Group 3 - Ce Laws

PICE MANUAL OF
PROFESSIONAL
PRACTICE FOR
CIVIL ENGINEERS
SECTIONS 3 & 4
GROUP 3
ACUZAR BAGSIC CAGUETE MIRANO OSIAS

Jhamaica Denise Marc Oliver John Lloyd Areen Christzel Laralyn
TABLE OF CONTENT
01 SECTION 3. THE SELECTION OF THE
CIVIL ENGINEER 02
SECTION 4. CHARGING FOR CIVIL
ENGINEERING SERVICES
3.1 General 4.1 General
3.2 Basis for Selection 4.2 Salary Cost Times Multiplier Plus Direct
3.3 Client’s Selection Committee Non-Salary Expense
3.4 Qualifications-Based Selection (QBS) 4.3 Hourly Billing Rate
Procedure 4.4 Per Diem
3.5 Selection Procedure for “Level of Effort” 4.5 Cost Plus Fixed Fee
Contracts 4.6 Fixed Price
3.5.1 Bidding 4.7 Percentage of Construction Cost
3.5.2 Two-Envelope System 4.8 Schedule of Minimum Basic Fees
SECTION 3
THE SELECTION OF THE CIVIL ENGINEER
SECTION 3. 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 the most qualified Civil Engineer for a specific project
will result in a well-planned and designed, economical, and successful project.
This section presents what experiences 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 and criteria for the selection of
QUALIFIED Civil engineers for particular projects. The client’s first step is to define
the proposed scope of the project.
3. 2 Basis for Selection

The professional and ethical reputation of the Civil Engineer and his staff as
determined by inquiries to previous clients and other references.
Responsible Civil Engineers and their employees must be registered professional
Civil Engineers.
Civil Engineers should have demonstrated qualifications and expertise,
performing the services required for the project.
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.
The Civil Engineer should have the necessary financial and business resources to
accomplish the assignment and provide continuing service.
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 requirements
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 detail,
and can prepare a project scope and outline of services expected of the Civil Engineer.
The client’s usual steps in the selection process procedure are:
By invitation or public notice, state the general nature of the project, the
services required, and the request statements of qualifications and
experience from Civil Engineers who appear to be capable of meeting the
requirements.

Prepare a budget for the staff time and costs that can be expected from
potential Civil Engineers prior to receipt of the RFQs or RPSs.
Evaluate the statements of qualifications received. Select at least three Civil
Engineers or firms that may appear to be best qualified for the specific
project.
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.

On the receipt of proposals, 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 the engineering services required.
Check with each Civil Engineer or firm's recent clients to determine their
performance quality. This check need not be limited to references listed by
the Civil Engineer.
List the Civil Engineer or firms in the order of preference, taking into
account their approach and understanding of the project, reputation,
experience, financial standing, size, personnel available, quality of
references, workload, location, and other factors pertinent to the project
considered.

Invite the Civil Engineer considered to be best qualified to develop a
detailed one. List of deliverables and schedule, and to negotiate fair
compensation for the services.
The compensation proposed by the Civil Engineer should be evaluated
based on 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.

If a 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. If no accord is reached, the client should
seek outside assistance before continuing with the selection process. 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.
When an agreement has been reached on scope, schedule, and

compensation, the client and selected Civil Engineer should familiarize their
agreement in a written contract.
3.5 Selection Procedure For “Level of Effort” Contracts

A “level of effort” type of contract for engineering services is a contract procedure used to
supplement a client staff, either by 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 effort” 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 firm 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. Selection Procedure For “Level of Effort” Contracts

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 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.

3.5.1 Bidding
There are many reasons why bidding for consulting Civil Engineering services often
produces unsatisfactory results for the client. Principal among these are:
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.
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 of the bid documents and will not necessarily suit the client’s needs or
expectations.

3.5.1 Bidding
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.
The consulting Civil Engineer’s ability to be flexible and creative in meeting the client’s
requirements is severely limited.
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 is as outlined in “Qualifications-Based Selection
procedure”, provided that the client and the best qualified consulting Civil Engineer have
extensive extensions 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.

