CHARGING FOR

CIVIL
ENGINEERING
SERVICES

Prepared by M.C. M
 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

4. Cost plus fixed fee (“CPFF”)

5. Fixed Price

6. Percentage of Construction Cost (“Percentage”)

 Salary cost times multiplier plus 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 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 employees benefits. The single multiplier includes cost
associated with employees 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”.

1. 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.

2. Direct Non-salary expense usually incurred in engineering engagements

may include the following:
 Living and traveling expenses
 Identifiable communications expenses
 Expenses for services and equipment directly applicable to the
project
 Identifiable drafting supplies, stenographic supplies, and
reproduction work
 Expenses for unusual insurance and specialized health and safety
programs
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
 Executive, administrative, accounting, legal, stenographic, and
clerical salaries and expenses (Other than salaries included in
salary costs and expenses)
 Business development expenses
 Provision for loss of productive time
 Cost of acquiring and maintaining computers, development of
software, and training staff when not billed as direct cost

5. Accounting records
 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
 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
 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.
 Fixed Price

The fixed price 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.

Fixed price compensation for basic services on certain design-type projects

can also be computed as an appropriate percentage of estimated
construction cost.
 Percentage of Construction Cost

The Percentage of construction cost 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, excluding the fees and other costs of
such services, the cost of land and right-of-way, and legal and
administrative expenses.
 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.
 Minimum Compensation for Civil Engineer as a Prime
Professional.

Group I-Simple Structures, one storey buildings, warehouses,

market buildings and comparable projects

Project Construction Cost Minimum Basic Fees

 P10 Million and less 6%

 Over P10 Million to P20 Million P600,000 plus 5.5%

 Over P20 Million to P30 Million P1,150,000 plus 4.5% of excess of

P20 Million
 Over P30 Million P1, 600, 000 plus 3.5% of excess of
P30 Million
 Group II- Buildings of 3 to 14 floors, towers, tanks, industrial
buildings, piers, and comparable projects.

Project Construction Cost Minimum Basic Fees

 P10 Million and less 7%

 Over P10 Million to P20 Million P200,000 plus 6.5% of excess of

P10 Million
 Over P20 Million to P30 Million P1,350,000 plus 5.5% of excess of
P20 Million
 Over P30 Million P1, 900, 000 plus 4.5% of excess of
P30 Million
 Group III- Buildings of 15 or more floors, long span and complex
bridges, high dams, port works, power plants.

Project Construction Cost Professional Fee

 P10 Million and less 8%

 Over P10 Million to P20 Million
 Over P20 Million to P30 Million
 Over P30 Million
P800,000 plus 7.5% of excess of P10
Million
P1,550,000 plus 6.5% of excess of
P20 Million
P2, 200, 000 plus 5.5% of excess of
P30 Million

If the Civil Engineer is not the prime professional but renders basic civil engineering
services only, his fee shall be a minimum of 25% of the prime professional fee.
 Minimum Compensation for Civil Engineer as
Professional not Prime.

Group IV-Hotels, large apartment buildings, shopping

centers,resorts,hospitals,and comparable projects.

Project Construction Cost Engineer’s Fee

 P10 Million and less 1.05%

 Over P10 Million to P20 Million P105,000 plus 0.975% of excess of

P10 Million
 Over P20 Million to P30 Million P202,500 plus 0.825% of excess of
P20 Million
 Over P30 Million P285, 000 plus 0.675% of excess of
P30 Million
 Minimum Compensation for Civil Engineer’s for
rendering the following Services

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

savings

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 (PICE-CPD) P500/hr
e) Conducting Tutorial/refresher courses P500/hr
f) Resource Speaker P500/hr
g) Writer/Author P3000/article