CHARGING FOR CIVIL

ENGINEERING SERVICES
GROUP 4:
CERENO, KAREN C. SARIO, PRINCE MARSWIN D.
NAMIA, JANELLE L. SENDON, JOHN VINCENT L.
 Table Of Content
01 SALARY COST X MULTIPLIER + DIRECT NON SALARY
EXPENSE 06 PERCENTAGE OF CONSTRUCTION COST

02 HOURLY BILLING RATE 07 SCHEDULE OF MINIMUM FEES

03 PER DIEM

04 COST PLUS FIXED FEE

05 FIXED PRICE
Charges for engineering services are usually computed using of this six methods:
SALARY COST TIMES MULTIPLIER PLUS DIRECT NON-SALARY EXPENSE

HOURLY BILLING RATE

PER DIEM

COST PLUS FIXED PRICE

FIXED PRICE

PERCENTAGE OF CONSTRUCTION COST

 Compensation on the basis of the salary cost
SALARY
SALARY COST
COST times an agreed multiplier is a frequently
used method of determining charges for
TIMES
TIMES MULTIPLIER
MULTIPLIER engineering services.

PLUS
PLUS DIRECT
DIRECT NON-
NON- This method may be utilized as either a

SALARY
SALARY EXPENSE
EXPENSE multiplier times salary cost (two multiplier
version) or a multiplier times direct salary
cost (single multiplier version).
SALARY COST TIMES MULTIPLIER PLUS DIRECT NON-SALARY
EXPENSE
1. SALARY COST - is
defined as "direct 2. MULTIPLIER - is applied to salary
salaries plus cost is a factor that compensates
employee benefits". 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 times the average
salary cost.
 SALARY COST TIMES MULTIPLIER PLUS DIRECT
NON-SALARY EXPENSE

3. DIRECT NON-SALARY EXPENSES - usually

incurred in engineering engagements may
include the following:
Living and traveling expenses
Identifiable communication expenses
Expenses for services and equipment
Identifiable supplies
Expenses for unusual expenses
SALARY COST TIMES MULTIPLIER PLUS DIRECT
NON-SALARY EXPENSE
4. The civil engineers overhead which comprises a
major portion of the compensation is generated by
the multiplier on salary cost, includes the following:

Provision for office expenses

Taxes and insurance other than those included
as salary cost
Library and periodical expenses and other costs
of keeping abreast of advances in engineering
Executive, administrative, accounting, legal,
stenographic, and clerical salariesand expenses
SALARY COST TIMES MULTIPLIER PLUS DIRECT
NON-SALARY EXPENSE

Business development expenses

Provision for loss of productive time of technical
employees between assignments, and for time of
principals and employees on public service
assignments.
Cost of acquiring and maintaining computers,
development of software, and training staff when not
billed as a direct cost
SALARY COST TIMES MULTIPLIER PLUS DIRECT
NON-SALARY EXPENSE

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.
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 (as defined under the salary cost times multiplier
section) are a separate item for reimbursement, usually with a service
charge. Civil engineering firms may elect to utilize this method of
compensation on projects where the scope of service is not well defined
or to simply accounting and record keeping.
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 witness or other legal-type services and to other
short term engagements involving intermittent personal services.
PER DIEM
Where per diem services are furnished, the Civil Engineer should be
compensated for all of the time devoted to providing them including
travel and standby time. The per diem charge should be based on
the complexity, risk, and important of the services and on the Civil
Engineer's professional standing, expertise, and breadth of
experience. The Civil Engineer is also reimbursed for travel and
subsistence costs and for other out-of-pocket expenses incurred
when away from the home office.
PER DIEM
For engagements in which the Civil Engineer is to appear as an
expert, a per diem charge is considered to be earned for each day of
such appearance, even though the Civil Engineer is not called to
testify or, if called, may, finish testifying in only a part of the day.

