FINAL TERM

Civil Engineering Processes

• Planning
• Design
• Construction
• Operation/Maintenance
• Rehabilitation
Civil Engineering Processes
Civil Engineering Processes
Civil Engineering Processes
Civil Engineering Processes
Civil Engineering Processes
 Philippine Legal System
LAWS IN THE CIVIL ENGINEERING PROFESSION
CONSTRUCTION REGULATORY

• RA 4566 - Contractors' License Law. AN ACT CREATING THE PHILIPPINE LICENSING BOARD FOR
CONTRACTORS, PRESCRIBING ITS POWERS, DUTIES AND FUNCTIONS, PROVIDING FUNDS
THEREFORE, AND FOR OTHER PURPOSES.

• PD 1746 – CREATING THE CONSTRUCTION INDUSTRY AUTHORITY OF THE PHILIPPINES (CIAP)

• PD 1167 – DEVELOPING AND REGULATING THE OVERSEAS CONSTRUCTION INDUSTRY, PROVIDING

INCENTIVES THEREFORE, AND FOR OTHER PURPOSES

• RA 9184 – GOVERNMENT REFORM ACT - AN ACT PROVIDING FOR THE MODERNIZATION,

STANDARIZATION AND REGULATION OF THE PROCUREMENT ACTIVITIES OF THE GOVERNMENT
 Philippine Legal System
LAWS IN THE CIVIL ENGINEERING PROFESSION
DESIGN AND CONSTRUCTION CODES

• PD 1096: NATIONAL BUILDING CODE. Implementing Rules and Regulations

• PD 1185 – FIRE CODE OF THE PHILIPPINES

• PD 856 – CODE ON SANITATION OF THE PHILIPPINES. Implementing Rules and Regulations

• BP 344 – ACCESSIBILITY LAW : Implementing Rules and Regulations - An Act To Enhance The
Mobility Of Disabled Persons By Requiring Certain Buildings, Institutions

REPUBLIC ACT NO. 544 – THE CIVIL ENGINEERING LAW. An act to regulate the practice of Civil
Engineering in the Philippines
 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS

An obligation is a juridical necessity to give to, do to, or not to do.

Obligations arises from:

• Law;
• Contracts;
• Quasi-contracts;
• Acts or omission punished by law; and
• Quasi-delicts.
 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS
Elements of Obligation

• ACTIVE SUBJECT – power to demand the prestation (obligee/creditor)

• PASSIVE SUBJECT – bound to perform the prestation (obligor/debtor)

• PRESTATION OR OBJECT – not a thing but a particular conduct of the debtor

 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS
Kinds of Prestation

• TO GIVE – consists in the delivery of movable or immovable thing, in

order to create a real right or for the use of the recipient or for its
simple possession or in order to return to its owner.

• TO DO – all kinds of work or services, whether mental or physical

• NOT TO DO- consists in abstaining from some act, includes “not to

give”, both being negative obligation
 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS
Obligations as defined:

• By Law

o Obligations derived from law are not presumed.

➢ Governed by the Law itself
➢ Agreement of the party is not necessary (e.g. Tax payment)
➢ Not presume. Only expressly provided are enforceable
 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS
Obligations as defined:

• By Contract

o Obligations arising from contracts have that force of law between the
contracting parties and should be complied in good faith
 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS
Contract as defined:

• By Contract

Art. 1305. A contract is meeting of mind between two persons

whereby one bind himself, with respect to the other, to give
something or to render some service.

Art. 1306. The contracting parties may establish such stipulations,

clauses, terms and conditions as they may deem convenient,
provided they are not contrary to law, morals, good customs, public
order, or public policy.
 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS
Contract as defined:

• By Contract

Art. 1308. The contract must bind both contracting parties; its validity or
compliance cannot be left to the will of one of them.

