Contracts Between an Owner and an Engineering Consultancy Office
This contract relies on various forms of fixed standards, with the Engineering Office supplying the detailed description of the services to be provided. Typically, in businesses of the European countries and in Arab countries, the estimated value is within seven per cent (7%) of the project’s total costs for smaller consultancies to within five per cent (5%) for larger corporate entities. The Engineers Association has identified these percentages based on project size. If the contract is for design services only, or design services plus some onsite supervisory activity, there may be additional fees charged for use of facilities, transportation and other supervisory expenses. In some projects, supervision may be charged as a fixed fee rather than as a percentage.
Often in big projects, this type of contract is based on the cost of man-hours employed. The contract specifies the cost per hour of the lead engineer, senior, junior engineers, drafting, and others. In the project as a whole, the overall cost is determined by identifying the number of hours of each group’s work. The price is based on an hourly rate in which any administrative, insurance, tax, or other expenses are incorporated.
Table 7.1 Cost, time, and resource estimate sheet
In this section the scope of work will he written in summary but should be precise.
Table 7.1 (cont.) Cost, time, and resource estimate sheet
The benefit for the engineering office from contracting on this basis of man-hours emerges when the owner requests changing any part of the study design or adding some other piece that was not in the scope of work delivered originally to the engineering office. Since the office provides a number of hours for each member, and the rate is already a known quantity, the additional cost can be calculated easily.