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Charging For Civil Engineering Services1

Charging for civil engineering services can be done using six main methods: 1) salary cost times multiplier plus expenses, 2) hourly billing rates plus expenses, 3) per diem, 4) cost plus fixed fee, 5) fixed price, or 6) percentage of construction cost. The appropriate method depends on the nature, scope, and complexity of the required services. Methods based on the engineer's costs are best for undefined scopes, while fixed price and percentage are for well-defined projects. The cost plus fixed fee method provides the most flexibility for scope and fee changes. Potential risks from undefined scopes should be discussed early in negotiations.

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237 views

Charging For Civil Engineering Services1

Charging for civil engineering services can be done using six main methods: 1) salary cost times multiplier plus expenses, 2) hourly billing rates plus expenses, 3) per diem, 4) cost plus fixed fee, 5) fixed price, or 6) percentage of construction cost. The appropriate method depends on the nature, scope, and complexity of the required services. Methods based on the engineer's costs are best for undefined scopes, while fixed price and percentage are for well-defined projects. The cost plus fixed fee method provides the most flexibility for scope and fee changes. Potential risks from undefined scopes should be discussed early in negotiations.

Uploaded by

Mirabella Di Bastida
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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CHARGING FOR CIVIL ENGINEERING SERVICES

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”)

The method or combination of methods used depends upon:

1. Nature
2. Scope
3. Complexity of services required by the client.

Note: The first four methods are based upon the civil engineers cost 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.

The potential risks and problems faced by both the client and the Civil Engineer, when the scope of services is not well
defined, should be recognized and discussed during early negotiations. Often, initial estimates of maximum engineering
cost for projects of certain 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 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 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 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 contractor’s 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 the 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’s
objective.

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