Contracts are perfected by mere consent, and from that moment the
parties are bound not only to the fulfillment of what has been expressly
stipulated but also to all the consequences which, according to their
nature, may be in keeping with good faith, usage and law..
 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS
Valid Contracts

• ENFORCEABILITY - The law will enforce the provision of a valid

contract; the law will not intervene to impose more favourable
contract terms

• CHANGES - An existing contract can be altered by mutual

agreement, providing it is within the framework of the existing
contract
 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS
Terms and Conditions of Contracts

• Expressed Terms
o The conditions which are written in the contract

• Implied Terms
o Valid conditions which are not explicitly stated
o Often rely on established customs and practice
o Obvious terms, which should reasonably be applied
o e.g. contract to build staircase implies conformance to appropriate
building code
 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS
Contract Interpretation

• Contracts are a method of communication

• Use them to ensure that all parties have the same understanding
• Draft contracts in precise and unambiguous language
• Where a contract is ambiguous it will be interpreted against the party
that drafted it - rule of CONTRA PROFERENTEM
• Read your contract
• Clarify any potentially problematic areas
 Case Study: Disclaimer Clauses
A contracting firm entered into a contract with an owner to construct
three bridges over a water creek. During the bidding process, the
Contractor made a cursory inspection of the site, including berms, which
had been constructed by the owner upstream and downstream of each
bridge site.

• When contractor commenced work, water leaked through the berms.

Work was delayed and became more difficult. Contractor sued for
compensation.
 Case Study: Disclaimer Clauses
Is contractor entitled for compensation?
• Contract included the following two disclaimer clauses:

No Damage for Delay

“… the contractor shall not have any claim for compensation for damages
against the owner for any stoppage or delay from any cause whatsoever.”

Examination of Work
“The bidder is required to investigate and satisfy himself of everything and
every condition affecting the work to be performed and the labour and
material to be provided, and it is mutually agreed that submission of
tender shall be conclusive evidence that the bidder has made such an
investigation.”
 QUESTION
Is contractor entitled for compensation?

In general, when a party signs a standard form contract without reading

and understanding its terms, what will happen?

a) The court will reject the contract

b) The court will delete ambiguous terms and then enforce the contract
c) The court will delete unfair terms and then enforce the contract
d) The court will enforce the contract
e) The court will impose a penalty on the other party
 CONSTRUCTION CONTRACTS
Different types of Construction Contracts

1. Cost – Plus Contract

2. Design-Build Contract
3. Guaranteed Maximum Price Contract
4. Incentive Construction Contracts
5. Integrated Project Delivery Contract
6. Time and Materials Contract
7. Unit Price Contract
 CONSTRUCTION CONTRACTS
1. Cost – Plus Contract

Under a cost-plus contract, contractors are paid for all of their

construction-related expenses. That’s the cost part of the name.
The costs can include direct costs such as labor, materials,
supplies, etc.

They also include overhead costs such as insurance, mileage, a

portion of your office rent. Additionally, they also receive an
agreed-upon amount for the profit. That’s the “plus.”
 CONSTRUCTION CONTRACTS
2. Design-Build Contract

As the name suggests, a design-build contract addresses design

and construction costs simultaneously. Under this type of
contract, the construction process actually begins before the
final design is completed.
This process saves the owner time and money by combining
the design and construction project delivery into one contract.
It also helps to streamline communications and create
repeatable processes.
 CONSTRUCTION CONTRACTS
3. Guaranteed Maximum Price Contract

• Under the guaranteed maximum price (GMP) contract, the maximum

amount the owner will have to pay the contractor is capped.

• The GMP contract limits the amount the owner will have to pay, and
any additional expenses incurred are covered by the contractor.

• These agreements limit the cost-risk for the customer. They clearly
define the most the owner will have to pay, which makes budgeting
much easier.
 CONSTRUCTION CONTRACTS
4. Incentive Construction Contracts

• Incentive contracts provide the contractor with an agreed-upon

payment if the project is delivered by a certain date and at a specific
point.

• If the project is delivered at a lower cost and/or by the target

deadline, the contractor receives extra payment. The amount they
receive is specified in the contract and may be based on a sliding scale

• In other words, the contractor is incentivized for controlling costs and

staying on schedule.
 CONSTRUCTION CONSTRACTS
5. Integrated Project Delivery Contract

• “Integrated Project Delivery (IPD) is a delivery model for delivering

construction projects using a single contract for design and
construction with a shared risk/reward model, guaranteed costs,
waivers of liability between team members, an operating system
based on lean principles, and a collaborative culture.”.
 CONSTRUCTION CONSTRACTS
6. Lump-Sum Contract

With a lump-sum contract, the contractor delivers the project at a

preset price.

