Charging For Civil Engineering Services

CHARGING FOR CIVIL ENGINEERING SERVICES:
CONSTRUCTION SERVICES
Charges for Civil Engineering Services are usually computed using one of the six
methods:
1. Salary cost times multiplier plus direct non-salary expense (“Reimbursable”)
2. Hourly Billing Rates Plus Reimbursable
3. Per Diem
4. Cost plus fixed fee (“CPFF”)
5. Fixed Price
6. Percentage of Construction Cost (“Percentage”)
Salary cost times multiplier plus non-salary expense

Compensation on the basis of the salary cost times an agreed multiplier is a frequently used
method of determining charges for engineering services. With this method, charges for civil
engineering services are based mainly on direct salaries.
The salary cost times multiplier method may be utilized as either a multiplier times salary cost
(two multiplier version) or a multiplier times direct salary cost (single multiplier version) The
direct salary times multiplier or as it is frequently called the direct labor times multiplier version is
very similar to the salary cost times the multiplier with the exception that it applies a single
multiplier to unburdened direct labor cost, i.e., direct salaries without employees benefits. The
single multiplier includes cost associated with employees’ benefits, overhead, and a margin for
contingencies, risk, and profit.
The following factors are pertinent to the salary cost times multiplier:
1. Salary cost is defined as the “direct salaries plus the employee benefits”.
2. Multiplier which is applied to salary cost is a factor that compensates the Civil Engineer for
overhead plus a reasonable margin for contingencies, interest or invested capital readiness to
serve, and profit.
3. Direct Non-salary expense usually incurred in engineering engagements may include the
following:
 Living and traveling expenses

 Identifiable communications expenses
 Expenses for services and equipment directly applicable to the project
 Identifiable drafting supplies, stenographic supplies, and reproduction work
 Expenses for unusual insurance and specialized health and safety programs
4. The Civil Engineers overhead which comprises a major portion of the compensation
generated by the multiplier on salary cost, includes the following indirect cost:
 Provision for office expenses

 Tax and insurance other than those included as salary cost
 Library and periodical expenses
 Executive, administrative, accounting, legal, stenographic, and clerical salaries and
expenses (Other than salaries included in salary costs and expenses)
 Business development expenses
 Provision for loss of productive time
 Cost of acquiring and maintaining computers, development of software, and training
staff when not billed as direct cost
5. Accounting records
Hourly Billing Rate

The Hourly billing rate method of compensation is very similar to the salary cost times multiplier
method in that the hourly billing rate includes all direct personnel expense, overhead and profit.
Direct non-salary expenses are a separate item for reimbursement, usually with a service
charge.
Per Diem
The term ‘per diem’ normally refers to an eight-hour day. Direct personnel services are
frequently charged on a per diem basis
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.
Fixed Price
The fixed price can be calculated as the sum total of estimated engineering costs for salaries,
overhead and no 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.
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.
Schedule of Minimum Basic 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.
MINIMUM COMPENSATION FOR CIVIL ENGINEER AS A PRIME PROFESSIONAL
Group I-Simple Structures, one storey buildings, warehouses, market buildings and
comparable projects
Project Construction Cost Minimum Basic Fees
 P10 Million and less 6%
 Over P10 Million to P20 Million P600,000 plus 5.5%
 Over P20 Million to P30 Million P1,150,000 plus 4.5% of excess of P20
Million
P1, 600, 000 plus 3.5% of excess of P30
 Over P30 Million Million
Group II- Buildings of 3 to 14 floors,

towers, tanks, industrial buildings, piers,
and comparable projects.
Project Construction Cost Minimum Basic Fees
 P10 Million and less 7%
 Over P10 Million to P20 Million P200,000 plus 6.5% of excess of P10
Million
P1,350,000 plus 5.5% of excess of P20
 Over P20 Million to P30 Million Million
 Over P30 Million P1, 900, 000 plus 4.5% of excess of P30
Million
Group III- Buildings of 15 or more floors,
long span and complex bridges, high
dams, port works, power plants.
Professional Fee
Project Construction Cost
8%
 P10 Million and less
P800,000 plus 7.5% of excess of P10

 Over P10 Million to P20 Million
Million
P1,550,000 plus 6.5% of excess of P20
P2, 200, 000 plus 5.5% of excess of P30
Million
 Over P30 Million
If the Civil Engineer is not the prime

professional but renders basic civil
engineering services only, his fee shall be a
minimum of 25% of the prime professional
fee.
Group IV-Hotels, large apartment

buildings, shopping centers, resorts,
hospitals, and comparable projects.
Engineer’s Fee
Project Construction Cost
1.05%
 P10 Million and less

Million
 Over P20 Million to P30 Million
P285, 000 plus 0.675% of excess of P30

 Over P30 Million Million

Charging For Civil Engineering Services

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CHARGING FOR CIVIL ENGINEERING SERVICES:

Salary cost times multiplier plus non-salary expense

 Living and traveling expenses

 Provision for office expenses

Hourly Billing Rate

Cost plus fixed fee

Percentage of Construction Cost

Schedule of Minimum Basic Fees

Project Construction Cost Minimum Basic Fees

 P10 Million and less 6%

 Over P10 Million to P20 Million P600,000 plus 5.5%

Group II- Buildings of 3 to 14 floors,

Project Construction Cost Minimum Basic Fees

 P10 Million and less 7%

P800,000 plus 7.5% of excess of P10

If the Civil Engineer is not the prime

Group IV-Hotels, large apartment

P105,000 plus 0.975% of excess of P10

P285, 000 plus 0.675% of excess of P30

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