Final Term 1 Flashcards
charges for engineering services are usually computed using one of six methods
- salary cost times multiplier plus
direct non-salary expense
(“Reimbursable”) - hourly billing rates plus
reimbursable - per diem
- cost plus fixed fee (“CPFF”)
- fixed price
- percentage of construction cost
(“Percentage”)
charges for engineering services are based
mainly on direct salaries.
Salary cost times multiplier plus direct non-salary expense (“Reimbursable”)
The salary cost times multiplier method may be utilized as either:
- a multiplier times salary cost (TWO MULTIPLIER
VERSION) - a multiplier times direct salary cost (SINGLE
MULTIPLIER VERSION)
Frequently called the “DIRECT LABOR TIMES MULTIPLIER” version
Multiplier Times Direct Salary Cost
(Single Multiplier Version)
It applies a single multiplier to unburdened direct labor costs (i.e., Direct salaries without employee `benefits)
Multiplier Times Direct Salary Cost
(Single Multiplier Version)
It includes costs associated with employee benefits, overhead and a margin for contingencies, risk and profit.
Multiplier Times Direct Salary Cost
(Single Multiplier Version)
It is more easily accountable due to the basic premise of providing two separate multipliers.
Multiplier Times Direct Salary Cost
(Single Multiplier Version)
factors that are pertinent to the salary
cost times multiplier version
- salary cost
- multiplier
- direct non-salary expenses
- the civil engineer’s OVERHEAD
- accounting records
defined as direct salaries plus employee benefits and includes salaries for partners or principals and for technical, professional, administrative and clerical staff directly.
salary cost
which is also 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.
multiplier
usually incurred in engineering engagements may include the following:
a) living and travelling expenses of principals and employee 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.
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 an programming services that are not applicable for inclusion in general overhead.
d) Identifiable drafting supplies, stenographic supplies and reproduction work 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 risk such as toxic and hazardous waste conditions.
direct non-salary expenses
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
d) executive, administrative, accounting, legal, stenographic and clerical salaries and expenses plus salaries or imputed salaries of partners and principals.
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 services assignments.
g) costs of acquiring and maintaining computers, development of software, and training staff when not billed as a direct cost.
the civil engineer’s OVERHEAD
- detailed hourly time records must be maintained for principals, engineers and other employees who devote; time to the project.
- applicable payroll records, together with the receipts or other documents to substantiate chargeable expenditures, must be available for inspection audit b the client if required by contract
accounting records
- It is very similar to salary cost times multiplier method (Two- multiplier)
- it includes all direct personnel expense, overhead and profit.
hourly billing rate
- refers to an eight-hour day.
- when per diem services are furnished, the Civil Engineer should be compensated for all the time devoted to providing them, including travel and standby time.
per diem