The contractor will deliver a total price for the project rather than
bidding on the deliverables. The agreement is relatively simple and
works well for projects with a well-defined scope. They’re popular
with straightforward work that doesn’t require detailed estimates.
These types of construction contracts also make administration and
cash flow estimates easy.
 CONSTRUCTION CONSTRACTS
6. Time and Materials Contract

Under a time and materials (T&M) contract, the owner pays an agreed-upon
price based on the time spent on the project, required materials, and the
included profit rate.

They may also include a mark-up for the materials if they are purchased at
wholesale rates.
 CONSTRUCTION CONSTRACTS
7. Unit Price Contract

The unit price contract details prices per unit, which may include materials,
labor, overhead, supplies, and profit.

The owner pays the contractor based on the units at agreed-upon rates. The
contract may or may not include the number of units needed to complete the
project but will likely include at least an estimate
 TYPICAL CONCEPTUAL PLAN

Value engineering is a methodology that ensures the owner is

not over-paying for quality when an equally effective, less
expensive option exists. Product quality is the ultimate prize.

The catchall term “value engineering” describes a studied

approach to reducing building costs without compromising
quality.
 TYPICAL CONCEPTUAL PLAN
Some of Basic Example of Value Engineering.
 TYPICAL CONCEPTUAL PLAN
Some of Basic Example of Value Engineering.
 TYPICAL CONCEPTUAL PLAN
Some of Basic Example of Value Engineering.
 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS
Major clauses in a Construction Contract

o CONTRACTING PARTIES
o NAME AND LOCATION OF PROJECT
o CONTRACT DURATION
o CONTRACT AMOUNT
o MANNER / TERMS OF PAYMENT
➢ Down payment
➢ Progress Billing
o RECOUPMENT OF DOWNPAYMENT (Pro-rated to Progress Billing)
o RETENTION MONEY o LIQUIDATED DAMAGES
 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS
Major clauses in a Construction Contract

Retention is money held by the Employer/Client as a safeguard against defects

which may subsequently develop and which the Contractor may fail to remedy

Retention is usually set at either 10% of the value of the works or 5% in the case
of some (usually larger) contracts. This percentage is then deducted from all the
interim payments made to the main contractor
 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS
Major clauses in a Construction Contract

Down payment – an initial payment made when something is bought on credit.

Progress Billing - Progress billings are invoices requesting payment for work
completed to date.

SWA-Repair-of-HRM-Building.xlsx

sample project.xlsx
 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS
Major clauses in a Construction Contract

Recoupment of Downpayment – the recovery or collection of money that was

previously unduly paid out.
 Contract Violation

Breach of Contract

• This occurs when either party fails to comply with their respective
obligations
o Owner’s obligation to pay for work done
o Contractor’s duty to perform the work
o Any other obligation contained in the contract document either expressly
or implied
• Does not enable injured party to avoid their own obligations
 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS
Remedies for Contract Violation

• Damage
o A non-defaulting party is entitled to damages incurred if it can be established
that:

1. There has been a breach of contract

2. The party has suffered a loss
3. The loss is as a result of the breach
 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS
Remedies for Contract Violation

• Damage
Purpose of damages is to return the injured party to the position it would be
in if the breach had not occurred i.e., damages are what is reasonably
contemplated or agreed at the time the contract is formed.

• DIRECT DAMAGES
Losses directly suffered as a result of the breach
 INTRODUCTION TO OBLIGATIONS AND
CONTRACTS

Remedies for Contract Violation

• INDIRECT DAMAGES
o Losses consequential to the breach
o Must have been reasonably foreseeable when the contract was
contemplated o Liquidated damage clauses must be genuine estimates of
potential losses
o Penalty payments not enforceable
o Liability limiting clauses enforceable
 Liquidated Damages (Construction Contract)
Liquidated Damages (Construction Contract)

• Liquidated damages are specified daily charges deducted from moneys

otherwise payable to the contractor for each day the contractor fails to meet a
milestone and/or contract completion date. Another way of looking at
liquidated damages, is that it is the price the contractor must pay per day for
working beyond the required completion dates:

• Estimated LD:
o 1/10th of 1% of the amount of the remaining works for every day of delay
beyond the required completion date
 Case on Project Delays
Liquidated Damages (Construction Contract)

A contractor was awarded a contract for a construction of a 4-storey

building in Laguna with a contract amount of 4,800,000.00 and with
duration of 180 calendar days.
During the construction process, the contractor experienced
unforeseeable situation that caused them delays in construction. At the
end of the contract duration, the contractor only accomplished 88%,
which obliged him to pay liquidated damages as stated in the contract.

