CHARGING FOR CIVIL ENGINEERING SERVICES

Charges for Civil Engineering Services are usually computed using one of the six methods:

1. Salary cost times multiplier plus direct non-salary expense (“Reimbursable”)

2. Hourly Billing Rates plus Reimbursable
3. Per Diem

Salary cost times multiplier plus direct non-salary expense (“Reimbursable”)

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 civil engineering services
are based mainly on direct salaries.

The salary cost times multiplier method may be utilized as either a multiplier times salary cost (two
multiplier version) or a 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 the multiplier with the exception that it applies a single multiplier to
unburdened direct labor cost, i.e., direct salaries without the employee benefits. The single multiplier
includes cost associated with employee benefits, overhead, and a margin for contingencies, risk, and
profit.

The following factors are pertinent to the salary cost times multiplier:

1. Salary cost is defined as the “direct salaries plus the employee benefits”.
2. Multiplier which is applied to salary cost 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. The average of multiplier should be between 2.5 and 3.0 times the average of
salary cost.
3. Direct Non-salary expense usually incurred in engineering engagements may include the
following:
✔ Living and traveling expenses of principals and employees when away from the home
office on business connected with the project.
✔ Identifiable communications expenses such as long distance telephone, facsimile,
telegraph, shipping charges, and special postage charges (for other than the general
correspondence).
✔ 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 subcontractor commercial painting and binding, and similar services
that are not applicable for inclusion in general overhead.
✔ Identifiable drafting supplies, stenographic supplies, and reproduction work
(blueprinting, photocopying and printing) as distinguished from such supplies and
expenses applicable to several projects.
✔ 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.
4. The Civil Engineers overhead which comprises a major portion of the compensation generated
by the multiplier on salary cost includes the following indirect cost:
✔ Provision for office expenses

✔ Tax and insurance other than those included as salary cost

✔ Library and periodical expenses and other costs of keeping abreast of advances in
engineering, such as attendance at technical and professional meetings and continuing
education courses.
✔ Executive, administrative, accounting, legal, stenographic, and clerical salaries and
expenses (Other than salaries included in salary costs and expenses) plus salaries or
imputed salaries of partners and principals to the extent that they perform general
executive and administrative services as distinguished from technical or advisory services
directly applicable to particular projects.
✔ Business development expenses including salaries of principals and employees so
engaged.
✔ Provision for loss of productive time of technical employees between assignments, and
for time of principals and employee on public service assignments.
✔ Cost of acquiring and maintaining computers, development of software, and training
staff when not billed as direct cost.
5. Accounting Records
The Civil Engineers who perform 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.

Hourly Billing Rate

The Hourly billing rate method of compensation is very similar to the salary cost times multiplier method
in that the hourly billing rate includes all direct personnel expense, overhead and profit. Direct
non-salary expenses are a separate item for reimbursement, usually with a service charge.
Per Diem

⮚ The term ‘per diem’ normally refers to an eight-hour day.

⮚ Direct personnel services are frequently charged on a per diem basis

⮚ Is particularly suited to expert witness or other type legal-type services and to other short-term
engagements involving intermittent personal services
⮚ 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

Source: https://www.academia.edu/7380400/CHARGING_FOR_CIVIL_ENGINEERING_SERVICES

GROUP 5

Calan, Bernabe

Comeso, Ice Maris