
COST PLUS FIXED
FEE
• Civil engineers is reimbursed for the
actual costs of all services and
supplies related to the project:
• 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
COST PLUS FIXED
FEE
• Can be used when the civil engineer is required to
start providing service before the detailed scope of
service can be determined under the following
conditions:
• 1. General scale and intent of the project should be
fairly well-defined for example: the number, size and
character of buildings, other facilities etc.
• 2.Type of services to be performed

• Fixed fee is frequently calculated as a percentage of

the salary costs, overhead, and direct non-salary
expenses.
FIXED PRICE

• 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 well-defined.
• Can be calculated as the sum of estimated
engineering costs for salaries, overhead and
non salary expenses, an allowance for
contingencies, interest on invested capital.
Etc.
• Can be computed as the appropriate
percentage of estimated construction costs.
PERCENTAGE OF
CONSTRUCTION COST

• This 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.

• 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.

• Rests upon the assumption that detailed design and

construction supervision cost vary in proportion to
the cost of construction
PERCENTAGE OF
CONSTRUCTION COST

• 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-(3%)
• B. Detailed engineering design-(6%)
• C. Detailed architectural and engineering design-(8%)
• D. Construction supervision-(10%)

• These % include only those work normally undertaken

in arriving at the expected outputs and o not include
special studies.
 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 approximates the international standard rates.
SCHEDULE
2. Civil engineers regularly employed is private sector shall have a
OF minimum compensation corresponding to 10% more that the
MINIMUM minimum wage prevailing in the region as basic salary. Civil
BASIC FEES engineers employed in the government sector shall have a
minimum basic monthly salary corresponding to appropriate entry
position provided by the civil service commission
SCHEDULE 3. Civil engineers employed in private sector who signs and seals the
civil engineering plans, specifications and other related documents of
OF certain project shall be compensated with a minimum 10% of the
MINIMUM professional fee for the project, over and above the basic monthly
BASIC FEES salary.