• How much LD did the contractor pays the owner if they only completed
the project after 208 days?
Case on Project Delays
 RESEARCH WORK FOR DISCUSSION

1. What does it mean by substantially completed? If the

project is already on the status of substantially completed,
can it still be delayed? Can it still incur Liquidated damage?
Explain your answer.
 RESEARCH WORK FOR DISCUSSION

1. What does it mean by substantially completed? If the

project is already on the status of substantially completed,
can it still be delayed? Can it still incur Liquidated damage?
Explain your answer.
Substantial completion is the stage when a construction
project is both adequately completed and safely fit for an
owner or tenants to use for its intended purpose
At the outset of a project, the owner and contractor
typically agree on a “substantial completion date,” defined
as when the finished project will be ready to be used.

Once a project is deemed substantially complete, the meter

for potential liquidated damages stops running as long as
any remaining finishing touches don’t prevent occupancy or
usage. Perfection is not the standard, only that a project is
substantially complete and ready to be used.
 LIABILITY

Civil Engineers is required by law to be liable for the structural safety of their
projects for up to 15 years. Which means that if your house collapse within
that duration, then the civil engineer is liable under the civil code.

If a life was spared because of that incident, then the civil engineer can also be
liable under the criminal code.
CONTINUATION OF CONTRACT DOCUMENTS
AND BIDDING…..
Procurement Process in the Philippines
 Qualification of Bidders
Qualification of Bidders
• Pre-qualification documents:
o Information about the firm
➢ Owners
➢ Organization chart
➢ Company background
➢ General office location o Business licenses
➢ Business permits
➢ SEC/DTI registration documents
➢ BIR registration
➢ Contractors license (PCAB for construction)
➢ SSS/Pag-ibig registration
 Qualification of Bidders
Qualification of Bidders
o Technical capabilities
➢ Years of experience
➢ List of projects completed
➢ List of technical personnel (STE and AMO)
➢ List of equipment
➢ Experience in related projects

o Financial capabilities
➢ Financial Statements – Balance sheet and Income
statements
➢ List of accredited suppliers with credit lines
➢ Bank references with credit lines
 Bidding Information

• The bid documents are sent out with the

drawings and specifications to the qualified
bidders.

• This section of the documents contains:

o Invitation to Bid
o Instruction to Bidders
o Bid Forms
Bidding Documents.
 Invitation to Bid
The invitation to bid is a request for pricing. The owner usually prepares
it with the assistance of the designer or construction manager.
It contains:
1. The type of project.
2. The size of project
3. Location of the project
4. Bid due date
5. Start and completion dates
6. Bonds
7. Document location
8. Legal requirements
 Instruction to Bidders
The instruction to bidders is usually bound in the specification. Although
they may repeat some of the information in the invitation to bid or on the
bid form, the instruction is mostly concerned with the following:

1. Bid due date

2. Instruction about filling out the form
3. Places to indicate fees for additional work
4. Unit Prices
5. Location to deliver the bid
6. Method of awarding contracts
7. Expected dates of award and start of project
 Bid Form
The bid form is the document on which the bidder submits the price. The
form is usually prepared by the designer, with blanks left to be filled out by
the bidder.
Items may include some or all of the following:
1. Name of contractor
2. Price both in numbers and in words
3. Price breakdown for major trades, which can guide progress payments
4. Amount of bonds
5. Fees for additional work
6. Unit prices if quantities are unclear
7. Key subcontractors
8. Legal status: (Single proprietor, Corporation or Partnership)
9. Signature of authorized representative of the firm, title and date
 Contractual Information
• The contract issued with the construction documents goes to the firm
that will perform the work.

This includes:
o Agreement
o General Conditions
o Special Conditions
o Sample of Bonds
o Insurance requirements
 Contractual Information
General Conditions

• The purpose of the general conditions is to establish he legal

responsibilities, obligations, authority, and rights of all parties involved in
the project.
 Contractual Information
Special Conditions

• The special conditions are sometimes called supplementary conditions

or special provisions of the contract.

• They are intended to supplement the general conditions and are project
specific.