On occasion the urgency of the engagement requires the Civil

Engineers time regularly for periods longer than the normal eight-
hour day. In such cases an understanding should be reached with the
client, and the per diem rate increased accordingly.
PER DIEM
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.
 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 project, including:

Salary costs, as previously defined

Overhead, as previously defined (The Civil Engineer should be prepared to
support the basis for 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.
 COST PLUS FIXED FEE

The cost plus fixed fee basis requires, as a 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. Such definition of the scope of service is essential to
enable the Civil Engineer to estimate costs and propose an
equitable fixed fee amount. The scope of services, cost estimate,
and fixed fee should be incorporated into the client-engineer
agreement.
 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 fined, 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.

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.
 COST PLUS FIXED FEE
The fixed fee amount varies with the complexity and scope of the engineering services
required. It is frequently calculated as a percentage of the salary costs, overhead, and
direct non-salary expenses.

Agreements for cost-based methods should provide for reimbursement of all costs to be
incurred directly or indirectly in connection with the project, including but not limited to
those foreseen when the agreement is negotiated. The list of reimbursable items should be
as complete and detailed as possible. One advantage of the cost plus fixed fee method is
that it eliminates any suspicion that the costs have been allowed to grow in
order to increase the Civil Engineer's fee, which by definition is a fixed amount.
Because the entire fixed fee amount is due the Civil Engineer, whether or not
the estimated project costs have been reached the Civil Engineer has an
incentive to complete the service promptly.
 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 non-salary 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 costs; this method and its
limitations are discussed In the following section. Results using the percentage
method and the direct calculation method are frequently used to check each
other.
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. For design services,
there should be a provision for changes required after approval of
the preliminary design, with a clear understanding as to where the
final approval authority lies.

Partial payments should be made to the Civil Engineer at stated

intervals usually once a month during the performance of the
services. These payments are usually based on the Civil Engineer's
statement of percent completion to date.
PERCENTAGE
OF CONSTRUCTION
COST
CONSTRUCTION COST

It is defined as the estimated total cost of

constructing the facility to be covered by the
proposed detailed design, the construction cost
includes the cost of the current market rates of
labor, materials, supplies, and equipment used in
the construction.
PERCENTAGE OF
CONSTRUCTION
Percentage of construction is used to determine
the compensation of the engineer for services
where their principal responsibility is providing
a detailed design and construction supervision.
PERCENTAGE OF CONSTRUCTION COST

The percentage of construction cost method is seldom

used raw. Because the 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.
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.

1. Feasibility studies - Three Percent (3%)

2. Detailed Engineering design - Six Percent (6%)
3. Detailed Architectural Design - Eight Percent (8%)
4. Construction Supervision - Ten Percent (10%)
SCEDULE OF
MINIMUM 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 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 OF A CIVIL
ENGINEER AS A PRIME PROFESSIONAL
GROUP 1 - Simple Structures such as lofts, warehouses, garages, sheds, market
building, and comparable projects of one but not more than two storeys.
Group II - Buildings of 3-Storey up to 14-Storey, towers, tanks,
exhibition buildings, memorials, industrial buildings, simple
bridges, low dams, piers, wharves, bins and silos, and
comparable projects.
Group III - Buildings with fifteen (15) or more floors, long span and complex bridges,
high dams, major portworks, powerplants and other complex structures not covered
in groups I and II.
MINIMUM COMPENSATION OF A CIVIL ENGINEER
AS PROFESSIONAL NOT PRIME
(A) Group IV - Hotels, large apartment buildings, office buildings,
shopping centers, store buildings, resorts, hospitals, and
comparable projects.

(B) Structures not falling in any group shall be classified into group 3
MINIMUM COMPENSATION OF A CIVIL ENGINEER
FOR RENDERING THE FOLLOWING SERVICES
referenceS:

Philippine Institute of Civil Engineers, Inc. 2003. Manual of Professional

Practice for Civil Engineers, 2nd Edition. Manila: Philippine Institute of
Civil Engineers, Inc.

https://theconstructor.org/construction/cost-engineering-consultant-
services-calculation-methods/17879/

GROUP 4: CERENO, NAMIA, SARIO, SENDON

THANK YOU
FOR
LISTENING !!!

GROUP 4: CERENO, NAMIA, SARIO, SENDON