COST OF PROFESSIONAL SERVICES1. FORMULA
2. HOURLY BILLING RATES
Hourly billing rates are comprised of three basic elements in a Professional Practice; direct costs, overhead costs and profit. For purpose of uniformity and practical use, they are based on actual hourly payroll costs with a payroll factor multiplier to cost overhead costs and profit.2.1 Direct Costs
This category of cost represents payroll costs and disbursements incurred by staff while engaged on the assignment.
2.2 Overhead Costs
This category of cost relates to the general operations and maintenance of a Consultant's practice and include:
The balance after direct costs and overhead costs are deducted from total revenue
represents the before-tax, before dividend and before-bonus profit. The level of profit on
a specific project should reflect the Consultant's exposure to risk on the project. The
Client should expect competent and efficient services at a fee that provides an
appropriate profit to the Consultant.
The payroll factor multiplier to cover overhead costs and profit will vary according to conditions which affect the efficiency of the organization or which affect overhead costs directly. Following are guidelines for selecting an appropriate Payroll Factor:
4. TYPICAL HOURLY BILLING RATES BASED ON APEGGA SALARY SURVEY, JUNE 1997.
Abstracted from APEGGA publication titled "Value of Professional Services".
** Principal is defined as a professional engineer who undertakes to provide responsible direction, both technically and organizationally, to the professional practice performed by a Consultant and who represents that professional practice to Clients.
CONCRETE, ASPHALT, SOILS, MASONRY, METALS AND PLASTIC MATERIALS
[ Home | Section 1 | Section 2 | Section 3 | Section 4 ]
[ Appendix A | Appendix B | Appendix C | Appendix D ]