EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED

QUALITY MANAGEMENT SYSTEM

City of Dasmariñas,Cavite

CHARGING FOR CIVIL

ENGINEERING SERVICES

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EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED
QUALITY MANAGEMENT SYSTEM
City of Dasmariñas,Cavite

Fixed Price

•The fixed price 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 cost
•Pros and Cons

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EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED
QUALITY MANAGEMENT SYSTEM
City of Dasmariñas,Cavite

Pros
1. It can be easier to budget what is needed since there is a fixed
number that has been decided on.
2. No extra costs and if the fixed cost does need to be changed, then
it must be done so mutually and detailed in separate legal
documents.
3. The owner may not supervise as frequently as with a cost-plus
contract.

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EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED
QUALITY MANAGEMENT SYSTEM
City of Dasmariñas,Cavite

Cons
1. It’s on the contractor to complete the project within budget
and within the time frame that has been set – or else they’ll
have to cover extra costs themselves.
2. Changes to the original plan may not go down well with the
owner.
3. Cheaper materials may be used to stay within budget.

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EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED
QUALITY MANAGEMENT SYSTEM
City of Dasmariñas,Cavite

Cost plus fixed fee

• Under a cost fixed fee agreement, the Civil Engineer is reimbursed
for the actual costs of all services and supplies related to the project,
including:
- Salary Cost
- 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
• Pros and Cons

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EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED
QUALITY MANAGEMENT SYSTEM
City of Dasmariñas,Cavite

Pros
1. It acts as an incentive for builders to not use cheaper
materials, as the money is ultimately not coming out of their
own pocket.
2. A cap can be put on the project if the owner so chooses.
3. Flexible for owners as they can closely monitor the progress
and cost of the project – since they’re being invoiced when
new materials are being purchased.

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EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED
QUALITY MANAGEMENT SYSTEM
City of Dasmariñas,Cavite

Cons
1. Cost records must be kept and documented meticulously by the
contractor or else there could be issues with being paid for particular
materials.
2. Since contractors will have to fork out the initial costs for materials
before they can invoice them to the owner, it can prove problematic
if the contractor doesn’t have the funds to finance this.
3. The higher the cost becomes the higher the “plus” part of the contract
becomes.

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EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED
QUALITY MANAGEMENT SYSTEM
City of Dasmariñas,Cavite

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

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EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED
QUALITY MANAGEMENT SYSTEM
City of Dasmariñas,Cavite

Schedule 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 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
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EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED
QUALITY MANAGEMENT SYSTEM
City of Dasmariñas,Cavite

Salary Cost * multiplier plus direct plus non-

salary expenses
• Compensation on the basis of the salary cost times an agreed
multiplier is a frequently used method of determining charges for the
engineering services
• May be utilized as either a multiplier times salary cost or a
multiplier times direct salary cost
• The direct salary time multiplier is very similar to the salary cost
times multiplier with the exception that it applies a single
multiplier to unburdened direct labor cost

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EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED
QUALITY MANAGEMENT SYSTEM
City of Dasmariñas,Cavite

Direct non-salary expenses usually incurred in engineering

engagements may include the ff:
• Living and traveling expenses of principal and employees
when away from the home office on business connected with
the project.
• Expenses for services and equipment directly applicable to
the project such as for specialized technical equipment.
• Expenses for unusual insurance and specialized health and
safety programs.

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EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED
QUALITY MANAGEMENT SYSTEM
City of Dasmariñas,Cavite

Civil Engineers overhead which compromise a major portion od

compensation generated by the multiplier on salary cost
includes the ff indirect costs:
• Provision for office expenses
• Taxes and insurance other than those includes as salary cost
• Executive, administratice, accounting legal
• Business development expenssews, including salaries of
employees so engaged.
• Provison for loss of productive time of technical employees.

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EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED
QUALITY MANAGEMENT SYSTEM
City of Dasmariñas,Cavite

Hourly billing rate

• Is very similar to the salary cost times multiplier method

in that the hourly billing rate includes all direct
personnel expenses, overhead and profit.
• Use on projects where the scope of service is not well
defined or to simply-accounting and record keeping.

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EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED
QUALITY MANAGEMENT SYSTEM
City of Dasmariñas,Cavite

Per diem

• Per diem normally refers to an eight hour day

• 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 service.
• Rates for consultation in connection with litigation
and appearances before commissions and courts are
normally higher than the standard rates.

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EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED
QUALITY MANAGEMENT SYSTEM
City of Dasmariñas,Cavite

THANK YOU

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