• Special conditions include additional owner requirements such as

provisions for prevailing wages and additional insurance requirements
 Contractual Information
Bonds
• If the contractor fails to perform in accordance with the contract, a bond
will protect the owner.

There are generally three parties involved in a construction bond:

• The investor/project owners, also known as the obligee.
• The party or parties building the project.
• The surety company that backs the bond.
 Contractual Information
There are four types of bonds commonly required in construction:

o Bid bonds - These are furnished with the bids and basically guarantee
that the contractor will enter into a contract with the owner for the price
of the bid.

o Performance bonds - These guarantee that the contractor will perform

the contract with the terms of the agreement. If the contractor goes
bankrupt or otherwise cannot complete the work, the bonding company
becomes liable for it.
 Contractual Information
Bonds
• If the contractor fails to perform in accordance with the contract, a
bond will protect the owner.

There are four types of bonds commonly required in construction:

o Payment bond - Also called labor and material bonds, these

assure the contractor will pay all bills, thus leaving the owner
unharmed by claims and liens.

• Guarantee bond - These guarantee that the contractor will

guarantee the quality of work completed within a period of one year
prior to release of retention money to the contractor.
 Contractual Information
Insurances
• To be purchased by the contractor as required by the contract to
protect the contractor against risks during the construction period.

• Types of insurances:
o Workers’ compensation - This insurance covers disability and medical
treatments for injuries resulting from accidents that occur during the
construction employment

o Comprehensive liability - This provides protection from third-party

claims. It covers injury to non-workers at the site, damage caused by
construction vehicles, damage caused by sub-contractors.
 Contractual Information
Insurances
• To be purchased by the contractor as required by the contract to protect the
contractor against risks during the construction period.

Contractor’s All Risk Insurance (CARI) - This is essentially property

insurance for the building while it is under the control of the
contractor. It covers losses resulting from fire, smoke, water,
explosions, vandalism, and theft.
 Technical Information

• The technical information is resented in two formats: drawings and

specifications.

• These two different formats (one graphic and one narrative) do

not exist independently but as a unit.
 Technical Specifications
• The technical specifications are written descriptions of the quality of the
project.
• They detail the materials, equipment, and workmanship to be incorporated
into the project
• Types of Specifications:
o Design specifications
o Performance specifications
o Proprietary specifications
o Open specifications

408274919-Construction-Specifications (1).docx
 Technical Specifications
Design Specifications
• These are also known as descriptive specifications.
• They are detailed descriptions of materials, workmanship, installation, and
erection procedures.
• The contractor’s obligation is to follow the instructions as laid out in the
specifications Performance Specifications
• These lay out the expected results of the work and leave the methods to the
contractor.
 Technical Specifications
Performance Specifications
• These lay out the expected results of the work and leave the methods to the
contractor.
• Performance may be expressed in terms of:
o Operational capacity
o Functional qualities
o Appearance
o Finish
o Color, texture, structural tolerance
• \\/
THE SELECTION OF THE CIVIL ENGINEER
 THE SELECTION OF THE CIVIL ENGINEER

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.
 THE SELECTION OF THE CIVIL ENGINEER
Basis for selection:
1. The professional and ethical reputation of the Civil Engineer and his staff
as determined-by inquires 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 Engineer should be able to assign qualified engineering staff who

will be in responsible charge puff the project and will be able to provide
and complete the required services within the time allotted.
 THE SELECTION OF THE CIVIL ENGINEER
Basis for selection:

5. The Civil Engineer should have the necessary financial and business
resources to accomplish the assignment and provide continuing
service.
 THE SELECTION OF THE CIVIL ENGINEER

Client’s Selection Committee

Within the client’s organization there should be an established administrative

policy for designating the person authorized to select or recommend selection of
Civil Engineers for specific assignments.
 QUALIFICATIONS-BASED SELECTION (QBS)
PROCEDURE
1. By invitation or by public notice, state the general nature of the project, the
services required, and request statements of qualifications and experience
from Civil Engineers who appear to be capable of meeting the project
requirements.

2. Prepare a budget for the staff time and costs that can be expected from
potential Civil Engineer prior to receipt of the RFQs or RFPs.

3. Evaluate the statements of qualifications received.

 QUALIFICATIONS-BASED SELECTION (QBS)
PROCEDURE
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.

