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<br />CONSULTING ENGINEERING <br /> <br />27 <br /> <br />His applicable payroll records should be open for inspection or audit by the <br />Client. Receipts and other documents should be provided to substantiate all <br />expenditures at least once a month. . <br />Payments on these bases should be made to the Consulting Engineer at stated <br />times during the execution of the work, within a reasonable period of billing, and <br />should be clearly stated in the agreement. <br />Although it was previously stated (page 24) that the salary cost-times-a- <br />multiplier plus direct non-salary expenses method is particularly applicable to <br />assignments where it is not possible to state accurately the scope of the work, this <br />basis of compensation has been widely used in recent years for a great variety of <br />projects including those where the scope is fairly well defined. Indeed, it may be <br />said that this method, together with the fixed lump sum payment have become <br />the two most common bases of compensation. <br /> <br />4. Cost Plus a FIxed Payment <br /> <br />For many engineering projects, the Consulting Engineer is required to start <br />work before the cost and detailed scope of the project can be accurately deter- <br />mined. Such indeterminate projects generally result from requirements for speed, <br />special problems which require studies, research or experimental work, prepara- <br />tion of estimates for alternate types of construction, and other requirements. The <br />contract, however, should carry a general description or statement of the scope of <br />work contemplated - that is, the number, size, and character of buildings or <br />other facilities, the extent of utilities, and other items. <br />For this type of project, the cost-plus-fixed-payment method offers a satisfac- <br />tory basis for performing the service. One of the. virtues of this method is that it <br />eliminates any suspicion that the costs have been allowed to grow in order to <br />increase the Engineer's fee. Under the cost-plus-fixed-payment contracts, the <br />Consulting Engineer is reimbursed for the actual costs of all his services and <br />supplies, including the following: <br />a. Salary-Cost. As previously defined. <br />b. Overhead. As previonsly defined. The Consulting Engineer should be <br />prepared to support the bases for his overhead charges. <br />c. Direct Non-salary Expenses. As previously defined. <br />d. Fixed Payment. In addition to reimbursement for costs included in a, b and <br />c above, the Consulting Engineer is paid a fixed amount for contingencies, <br />interest on invested capital, readiness to serve, and profit. The fixed pay- <br />ment varies with the scope of the engineering services involved. This may <br />be an amount based on the estimated cost of the project at the time the <br />Consulting Engineer is engaged. The fixed payment usually ranges from <br />25% of the direct cost (items a, b, and c above) for projects starting at <br />$100,000 construction cost io as low as 10% of these costs for very large <br />projects of the order of $100 million. The cost-plus-a-fixed payment basis <br />of compensation requires, as a prerequisite to equitable negotiation, that <br />the general scope of the project itself be fairly well defined, and tbat the <br />