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Lecture 04. Charging For Civil Engineering Services

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8 views17 pages

Lecture 04. Charging For Civil Engineering Services

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ro ji
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CHARGING FOR

CIVIL ENGINEERING
SERVICES
Pr epar ed by: Engr. Benshe L. Dir o y

Referen ce: PICE Ma n u a l o f Pro fessio n a l Pra ct ice fo r


Civil En g in eers 3 rd Ed it io n
Six Methods
SALARY COST HOURLY BILLING PER DIEM COST PLUS FIXED

of Charging TIMES MULTIPLIER


PLUS DIRECT NON-
RATES PLUS
REIMBURSABLES
FEE

SALARY EXPENSE
for Civil
Engineering
Services FIXED PRICE PERCENTAGE OF
CONSTRUCTION
COST
When a reimbursement method
such as cost times multiplier,
hourly billing rate, per diem or
"not-to- cost plus fixed fee is chosen
because of uncertainty of the
exceed" scope of services, it is logical
to propose that an upper limit
amount
(maximum amount) for these
services be included in the
agreement.
The inconsistency of such a
proposal is proportional to
the uncertainty of the
scope.

One reasonable approach to


compensation for uncertain
assignments is to require the Civil
Engineer to inform the client
when engineering costs are
approaching 75 percent of a
stated budget figure and to
forecast the probable total cost.
SALARY COST
TIMES With this method, charges for engineering services

MULTIPLIER are based mainly on direct salaries.

PLUS
DIRECT NON- The salary cost times multiplier method may be

SALARY utilized as either a multiplier times salary cost (two


multiplier version) or a multiplier times direct salary
EXPENSES cost (single multiplier version).
S alary Cos t

“Dir ec t salar ies plus emplo yee benefits”

Mu ltiplier

Fac t o r applied t o salar y c o st t o c o mpensat e t he


Civil Engineer fo r o ver head.

Aver age multiplier sho uld be between 2.5 and


3.0 times the aver age salar y c o st
Direct Non-Salary Expenses

LIVING AND TRAVELING IDENTIFIABLE EXPENSES FOR IDENTIFIABLE EXPENSES FOR


EXPENSES. COMMUNICATIONS SERVICES AND DRAFTING SUPPLIES. UNUSUAL INSURANCE
EXPENSES. EQUIPMENT DIRECTLY AND SPECIALIZED
APPLICABLE TO THE HEALTH AND SAFETY
PROJECT. PROGRAMS.
Civil Engineer's Overhead
a. P r ovision of sup p lies not id entifiab le to a sp ec ific p r ojec t.

b . Tax es and insur anc e other than those inc lud ed as salar y c ost.

c . L ib r ar y and p er iod ic al ex p enses and other c ost of k eep ing ab r east of ad vanc es in
eng ineer ing .

d . Other id entifiab le salar ies

e. Business d evelop ment ex p enses

f. P r ovision for loss of p r od uc tive time of tec hnic al emp loyees b etween assig nments

g . Costs of ac q uir ing and maintaining c omp uter s, d evelop ment of softwar e, and
tr aining staff when not b illed as a d ir ec t c ost
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

T he ho ur ly billing r ate metho d o f c o mpensatio n


is ver y similar to the salar y c o st times
multiplier metho d in the ho ur ly billing r ate
inc ludes all dir ec t per so nnel expenses,
o ver head and pr o fit.

Dir ec t no n-salar y expenses ar e a separ ate item


f o r r eimbur sement, usually with a ser vic e
c har ge.
Per Diem

T he t e rm pe r die m no rma lly re f e rs t o a n e ight - ho ur


da y.

Whe n pe r die m s e rvice s a re f urnis he d, t he Civil


Engine e r s ho uld be co mpe ns a t e d f o r a ll t he t ime
de vo t e d t o pro viding t he m, including t ra ve l a nd
s t a ndby t ime . T he Civil Engine e r is a ls o re imburs e d
f o r t ra ve l a nd s ubs is t e nce co s t s a nd f o r o t he r o ut - o f -
po cke t e xpe ns e s incurre d w he n a w a y f ro m ho me .
COST PLUS FIXED FEE

- SALARY COST - OVERHEAD - DIRECT NON-SALARY - FIXED FEE, FOR


EXPENSES CONTINGENCIES, INTEREST
ON INVESTED CAPITAL,
READINESS TO SERVE AND
PROFIT
COST PLUS FIXED FEE

The general scale and intent of the project should be The type of service to be performed by the Civil
well-defined. Engineer should be agreed upon and fully set forth
FIXED PRICE

M e t ho d o f co mpe ns a t io n
f re que nt ly us e d f o r
inve s t iga t io ns a nd s t udie s a nd
f o r ba s ic s e rvice s o n de s ign
t ype pro j e ct w he re t he s co pe
a nd co mple xit y o f t he
a s s ignme nt a re cle a rly a nd
f ully de f ine d.
PERCENT OF
CONSTRUCTION COST

This 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.
PERCENT OF
CONSTRUCTION COST

C onstruction cost is the estimated


total of cost of constructing the
facility to be covered by the
proposed detailed design
Percentage fee shall not exceed

A. FEASIBILITY STUDIES B. DETAILED ENGINEERING C. DETAILED D. CONSTRUCTION


(3%) DESIGN (6%) ARCHITECTURAL AND SUPERVISION (10%)
ENGINEERING DESIGN
(8%)

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