5. On 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.
 QUALIFICATIONS-BASED SELECTION (QBS)
PROCEDURE
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.

5. On 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.
 QUALIFICATIONS-BASED SELECTION (QBS)
PROCEDURE
6. Check the recent clients of each Civil Engineer or firm to determine the quality of
their performance
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
standing, 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.

9. The compensation proposed by the Civil Engineer should be evaluated on the basis
of the clients experience and budget estimate.
 QUALIFICATIONS-BASED SELECTION (QBS)
PROCEDURE
10. If satisfactory agreement is not reached with the first Civil Engineer, the
negotiations should be terminated and the Civil Engineer or firm to be notified in
writing to that effect.

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.
 SELECTION PROCEDURE FOR “LEVEL OF
EFFORT” CONTRACTS
1. BIDDING

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.
There are many reasons why bidding for consulting Civil Engineering services
often produces unsatisfactory results for the client:

• Bidding does not recognize professional judgement, which is the key difference
between professional services and the furnishing of products.

• 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
There are many reasons why bidding for consulting Civil Engineering services
often produces unsatisfactory results for the client:

• In-depth studies and analyses by the consulting Civil Engineer are not
likely to be performed.

• 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.
 SELECTION PROCEDURE FOR “LEVEL OF
EFFORT” CONTRACTS
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.
 SELECTION PROCEDURE FOR “LEVEL OF
EFFORT” CONTRACTS
2. Two-Envelope System

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.
 CHARGES FOR CIVIL ENGINEERING SERVICES

• 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”)
 Salary Cost Times Multiplier plus Non-salary
Expense
Compensation on the basis of the salary cost time and agreed multiplier is a
frequently used method of determining charges for engineering service. With this
method, charges for civil engineering services are based mainly on direct salaries.

The salary cost times multiplier method maybe utilized as either a multiplier times
salary cost (two multiplier version) or a multiplier times direct salary cost (single
multiplier version).
 The following factors are pertinent to the
salary cost times multiplier:
1. Salary cost is defined as the “direct salaries plus the employees benefits”.
2. Multiplier which is applied to salary cost is a factor that compensates the Civil Engineering for
overhead plus 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 travelling 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
 The following factors are pertinent to the
salary cost times multiplier:
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 Rates

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 bases.
 Cost plus Fixed Fee

Under a cost plus fixed free agreement, the Civil Engineer is reimbursed for the
actual costs of all services of all services and supplies related to the project,
including:
• Salary costs
• Overhead
• Direct non-salary expenses
• Fixed free, 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 cost for
salaries, overhead and non-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 the other costs of such services, the cost of land and right-
of-way, and legal and administrative expenses.
.
 Schedule of Minimum Basic Fee
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

minimum compensation corresponding to 10% more than the minimum
wage prevailing in the region as basis monthly salary corresponding to
appropriate entry position provided by the Civil Engineers Service
Commission.
.
 Schedule of Minimum Basic Fee
Principles to observe:

3. A Civil Engineers 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.
TOTAL PROJECT COST
 TOTAL PROJECT COST

Cost is typically the expense incurred for making a product or service

that is sold by a company.

Price is the amount a customer is willing to pay for a product or

service. The cost of producing a product has a direct impact on both
the price of the product and the profit earned from its sale.

A unit cost is a total expenditure incurred by a company to produce,

store, and sell one unit of a particular product or service.
TOTAL PROJECT COST
 TOTAL PROJECT COST
Direct costs are the expenses a business incurs that can be directly
tied to the production of a good or the provision of a service.

Indirect costs are the costs of going to market with a product or

service that cannot be directly traced to the production of a good or
the provision of a service.

Overhead costs refer to all indirect expenses of running a business.

These ongoing payments support your business but are not directly
linked to creating a product or service.
 TOTAL PROJECT COST
Markup is the difference between a product's selling price and cost
as a percentage of the cost.
 TOTAL PROJECT COST
Probable total cost is a major concern of the client throughout the
planning design, and construction phases of a project. The probable
total capital cost, often used to establish budgets for a typical
project, is made up of:
• Professional engineering costs
• Construction cost
• Legal and land costs
• Owner’s costs, including project administration, staffing,
financing and other overhead
• Contingency allowance for unknowns

.
 TOTAL PROJECT COST
PROFESSIONAL ENGINEERING COSTS

A Civil Engineer is often engaged to make a study and to render a

planning report on the contemplated project, including alternative
solutions, layouts and locations along with initial estimates of the
probable project cost.