3.5.2 Two-Envelope System
If both envelopes of all proposers are opened at the same time, a bidding process, as
discussed in the section on “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.
SECTION 4
CHARGING FOR CIVIL ENGINEERING
SERVICES
SECTION 4. 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 reimbursables.
3. Per diem.
4. Cost plus fixed fee ("CPFF").
5. Fixed price.
6. Percentage of construction cost ("Percentage").
4.1. GENERAL
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 methods 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 methods.
4.1. GENERAL
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 when 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.
4.1. GENERAL
The charge 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 services 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.
4.1. GENERAL
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 clients 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.
4.2 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.
SALARY COST
- defined as "direct salaries plus employee benefits" and includes salaries for
partners or principals and for technical, professional, administrative and clerical
staff directly".
MULTIPLIER
- 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. 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.
DIRECT NON-SALARY EXPENSES

- usually incurred in engineering engagements may include the following:
Living and traveling expenses of principals and employee's when away from the home
office on business connected with the project.
Identifiable communications expenses, such as long- distance telephone, facsimile,
telegraph, shipping charges, and special postage charges (for other than general
correspondence).
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.
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.
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.
The Civil Engineers OVERHEAD which comprises a major portion of the
compensation generated by the multiplier on salary cost, includes the following
indirect costs:
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.
Taxes and insurance other than those included as salary costs.
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.
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.
Business development expenses, including salaries of principals and
employees so engaged.
Provision for loss of productive time of technical employees between
assignments, and for time of principals and employees on public service
assignments.
Costs of acquiring and maintaining computers, development of software,
and training staff when not billed as a direct cost.
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.
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.
4.3. 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. 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.
4.4. Per Diem

The term per diem normally refers to an eight-hour day. Direct personal services are
frequently charged on a per diem basis.
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.
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 to testify or, if called, may, finish testifying in only a part
of the day.
4.5. 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.
4.5. Cost Plus Fixed Fee

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:
The general scale and intent of the project should be fairly well defined, even if
the full scope is indeterminate.
The types of service to be performed by 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 of completion, or level of effort and services required are materially
changed over those contemplated during the negotiations.
4.6. Fixed Price
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
Fixed price amount can be calculated as the sum total of estimated engineering costs for
salaries, overhead and nonsalary expenses, 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.
Continuation...
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.
Partial payments should be made to the Civil
Engineer at stated intervals usually once a
month during the performance of the services.
There payments are usually based on the Civil
Engineer’s statement of percent completion to
date.
4.7. 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.
Construction Cost Percentage
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
comstructed.
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.
Construction Cost Percentage
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%)
This percentages include only those works normally undertaken

in arriving at the expected outputs and do not inlcude special
studies or investigations indicated under Section 2.5 hereof, the
outputs of which are ends by themselves. Plus, actual
percentage will depend on the mentioned factors above.
4.8. 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 international

consultants participate, the Civil Engineer performing similar or equivalent work, should
accept compensation that approximates the international standard rates (see Section 6.1.1
of the NEDA Guidelines).
2. Civil Engineers regularly employed in the private sector shall have a minimum
compensation corresponding to 10% more that 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,
over and above the basic monthly salary.
THANK YOU!
ACUZAR BAGSIC CAGUETE MIRANO OSIAS

Group 3 - Ce Laws

Uploaded by

Copyright:

Available Formats

Group 3 - Ce Laws

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Group 3 - Ce Laws

Uploaded by

Copyright:

Available Formats

PICE MANUAL OF

ACUZAR BAGSIC CAGUETE MIRANO OSIAS

3. 2 Basis for Selection

3. 2 Basis for Selection

3.3 Client’s Selection Committee

One satisfactory procedure is to utilize a selection committee of three or more individuals,

3.4 Qualifications-Based Selection (QBS) Procedure

The client’s usual steps in the selection process procedure are:

3.4 Qualifications-Based Selection (QBS) Procedure

3.4 Qualifications-Based Selection (QBS) Procedure

3.4 Qualifications-Based Selection (QBS) Procedure

3.4 Qualifications-Based Selection (QBS) Procedure

When an agreement has been reached on scope, schedule, and

3.5 Selection Procedure For “Level of Effort” Contracts

3.5. Selection Procedure For “Level of Effort” Contracts

Selection of Civil Engineers and related service professionals, including consultants on

3.5. Selection Procedure For “Level of Effort” Contracts

It is virtually impossible to completely detail in advance the scope of services required

3.5. Selection Procedure For “Level of Effort” Contracts

3.5. Selection Procedure For “Level of Effort” Contracts

3.5. Selection Procedure For “Level of Effort” Contracts

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

Determination of charges for services such as resident project representation

DIRECT NON-SALARY EXPENSES

Identifiable drafting supplies, stenographic supplies, and reproduction work

Applicable payroll records, together with receipts or other documents to

4.3. Hourly Billing Rate

4.4. Per Diem

4.5. Cost Plus Fixed Fee

4.5. Cost Plus Fixed Fee

The types of service to be performed by the Civil Engineer should be agreed

4.6. Fixed Price

The percentage of construction cost method is

a. Feasibility studies - three percent (3%)

This percentages include only those works normally undertaken

4.8. Schedule of Minimum Basic Fees

1. When doing work on foreign assisted projects, or in projects where international

You might also like