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Charging for Civil Engineering ServicesSECTION 44.1 GeneralCharging for engineering services are usually computed by 1 of 6 methodsSalary cost times multiplier plus direct plus direct non-salary expense (Reimbursable )Hourly billing rates plus reimbursablePer diemCost plus fixed fee (CPFF)Fixed pricePercentage of construction cost (Percentage)4.2 Salary cost times multiplier plus direct plus direct non-salary expenseCompensation on the basis of the salary cost times an agreed multiplier is a frequently used method of determining charges for engineering services.May be utilized as either a multiplier times salary cost or a multiplier times direct salary cost The direct salary times multiplier is very similar to the salary cost times multiplier with the exception that it applies a single multiplier to unburdened direct labor cost, i.e., direct salaries without employee benefitsThe following factor are pertinent to the salary cost times multiplier version of this method:1. Salary cost

2. MultiplierThe average multiplier should be between 2.5 and 3 times the average salary cost.

3. Direct non-salary expenses usually incurred in engineering engagements may include the ff:A. Living and traveling expenses of principals and employees when away from the home office on business connected with the project.B. Identifiable, communications, expenses, such as long-distance telephone, facsimile, telegraph, shipping charges, and special postage chargesC. 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 subcontractors commercial printing and binding and similar services that are not applicable for inclusion in general overhead.

D. Identifiable drafting supplies, stenographic supplies and reproduction work (blueprinting, photocopying and printing ) as distinguished from such supplies and expenses applicable to several projectsE. 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. Civil Engineers overhead which comprises a major portion of compensation generated by the multiplier on salary cost includes the ff. indirect costs:A. Provisions for office expensesB. Taxes and insurance other than those included as salary costC. 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.D. Executive, administrative, accounting legal, stenographic, and clerical salaries and expenses (other than identifiable 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 projetsE. Business development expenses, including salaries of principals and employees so engagedF. Provision for loss of productive time of technical employees between assignments, and for time of principals and employee on public service assignmentsG. Costs of acquiring and maintaining computers, development of software and training staff when not billed as a direct cost4.3 Hourly billing rates plus reimbursable

Is very similar to the salary cost times multiplier method in that the hourly billing rate includes all direct personnel expense, overhead and profitAre used on projects where the scope of service is not well defined or to simplify-accounting and record keeping. 4.4 Per diem

Per diem normally refers to an eight-hour dayIs particularly suited to expert witness or other type legal-type services and to other short-term engagements involving intermittent personal servicesPer 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 rates4.5 Cost plus fixed feeUnder a cost plus fixed fee agreement, the CE is reimbursed for the actual cost of all services and supplies related to the project, including:Salary costsOverheadDirect non-salary expensesFixed fee

The CPFF requires, as a prerequisite to equitable negotiations, that the client and the CE define an agree upon the scope of services the CE is to perform.Can also be used when the CE is requited to start providing service before the detailed scope of services can be determined. In such cases, the ff. considerations apply:1. The general scale and intent of the project should be fairly well defined, even if the full scope is indeterminate2. The type of service to be performed by the CE should be agree upon and fully set forth.4.6 Fixed priceIs frequently used for investigations and studies and for basic services on design type projects4.7 Percentage of construction costConstruction 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 expensesIs seldom used raw because of increasing complexity and large variation in task for projectsMay be used to determined the compensation of the engineer for services where the principal responsibility is the detailed design or construction supervision of facilities to be constructed

The validity of the percentage-of construction cost method rest upon the assumption that detailed design and construction supervision costs vary in proportion to the cost of construction.The percentage for shall consider the type, complexity location, and magnitude of construction cost of the project and shall not exceed the ff. percentages of estimated construction cost: Feasibility studies- 3 percentDetailed engineering design- six percentDetailed architectural and engineering design- 8 percentConstruction and supervision-10 percent4.8 Schedule of Minimum Basic FeesCertain principles should be observes as follows.When doing work on foreign assisted projects on in projects where international consultants participate, the CE performing similar or equivalent work, should accept compensation that approximates the international standard rates.CEs 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. CEs employed in the government sector shall have a minimum basic monthly salary corresponding to appropriate entry positions provided by the Civil service Commision

3. A CE 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 percent of the professional fee for the project, over and above the basic monthly salary.THANK YOU!!!