THE SELECTION OF THE CIVIL ENGINEER

3.1 General
The selection and engagement of a Civil Engineer is one of the most important
decisions to be made during the development of an engineering project. No two civil
engineers have the same training, experience, capabilities, personnel, workloads, and
particular abilities. Selection of a most-qualified Civil Engineer for a specific project will
result in well-planned and designed, economical, and successful project.
This section presents what experience has shown to be the best and, therefore,
the recommended procedure for the engagement of a Civil Engineer.
3.2 Basis for Selection
The client should establish administrative policy or criteria for the election of
qualified Civil Engineers for particular projects. The clients first step is to define the
proposed scope of the project. In some cases, this may be a general statement of the
performance requirements of the project. At other times, the tasks to be performed
maybe individually identified and defined. By clearly defining the services which the Civil
Engineer is to furnish, the client can accurately judge whether or not the Civil Engineer
is best equipped to provide them.
Here are some of the factors that should be considered in the selection process:
1. The professional and ethical reputation of the Civil Engineer and his staff as
determined by inquiries to previous clients and other references.
2. Responsible Civil Engineers and its employee and must be registered
professional Civil Engineers.
3. Civil Engineers should have demonstrated qualifications and expertise,
performing the services required for the project.
4. Civil Engineers should be able to assign qualified engineering staff who will be in
responsible charge of the project and will be able to provide and complete the
required services within the time allotted.
5. The Civil Engineer should have the necessary financial and business resources
to accomplish the assignment and provide continuing services.
The selection procedures described in this manual apply to projects of the private
sector. For government projects, E.O. 164 and PD 1594 as amended apply to
procurement of consulting services and selection of contractor for construction,
respectively.

3.3 Client’s Selection Committee

 Within the client’s organization there should be an established administrative
policy for designating the persons authorized to select or recommend selection of Civil
Engineers for specific assignments. The persons appointed should be familiar with the
project requirement and should be kept free of internal or external pressure during the
selection process.
One satisfactory procedure is to utilize a selection committee of three or more
individuals, at least one of whom is a professional engineer of the appropriate discipline.
For public projects, the client must choose individuals who demonstrate objectivity in
order to avoid the appearance of a conflict of interest in the selection of the Civil
Engineer. At least one of the individuals should be thoroughly familiar with the Civil
Engineering practices. The committee is responsible for making recommendations after
conducting appropriate investigations, interviews, and inquiries. The final selection is
then based upon the selection committee’s recommendations.

3.4 QUALIFICATIONS-BASED SELECTION (QBS) PROCEDURE

The selection procedure is considerably enhanced when the client is fully familiar
with the purpose and nature of the proposed project, can describe the project in details,
and can prepare a project scope and outline of services expected of the Civil Engineer.
In some cases the client may not have professional staff available to define the project
scope and describe the required services. The client should still be familiar enough with
the project requirements to understand what is expected of the Civil Engineer. The
selection procedure, however, can be modified to suit the circumstances.

The client’s usual steps in the selection procedure are presented below. If the
client has had satisfactory experience with one or more Civil Engineers, it may not be
necessary to follow all of the steps outlined.

