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S E C T I O N 4

CHARGING
FOR CIVIL
ENGINEERING
SERVICES
MANUAL OF PROFESSIONAL
PRACTICE FOR CIVIL ENGINEERS, 3RD
EDITION.
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S E R V I C E S C H A R G E S

Six (6) Methods

Salary cost times
multiplier plus direct
non-salary expense
(“Reimbursable”)

Hourly billing rates

plus reimbursables

Per diem
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S E R V I C E S C H A R G E S

Six (6) Methods

Cost plus fixed fee
(“CPFF”)

Fixed Price

Percentage of
construction cost
(“Percentage”)
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Charging of
E N G I N E E R I N G

One reasonable approach to compensation for uncertain

Services
Reimbursement Methods:
•
assignments is to require the Civil Engineer to inform the
client when engineering costs are approaching 75 percent
Salary cost times multiplier
of a stated budget figure and to forecast the probable
• Hourly Billing Rate
total cost.
• Per Diem
• Cost plus fixed fee
= UNCERTAINTY OF THE
SCOPE OF SERVICES
It gives the client and the engineer an
 Propose an upper limit opportunity to examine progress and, if
appropriate, revise either the original
(Maximum Amount) for budget or not-to-exceed amount of the
these services be scope of remaining services.
included in the
agreement
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Charging of
E N G I N E E R I N G

Similarly, the client may wish the

Services
For services such as resident
Civil Engineer to undertake a project
characterized by an accelerated
project representation during schedule, non-routine services,
construction: and/or high risk activities.
• Civil Engineer's costs may be
affected significantly by the
contractors performance
 It can be accomplished more
equitably by one of the methods
based on the actual cost of service.
• unique qualifications or expertise that is not
‘VALUE
PRICING’
readily available
One of the more common value pricing tasks is providing
• computer programs that materially decrease the
expert witness services.
time required for project execution
• A Civil Engineer may demonstrate that his/her
proposal will make the project easier, faster, or
less expensive to achieve the clients objective.
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C I V I L

Charging of
E N G I N E E R I N G
SALARY COST TIMES MULTIPLIER
PLUS DIRECT NON-SALARY

Services EXPENSE

Hourly billing rates

plus reimbursables

Per Diem
Charges for engineering services are
based mainly on:
 DIRECT
SALARIES
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C I V I L

Charging of
E N G I N E E R I N G
SALARY COST TIMES MULTIPLIER
PLUS DIRECT NON-SALARY

Services
SALARY COST TIMES
EXPENSE

MULTIPLIER METHOD:
1. Two Multiplier Version
2. Single Multiplier Version Hourly billing rates
plus reimbursables

 Single Multiplier
Version
 direct salary times multiplier
 frequently called the direct labor times
multiplier version Per Diem
 it applies a single multiplier to unburdened
direct labor costs
 i.e., direct salaries without employee
benefits.
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Charging of
E N G I N E E R I N G
SALARY COST TIMES MULTIPLIER
PLUS DIRECT NON-SALARY

Services EXPENSE

 Single Multiplier
Version
 Includes costs associated with employee Hourly billing rates
benefits, overhead, and a margin for plus reimbursables
contingencies, risk, and profit.
 Two Multiplier Version
 salary cost times multiplier
 more easily accountable Per Diem
 basic premise of providing two separate
multipliers
 Definitive costs
 Costs which may vary from project to
project.
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Charging of
E N G I N E E R I N G
SALARY COST TIMES MULTIPLIER
PLUS DIRECT NON-SALARY

Services EXPENSE

The following factors are pertinent

to the salary cost times multiplier
version of this method (they may Hourly billing rates
also apply for other methods of plus reimbursables
charging for civil engineering
services)
1.Salary cost
2.Multiplier
3.Direct non-salary expenses Per Diem
4.The Civil Engineer’s
overhead
5.Accounting records
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Charging of
E N G I N E E R I N G
SALARY COST TIMES MULTIPLIER
PLUS DIRECT NON-SALARY

Services
Salary cost - defined as direct salaries
EXPENSE

plus employee benefits and includes

salaries for partners or principals and Salary Cost
for technical, professional,
administrative, and clerical staff directly.
Multiplier
Chargeable to project:
Direct Non-Salary
Expenses
Overhead

