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Charging For Civil Engineering Services

The document outlines key terms related to contracts and civil engineering services, including definitions of contract, per diem, overhead costs, contingency funds, direct costs, and indirect costs. It also discusses various methods of charging for civil engineering services, such as cost plus fixed fee, fixed price, and percentage of construction cost, along with guidelines for minimum basic fees for civil engineers. The information is aimed at helping civil engineers understand compensation structures and contractual obligations in their field.

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18 views19 pages

Charging For Civil Engineering Services

The document outlines key terms related to contracts and civil engineering services, including definitions of contract, per diem, overhead costs, contingency funds, direct costs, and indirect costs. It also discusses various methods of charging for civil engineering services, such as cost plus fixed fee, fixed price, and percentage of construction cost, along with guidelines for minimum basic fees for civil engineers. The information is aimed at helping civil engineers understand compensation structures and contractual obligations in their field.

Uploaded by

gwenvaldez473
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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WARM UP

. What is a contract?
1

2. What does “Per Diem” mean?


3. What does “overhead costs” mean?
4. What does “ contingency funds” mean?
3. Define/Explain : Direct Cost vs Indirect
Cost
Contract
Contract - a written or spoken agreement,
especially one concerning employment,
sales, or tenancy, that is intended to be
enforceable by law.
Per Diem
from the Latin word "by the day"

- normally refers to an eight-hour day.


Direct personnel services are frequently
charged to a per diem basis.
Overhead Costs
Overhead costs, also known as
indirect costs, are expenses that are
not directly attributable to the
production of goods or services but
are necessary for running a project or
a business
Contingency Funds
Contingency funds are funds created
to cope with any unforeseen scenarios
or emergencies that a business or a
project may run into at any point in
time. Businesses hold this fund in the
form of liquid assets or cash.
What is the difference between Direct Cost
and Indirect Cost?

Direct costs are expenses that can be directly


attributed to a specific project, product, or service.
These costs are directly involved in the production
process and can be easily traced to the cost object
(e.g., a project or product).
Examples:
•Materials: Raw materials or components used in
manufacturing a product.
•Labor: Wages of workers who are directly involved
in the production or execution of the project.
•Equipment: Costs of machinery or tools
specifically used for the project.
•Consultants: Fees paid to external experts
working directly on the project.
Indirect Costs
Definition: Indirect costs, also known as
overhead costs, are expenses that cannot be
directly attributed to a specific project, product,
or service. These costs support multiple projects
or operations and are necessary for the overall
functioning of the organization.
•Rent and Utilities: Costs associated with the
office space, electricity, water, and internet that are
not specific to one project.
•Office Supplies – bond papers, computers,
printers, etc.
•Depreciation: The gradual reduction in value of
general use assets such as office buildings and
equipment.
•Insurance: General liability and property
insurance.
Charging for Civil
Engineering
Services
REPORTER:
CADIENTE, ALLEN JASPER R.
Agenda:
Cost Plus Fixed Fee

Fixed Price

Percentage of Construction Cost

Schedule of Minimum Basic Fees


CHARGING FOR CIVIL ENGINEERING
SERVICES
SALARY COST TIMES
MULTIPLIER PLUS
DIRECT NON-SALARY
EXPENSE

HOURLY BILLING RATE

PER DIEM
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 to the project, including
 Salary costs

 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.
Cost Plus Fixed Fee
The cost plus fixed fee basis requires 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 ( Contract).
Fixed Price
The fixed price method of compensation is frequently used for investigations
and studies 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.
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.
Percentage of Construction
Cost
The validity of the percentage of construction cost method rests upon the
assumption that detailed design and construction supervision costs vary in
proportion to the cost of construction. When judiciously applied, and with due
consideration of the ranges within which engineering scope may vary, this
method is valuable as a tool for general comparison with line-based fees for
design services. Its acceptance over many years also affords a valuable guide for
judging the reasonableness of proposal for consulting services.
Percentage of Construction
Cost
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:

a) Feasibility studies - three percent (3%);


b) Detailed engineering design - six percent (6%);
c) Detailed architectural and engineering design - eight percent (8%); and
d) Construction supervision - ten percent (10%)
Schedule of Minimum Basic
Fees
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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