1. By invitation or by doing public notice, state the general nature of the project, the
service required, and request statements of qualifications and experience from
Civil Engineers who appear to be capable of meeting the project requirements.
The client may issue a “Request for qualifications” (RFQ) or “Request for
Proposals” (RFP). RFQs are normally used to ascertain the general qualifications
in a selected area of expertise while RFPs are used to seek Civil Engineers for
creating “short lists” for selecting a Civil Engineer for a specific project.
2. Prepare a budget fir the staff time and costs that can be expected from potential
Civil Engineer prior to receipt of the RFQs and RFPs.
3. Evaluate the statements of qualifications received. Select at least three Civil
Engineer or firms that may appear to be best qualified for the specific project. It
should be noted that often more than three Civil Engineers or firms may appear
to be equally qualified – in which case more Civil Engineers or firms may be
considered. However, in fairness to those not selected it is usually best to make a
conscientious effort to keep the number selected for further consideration for
 realistic minimum in view of the cost and time required to prepare competent
proposals.
4. Write a letter to each Civil Engineer or selected for further consideration
describing the proposed project in detail, including a project scope and outline of
services required, and asking for a proposal describing in detail the Civil
Engineer’s plan for managing and performing the required services, the
personnel to be assigned, the proposed schedule, experience with similar
projects, office location in which services are to be performed, financial standing,
present workload, and references. Each Civil Engineer or firm should have an
opportunity to visit the site, review all pertinent data and obtain clarification of any
items are required. For major or complex projects a pre-proposal conference may
be desirable to explain details of the proposed scope of services and to answer
questions.
5. On receipt of proposals, in invite the Civil Engineers or firms to meet individually
with the selection committee for interviews and discussions of the desired end
results of the project and has engineering services required. These interviews
may be held at the Civil Engineer’s office. The client may be consider
supplementing the selection committee with personnel who have specialized
expertise to advise the committee, when appropriate. During each interview the
selection committee should review the qualifications and experience of each Civil
Engineer or firm, the capability to provide the services within the time allotted,
and the key personnel to be assigned to the project.
6. Check with recent clients of each Civil Engineer or firm to determine the quality of
their performance. This check need not be limited to references listed by the Civil
Engineer.
7. List the Civil Engineer or firms in the order of preference, taking into account their
approach and understanding of the project, reputation, experience, financial
stranding, size, personnel available, quality of references, workload, location, and
other factors pertinent to the project being considered.
8. Invite the Civil Engineer considered to be best qualified to develop a detailed
scope. List of deliverables and schedule, and to negotiate fair compensation for
the services.
9. The compensation proposed by the Civil Engineer should be evaluated on the
basis of the clients experience and budget estimate taking account of the range
of charges reported in Section 4 herein; giving consideration to the project’s
special characteristics and the scope of services agreed upon. Fair and
reasonable compensation to the Civil Engineer is vital to the success of the
project since it will enable the consultant’s expertise to be fully utilized.
10. If satisfactory agreement is not reached with the first Civil Engineer, the
negotiations should be terminated and the Civil Engineer or firm be notified in
writing to that effect. Similar negotiations should then be held with the second
Civil Engineers or firm and, if necessary, with the third Civil Engineers or firm. If
no accord is reached, the client should seek outside assistance before continuing
 with the selection process. Such a procedure will usually result in development of
a satisfactory contract. All such negotiations should be on a strictly confidential
basis, and in no case should the compensation discussed with one Civil Engineer
be disclosed to another.
11. When agreement has been reached on scope, schedule and compensation, the
client and selected Civil Engineer should formalize their agreement in a written
contract.

3.5 SELECTION PROCEDURE FOR “LEVEL OF EFFORT” CONTRACTS

The level of effort type of contract for engineering services is a contract

procedure used to supplement a client staff, either b providing an extension to existing
disciplines and capabilities already on board or by adding special disciplines not
available on the client’s staff.
As applied to “level of efforts” contracts, the QBS procedure sets forth the
general nature of services to be rendered, the types of specialists required and the
estimated number of hours required during the contract period for each type and grade
of specialist, and then requests proposals from qualified firms. Proposals usually state
the experience of the firms as it pertains to the given scope of services, and the
backgrounds of the specialists available to work on the project. After narrowing the
proposals to those which best meet experience qualifications, the client negotiates an
agreement as described in paragraphs 9-11 above.

3.5.1 BIDDING

Professional engineering and architectural societies, recognize QBS as

the preferred method for procurement of professional services. In fact the NEDA
Guidelines require the procurement of professional engineering and architectural
services only by a process similar to that described in “Qualifications-Based
Selection Procedure”, above.

Selection of Civil Engineers and related service professionals, including

consultants and sub consultants on construction projects, should result from
competition based on the qualifications and resources best suited to complete a
project successfully in terms of performance quality and cost-effectiveness.
Qualifications and resources, including training, professional licensing
experience, skills, capabilities, special expertise personnel, and workloads, are
paramount considerations in engaging engineering services. Costs of these
services, while important and meriting careful negotiations and performance
accountability, are a small portion of overall project costs and should be
subordinate to professional qualifications and experience.
 There are many reasons why bidding for consulting Civil Engineering Services
often produces unsatisfactory results for the client. Principal among these are:
1. Bidding does not recognize professional judgment, which is the key difference
between professional services and the furnishing of products. Judgment is an
essential ingredient in quality engineering services.
2. It is virtually impossible to completely detail in advance the scope of services
required for an engineering project especially for the study and preliminary
phases, without lengthy discussions and negotiations with the selected firm.
Lacking specifics, the bidding firms must, in order to be competitive, submit a
price for the least effort envisioned. The resulting service performed is likely to be
tailored to fit the minimal requirements for the bid documents and will not
necessarily suit the client’s needs or expectations.
3. In-depth studies and analyses by the consulting Civil Engineer are not likely to be
performed. The consulting Civil Engineer selected by lowest bid will often provide
only the minimum services necessary to satisfy the client’s scope of services.
4. The consulting Civil Engineer’s ability to be flexible and creative in meeting the
client’s requirements is severely limited.
5. The engineering designs are likely to be minimal in completeness with the details
left to the contractor. This produces a lower first cost design but tends to add to
the cost of the completed project. The lack of design-details also can and
frequently does, lead to a greater number of change orders during construction
and to contractor claims at a later date.
For these reasons, bidding for professional services is not recommended.