Accounting Records

Hourly billing rates

sick leave vacation holiday Incentive pay plus reimbursables
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Charging of
E N G I N E E R I N G
SALARY COST TIMES MULTIPLIER
PLUS DIRECT NON-SALARY

Services
Multiplier - which is applied to salary cost is a
factor that compensates the Civil Engineer for
EXPENSE

overhead (as defined hereinafter) plus a

Salary Cost
reasonable margin of contingencies, interest or
invested capital readiness to serve and profit.
Multiplier
Average Multiplier:
between

2.5 –
Direct Non-Salary

3.0
Expenses
Overhead

times average salary cost

Accounting Records
Some services:extensive experience and special knowledge

HIGHER Hourly billing rates

plus reimbursables
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Charging of
E N G I N E E R I N G
SALARY COST TIMES MULTIPLIER
PLUS DIRECT NON-SALARY

Services
Direct Non-Salary Expenses in
EXPENSE

Engineering Projects Salary Cost

In summary, when working on engineering Multiplier

projects, certain direct expenses are incurred,
which can include:
Direct Non-Salary
Expenses
• Travel Expenses
• Communication Costs Overhead
• Project-Specific and Services and Equipment
• Supplies and Reproduction Costs Accounting Records
• Special Insurance and Safety Expenses

Hourly billing rates

plus reimbursables
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Charging of
E N G I N E E R I N G
SALARY COST TIMES MULTIPLIER
PLUS DIRECT NON-SALARY

Services
Overhead Costs for Civil
EXPENSE

Engineers Salary Cost

In summary, the overhead costs for civil

engineers, which significantly impact overall Multiplier
compensation, include several indirect
expenses: Direct Non-Salary
• Office Expenses Expenses
• Taxes and Insurance Overhead
• Professional Development
• Administrative Salaries Accounting Records
• Business Development
• Non-Billable Time
• Technology Costs Hourly billing rates
plus reimbursables
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Charging of
E N G I N E E R I N G
SALARY COST TIMES MULTIPLIER
PLUS DIRECT NON-SALARY

Services EXPENSE

 Must provide the accounting necessary to Salary Cost

segregate and record the appropriate

expenditures. Multiplier

 Adequately detailed hourly time records

Direct Non-Salary
must be maintained. Expenses
 Applicable payroll records, together with Overhead
receipts or other documents to substantiate
chargeable expenditures. Accounting Records

Hourly billing rates

plus reimbursables
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Charging of
E N G I N E E R I N G Salary Costs times
Multiplier plus
Direct Non-Salary
Services
o Very similar to the salary cost times
multiplier method
Expense

Hourly billing rate includes:

 All direct personnel expenses HOURLY BILLING RATES PLUS
 Overhead REIMBURSABLES
 Profit
o Direct non-salary expenses are a
separate item for reimbursement,
usually with a service charge.
Per Diem
o Civil engineering firms may elect to
utilize this method of compensation on
projects where the scope of service is
not well defined
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Charging of
E N G I N E E R I N G Salary Costs times
Multiplier plus
Direct Non-Salary
Services
per diem - normally refers to an
eight-hour day.
Expense

 Direct personal services (Section 2)

which are frequently charged on a per
diem basis. Hourly Billing Rates
plus Reimbursables
• This basis is particularly suited
to expert witness or other
legal-type service and to other
short-term engagements
involving intermittent personal
services. PER DIEM
 Civil Engineers should be compensated
for all the time devoted to providing
them including travel and standby
time.
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Charging of
E N G I N E E R I N G Salary Costs times
Multiplier plus
Direct Non-Salary
Services
 Civil Engineer as an expert:
Expense

• 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
Hourly Billing Rates
called, may finish testifying in only a part of plus Reimbursables
the day.

Per diem rates varies depending

on:
• Employee Classification
• Regional Location PER DIEM
• Period of Service
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C I V I L

Charging of
E N G I N E E R I N G

Services
Salary Costs times Multiplier plus Direct Non-Salary Expense

Hourly Billing Rates plus Reimbursables

Per Diem
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THANK YOU
FOR YOUR
ATTENTION
SECTION 4: Charging for Civil
Engineering Services