The study and report phase may include the cost for field or traffic
surveys, planning analyses, geotechnical explorations and analyses,
in addition, to the direct engineering costs.

.
 TOTAL PROJECT COST
CONSTRUCTION COSTS

Construction cost is 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 administrative expenses of the agency. The
estimated construction cost must be approved by the client before the
invitation to submit technical proposal is issued

.
 TOTAL PROJECT COST
CONTIGENCY ALLOWANCE

To provide for intangible costs, contingencies should routinely be added to

the basic cost estimate. It is common practice to add 20% or more to the
estimated probable total project cost at the completion of the study end
report phase, reducing this to perhaps 10% at the completion of final design
and perhaps to 5% when the construction bids become known.

.
 TOTAL PROJECT COST
CONTIGENCY ALLOWANCE

To provide for intangible costs, contingencies should routinely be added to

the basic cost estimate. It is common practice to add 20% or more to the
estimated probable total project cost at the completion of the study end
report phase, reducing this to perhaps 10% at the completion of final design
and perhaps to 5% when the construction bids become known.

.
Project Design Phases
• Pre-design Phases
In the early project development phases, a Facility may need the services of
a design professional for project analyses and feasibility. The Professional
Services Agreement is used for these services.

If the same design professional is commissioned for project design, then the
advertising, screening, and selection procedures must be followed and an
Executive Design Professional Agreement must be executed prior to
beginning of Schematic Design Phase.
Project Design Phases
• Design development Phases
Project Design Phases
• Pre-design Phases
Analogous Estimating?
Project Design Phases
• Schematic Design Phases

Schematic design is the first phase of basic services for project

design. At this stage in a project, the design professional describes
the project three-dimensionally.

A range of alternative design concepts are explored to define the

character of the completed project and an optimum realization of
the project program
Project Design Phases
• Design development Phases
During the design development phase, the project design is
further refined. Plan arrangements, specific space
accommodations, equipment and furnishings, building design,
materials and colors, and complete definitions of all systems
serving the project are developed.

All design decisions are completed during this phase in order to

prepare the subsequent construction documents.
 Project Design Phases
• Design development Phases
If the total project cost is $5 million or greater, the project must undergo a
value engineering review at the end of design development phase.

Modifications or changes resulting from value engineering and design

review sessions must be incorporated into schematic design documents
before University approval is given to proceed to construction documents
phase.
 Project Design Phases
• Construction Phases
Construction document phase consists of preparation of drawings and
specifications establishing the requirements for the construction of the
project. The construction documents describe the quality, configuration, size,
and relationship of all components to be incorporated into the project.
Construction documents must be consistent with the project program, the
construction budget, and the project schedule.
Project Design Phases
• Design development Phases
What are Shop Drawings?
Shop drawings (also known as fabrication drawings) are detailed plans that
translate design intent. They provide fabricators with the information
necessary to manufacture, fabricate, assemble and install all the components
of a structure. This includes materials and dimensions required, as well as
explanations for assembly, installation and erection.
CONTRACTS IN PROJECT DELIVERY
SYSTEM
 CONTRACTS IN PROJECT DELIVERY SYSTEM
Clients are faced with the many choices. They must choose the delivery system,
procurement method and contract format most appropriate for each project
PROJECT DELIVERY SYSTEM
PROJECT DELIVERY SYSTEM
PROJECT DELIVERY SYSTEM
PROJECT DELIVERY SYSTEM
PROJECT DELIVERY SYSTEM
PROJECT DELIVERY SYSTEM
 CE LAWS – QUIZ NO 2
1. From the discussed services of a Civil Engineer, discuss and
propose a suitable type of contract, insurance, bonds and
delivery system for that specific service or project.

2. You can create your own scenario and apply the contract and
law that we discussed

3. Format. Minumun of 2 pages and 5 types of services/project

 CE LAWS – PROJECT
1. You will be assigned with a specific case study. Discuss the following
• Unethical issues
• Contract used
• Compensation
• Delivery System, etc
• Procurement
• Law
2. Propose possible actions.
I Abstract
II Introduction
III Discussion
IV Recommendation and Conclusion
CASE STUDY