3.5.2 TWO-ENVELOPE SYSTEM

The two-envelope system involves submission of a technical proposal in one

envelope and a price proposal in a second envelope. The client then evaluates the
technical proposals and selects the best qualified Civil Engineer based on that
consulting Civil Engineer’s technical proposal. At this point, in the selection procedure,
the client opens the price proposal submitted in the second envelope and uses this as a
basis for negotiation of contractual scope and fees. The second envelopes submitted by
the unsuccessful proposers are returned unopened.

If the client follows this procedure, the net effect is an outline in “Qualifications-
Based Selection Procedure,” provided that the client and the best qualified consulting
Civil Engineer have extensive discussions to reach full agreement on the scope of
services. This allows the client to utilize the knowledge and experience of the consulting
Civil Engineer in establishing the scope of services. Upon agreement of scope, the price
of services should be negotiated to reflect changes from the original scope used for
obtaining proposals.
 If both envelopes of all proposers are opened at the same time, a bidding
process, as discussed in the section of “Bidding”, is initiated with attendant
disadvantages. Procedures should be established to provide confirmation that the
second envelope is opened for only the successful proposal.

The two-envelope system is not recommended. If used as intended, it is similar

to the recommended QBS procedure except that the added cost to prepare a
comprehensive scope and price discourages some consulting Civil Engineers from
participating. The costs to prepare a proper price proposal are considerable to the firms
not selected, which increases the overall business costs of consulting civil engineering
and ultimately of the clients.

CHARGING FOR CIVIL ENGINEERING SERVICES

4.1 General

Charges for engineering services are usually computed using one of 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”)

Combinations of methods of payment for different phases of the contract may

be used. The method or combination of methods used depends upon the nature, scope,
and complexity of services required by the client. The first four methods are based upon
the Civil Engineers costs to perform services.

They are particularly applicable to assignments where the scope of services is

not self defined. The fixed price and percentage of construction cost method are based
upon a specific deliverable and do require that the project scope be well defined. The
cost plus fixed fee method provides more flexibility to accommodate both scope and fee
changes than do either the fixed price or percentage or construction cost method.

The potential risks and problems faced by both the client and the Civil Engineer,
when the scope and services is not well-defined, should be recognized and discussed
during early negotiations. Often, initial estimates of maximum engineering costs for
projects of uncertain scope are requested by the client for budgeting purposes. Such
budget estimates should state that they do not constitute an agreed-upon maximum and
that they are to be revised as the scope of services becomes better defined.
 When a reimbursement method such as salary cost times multiplier, hourly billing
rate, per diem, or cost-plus fixed fee is chosen because of uncertainty of the scope of
services. It is logical to propose that an upper limit (maximum amount) for these
services be included in the agreement.

The inconsistency of such a proposal is proportional to the uncertainty of the scope.

However, these methods are used with a “not-to-exceed” amount. In this case, it is
important for the client and the engineer to agree beforehand on a method for adjusting
the “not-to-exceed” amount when adjustment is warranted. One reasonable approach to
compensation for uncertain assignments is to require the Civil Engineer to inform the
client then engineering costs are approaching 75 percent of a stated budget figure and
to forecast the probable total cost. This provision gives the client and the engineer an
opportunity to examine progress at that point and, if appropriate, to revise either the
original budget or not-to-exceed amount or the scope of remaining services.

The charges for engineering services using the fixed price or the percentage of
construction cost methods is based entirely on the scope of services. These methods
may be appropriate where the scope of service is well defined and the Civil Engineer’s
costs are within his/her control. Certain types of investigations and designs are well
suited to these methods of determining charges.

Determination of charges for services such as resident project representation

during construction, where the Civil Engineer’s costs may be affected significantly by
the contractors performance can be accomplished more equitably by one of the
methods based on the actual cost of service.

Occasionally, a Civil Engineer has unique qualifications, and/or expertise that is

not readily available, and/or computer programs that materially decrease the time
required for project execution. In some instances, the Civil Engineer may demonstrate
that his/her proposal will make the project easier, faster: safer, or less expensive to
achieve the client objective.

Similarly, the client may wish the Civil Engineer to undertake a project
characterized by an accelerated schedule, non-routine services, and/or high risk
activities. Under these circumstances charges for engineering services may be based
on “value pricing which reflects a premium rate not tied directly to the Civil Engineer’s
cost, but based on the Civil Engineers unique qualifications or the extenuating
circumstances. One of the more common value pricing tasks is providing expert witness
services.

SALARY COST TIMES MULTIPLIER PLUS DIRECT 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 engineering services are based mainly on direct salaries. It is
therefore advisable that the Civil Engineer reach an agreement with the client on salary
ranges for each classification of service applicable, as well as on the time period over
which they can be guaranteed. This may help avoid future surprises,
misunderstandings, and disputes.

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 multiplier with the
exception that it applies a single multiplier to unburdened direct labor costs, i.e., direct
salaries without employee benefits., The single multiplier includes costs associated with
employee benefits, overhead, and a margin for contingencies, risk, and profit. The direct
salary times multiplier version of this method Is being utilized more frequently due to the
simplistic nature of utilizing a single multiplier. Of the two versions of this method, the
salary cost times multiplier is the more easily accountable due to the basic premise of
providing two separate multipliers. One multiplier is based upon definitive costs. i.e,
employee benefits end the other multiplier based upon costs which may vary from
project to project.

Regardless of the method utilized as a basis of compensation, a provision in the

agreement should state that payments will be made to the Civil Engineer during
progress of the services, based on monthly invoices, and within a reasonable time after
billing. Direct nonsalary expenses are a separate item for reimbursement usually with a
service charge. The following factors are pertinent to the salary cost times multiplier
version of this method (they may also apply for other methods of charging for civil
engineering services).

1. Salary cost is defined as "direct salaries plus employee benefits" and includes
salaries for partners or principals and for technical, professional, administrative
and clerical staff directly". Chargeable to the project: sick leave, vacation, holiday
and Incentive pay; unemployment and other payroll taxes; and the contributions
for social security, workers' compensation insurance retirement, medical, and
other group: benefits.

Note that salaries or imputed salaries of partners or principals, to the extent that they
perform technical or advisory services directly chargeable to the project, are to be
reimbursed in the same way as are other direct salary costs.
 2. Multiplier which is applied to salary cost is a factor that compensates the Civil
'Engineer for overhead (as defined hereinafter) plus a reasonable margin for
contingencies, interest or invested capital readiness to serve, and profit. The size
of the multiplier will vary with the type of service, the nature and experience of
the civil engineering firm, and the geographic area in which its office Is located.
The average multiplier should be between 2.5 and 3.0 times the average salary cost.
For some services, however, a higher multiplier is usually applicable for services
requiring recommendations based on extensive experience and special knowledge, or
for services involving expert testimony in legal proceedings. The Multiplier may also
Increase with the experience and special capabilities of the Civil Engineer's firm.

3. Direct non-salary expenses usually incurred in engineering engagements may

include the following:

a. Living and traveling expenses of principals and employee's 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
charges (for other than general correspondence).
c. 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) charged to the client's
project) as distinguished from such supplies and expenses applicable to
several projects.
e. 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. Such projects may require
special insurance, which is also normally billed as a direct cost to the
project. Such expenses are normally reimbursed by the client at actual
invoice cost plus an administration charge to compensate for associated
accounting, purchasing, contract administration, risk of liability, etc.
4. The Civil Engineers overhead which comprises a major portion of the
compensation generated by the multiplier on salary cost, includes the following
indirect costs:

a.Provisions for office expenses-light, heat, telephone depreciation, rental

furniture, rent, drafting equipment and engineering instruments,
 transportation expenses, and office and drafting supplies not identifiable to
a specific project.

b.Taxes and insurance other than those included as salary cost.

c. 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 projects. These services and expenses,
essential to the conduct of the business, include preliminary arrangements
for new projects or assignments and interest on borrowed capital.

e.Business development expenses, including salaries of principals and

employees so engaged.

f. Provision for loss of productive time of technical employees between

assignments, and for time of principals and employees on public service
assignments.
g. Costs of acquiring and maintaining computers, development of software,
and training staff when not billed as a direct cost.
h. 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. Adequately detailed hourly time records must
be maintained for principals, engineers and other employees who devote;
time to the project.
i. Applicable payroll records, together with receipts or other documents
to substantiate chargeable expenditures, must be available for inspection
audit by the client if required by contract.
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 (as defined under the salary
cost limes multiplier section) are a separate item for reimbursement, usually with a
service charge. Civil engineering firms may elect to utilize this method of compensation
on projects where the scope of service is not well defined or to simplify accounting and
record keeping.
PER DIEM
The term per diem normally refers to an eight-hour day. Direct personal services
of the type described in Section 2 of the PICE manual which are frequently charged on
a per diem basis. This basis is particularly suited to expert witness or other legal-type
services and to other short-term engagements involving intermittent personal services.
Where per diem services are furnished, the Civil Engineer should be
compensated for all of the time devoted to providing them, including travel and standby
time. The per diem charge should be based on the complexity, risk, and important of the
services and the Civil Engineer's professional standing, expertise, and breadth of
experience. The Civil Engineer is also reimbursed for travel and subsistence costs and
for other out-of-pocket expenses incurred when away from the home office.
For engagements in which the Civil Engineer is to appear as an expert, a per
diem charge is considered to be earned for each day of such appearance, even though
the Civil Engineer is not called testify or, if called, may. finish testifying in only a part of
the day.
Per 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
rates.
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 in the project including:
1. Salary costs, as previously defined
2. Overhead, as previously defined (The Civil Engineer should be prepared to
support the basis for overhead charges.)
3. Direct non-salary expenses, as previously defined
4. Fixed fee, an amount to compensate the Civil Engineer for contingencies,
interest on invested capital, readiness to serve, and profit.
The cost plus fixed fee basis requires, as a prerequisite to equitable negotiations, 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.
The cost plus fixed fee method can also be used when the Civil Engineer is required to
start providing service before the detailed scope of services can be determined. In such
cases, the following considerations apply:
1. The general scale and intent of the project should be fairly well defined,
even if the full scope is indeterminate; for example, the number, size, and
character of buildings or other facilities, the type of utilities, and other such
essential information should be available.
2. The types of service to be performed the Civil Engineer should be agreed
upon and fully set forth. The agreements should also provide for
appropriate adjustments in the fixed fee. In the event that the physical
scope of the project, time completion, or level of effort and services
required are materially changed over those contemplated during the
negotiations.
The fixed fee amount varies with the complexity and scope of the engineering services
required. It is frequently calculated as percentage of the salary costs, overhead, and
direct non-salary expenses.
Agreements for cost-based methods should provide for reimbursement of all costs to be
incurred directly or indirectly in connection with the project, including but not limited to
those foreseen when the agreement is negotiated. The list reimbursable items should
be as complete and detailed as possible. One advantage of the cost plus fixed fee
method
is that it eliminates any suspicion that the costs have been allowed to grow in order to
increase the Civil Engineer's fee, which by definition is a fixed amount. Because the
entire fixed fee amount is due the Civil Engineer, whether or not the estimated project
costs have been reached the Civil Engineer has an incentive to complete the service
promptly.
FIXED PRICE
The fixed price method of compensation is frequently used for investigations and
studies and 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
nonsalary 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; this method and its limitations are
discussed in the following section. Results using the percentage method and the direct
calculation method are frequently used to check each other.
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.
Partial payments should be made to the Civil Engineer at stated intervals usually once a
month during the performance of the services. These payments are usually based on
the Civil Engineer’s statement of percent completion to date.
PERCENTAGE OF CONSTRUCTION COST
The percentage of construction cost method is seldom used raw. Because of increasing
complexity and large variation in tasks for projects, the percentage of construction cost
fee curves no longer have a direct correlation to the required engineering fees for
specific projects. Owners should either use experienced "in-house" staff or retain
consultants to develop detailed program budgets for construction costs, right of
way, legal, administrative, engineering services and permits.
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.
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.
Over the years, engineering experience has established some appropriate correlations
between engineering costs and construction costs for certain types of engineering
design, where design procedures and materials of construction are more or less
standardized. These correlations have resulted in various curves and schedules which
have been widely used.
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.
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%)
These percentages include only those works normally undertaken In arriving at the
expected outputs and do not include special studies or investigations indicated under
Section 2.5 of the PICE manual, the outputs of which are ends by themselves.
It is further emphasized that the above percentages are only ceilings and it does not
necessarily mean that the said percentages shalI always be adopted for each project.
The actual percentage a particular project will depend on the factors mentioned above,
the type, complexity, location and magnitude of construction cost. As a general rule,
projects within a higher range of construction cost will have lower percentages of fees
than those acts within a lower range of construction cost. The above limits percentages
shall be reduced to the extent that some of the activities undertaken by the client.
SCHEDULE OF MINIMUM BASIC FEES
Rates of compensation for Civil Engineers engaged in various capacities are given in
Annex B. The PICE shall regularly update the schedule of fees stipulated in the Annex.
Certain principles should however be observed as follows.
1. When doing work on foreign assisted projects, or in projects where the
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 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
projects for and in behalf of his employers shall be compensated with a minimum
of 10% of the professional fee for the project, over and above the basic monthly
salary.