Cebu Technological University – Main Campus

M.J. Cuenco Ave., R. Palma St., Cebu City

CE 525
CE LAWS, CONTRACTS,
SPECIFICATIONS &
ETHICS

GROUP 1

Engr. Lawrence Orjalesa

Instructor
Fundamental Principles
Civil Engineers uphold and advance the integrity, honor and dignity of the civil
engineering profession by:
Using their knowledge and skill for the enhancement of human welfare and the
environment; being honest and impartial and serving with fidelity the public, their
employers/employees and client; striving to increase the competence and
prestige of the civil engineering profession and supporting the professional and
technical societies of their disciplines.
Fundamental Canons
1. Civil Engineers shall hold the paramount the safety, health and welfare of
the public and shall strive to comply with the principles of sustainable
development in the performance of their duties.
2. Civil Engineers shall perform services only in areas of their competence.
3. Civil Engineers shall issue public statements only in an objective and
truthful manner.
4. Civil Engineers shall act in professional matters for each employer or client
as faithful agents or trustees, and shall avoid conflicts of interest.
5. Civil Engineers shall build their professional reputation on the merit of their
services and shall not compete unfairly with others.
6. Civil Engineers shall act in such a manner as to uphold and enhance the
honor, integrity, and dignity of the civil engineering profession.
7. Civil Engineers shall continue their professional development throughout
their careers, and shall provide opportunities for the professional
development of those civil engineers under their supervision.
Section I. THE PRACTICE OF CIVIL ENGINEERING
1.1 Professional Responsibility
 The standard of practice is for civil engineers to be given responsibility for
studying, conceiving, designing, observing construction and assisting in the
programming for operating and maintaining engineering works.
 Civil engineers must always strive to maintain the highest standard for
Ethical Professional Practice in their dealing with client employers,
employees, competitors and the community.

1.2 Client-Civil Engineer Relationship

1.2.1 OBLIGATIONS OF THE CIVIL ENGINEER
a. shall perform scope of the services as stated in section 2.
b. shall exercise reasonable skills, care and diligence in his performance.
c. shall act independently
d. authorized to act as a client’s faithful agent.
1.2.2 OBLIGATIONS OF THE CLIENT
a. shall pay the civil engineer for his services
b. shall provide civil engineer within reasonable time
c. shall cooperate with the civil engineer
d. shall arrange for the provision of services from other professionals and
bear all cost.
1.2.3 LIABILITY OF THE CIVIL ENGINEER AND THE CLIENT
a. Civil engineer shall only be liable to pay damages to the client arising out
of or in connection with their agreement if breach of duty of care is established
against the civil engineer.
b. the client shall be liable to pay the civil engineer for the damages if
a breach of the client's duty to the civil engineer is established against the
client.
1.3 CIVIL ENGINEERING SERVICES
 Design, consultation and advice
 Feasibility studies
 Field investigation and engineering data collection
  Environmental assessment, impact statements or engineering reports
 Opinions of probable construction cost
 Preliminary and final designs, drawings, specifications and construction
bidding documents
 Assistance in securing construction bids and in awarding contracts.
 Construction administration and observations
 Arrangements for or performance of testing of materials and equipment
 Assistance in start-up, assessment of capacity, and operation of facilities
 Preparation of operation and maintenance manuals
 Appraisals and rate studies
 Value engineering
 Expert testimony
 Assessment of risks
 Structural remediation or rehabilitation
 Project management and controls
 Provision of supplemental temporary staff
 teaching

1.4 SPECIALIZATION IN CIVIL ENGINEERING

The PICE recognizes specializations in the fields of structural engineering,
geotechnical engineering, water engineering, transportation engineering and
construction management and engineering.

1.5 PROFESSIONAL PRACTICE OF FOREIGN CIVIL ENGINEERS

 The laws of the foreigner’s state or country allow the citizens of the
Philippines to practice civil engineering on the same basis and grant the
same privileges as those enjoyed by the subjects or citizens of such foreign
state or country.
 Allowed under international agreement.
  Consultants to be engaged in foreign-funded, joint venture or foreign-
assisted projects of the government.
 Employees of Philippine or foreign private institutions pursuant to law.

Civil engineers who were former citizens of the Philippines, who had been
registered and issued a certificate of registration and a professional identification
card prior to their naturalization as foreign citizens, and who while in the country
on a visit, sojourn or a permanent residence, desire to practice their profession.

CLASSIFICATION OF ENGINEERING SERVICES

THE TYPES OF INFRASTRUCTURE UNDER THE DOMAIN OF CIVIL ENGINEERING

PURSUANT TO RA 544, AS AMENDED, INCLUDE:

1. Streets, bridges, highways and railroads

2. Airports and hangers
3. Port works, canals, river and shore improvements, and dry docks
4. Buildings
5. Fixed structures for irrigation, flood protection, drainage supply, and sewerage
works

CATEGORIES OF ENGINEERING SERVICES

Consultation, Research, Investigation, and Report

Preliminary and Feasibility Investigation and Reports

 Authorization of a capital project

 Operating cost
 Life-cycle cost
 Financing consideration
 Expected revenues

 Extensive Investigations and Analyses of conditions

 Impact on the environment
 Sustainable development
  Comparison of Possible Plans

Planning Studies
 It includes the broad areas of developing the engineering requirements of
master plans for long range capital improvement programs
 Preparation of preliminary engineering of land development

Appraisal, Valuations, and Rate Studies

These services may include investigations and analyses of:
 Capital Cost
 Operating Cost
 Overhead Cost
 Costs of Financing
 Revenues needed

Assistance in Financial Matters

 The civil engineer may be engaged by Client who is planning to issue bonds,
particularly revenue bonds, to finance capital project.

Direct Personal Services

 Assistance in preparation for legal proceedings.
 Appearance before courts and commissions.
 Investigation of technical matters.

Research and Development

 Research in specialized investigation and gathering data.
 Development of new construction materials.

CONSTRUCTION SERVICES
 A registered Civil Engineer may engage in construction contracting after
being licensed as a contractor by the Contractors Accreditation Board.
 A registered Civil Engineer may provide the services of a supporting
technical employee as required of a construction company.
  A Civil engineer may be employed as a construction engineer, resident Civil
Engineer, Project engineer, Quality Control Engineer, Cost Engineer or
Engineer Inspector in a project.
 Only registered Civil Engineers can take charge of any structure mentioned
in Section 2, RA 554.

DESIGN SERVICES
STANDARD PHASES OF A CONSTRUCTION PROJECT

1. STUDY AND REPORT PHASE

 Reviewing of available data
 Identifying and analyzing of governmental jurisdiction
 Providing the analyses of the client needs
o Economic analysis
o Project concepts

2. PRELIMINARY DESIGN PHASE

 Consulting and advising of the client.
 Preparing preliminary design documents.
 Present the project to the public.
 Providing periodic status reports.

3. FINAL DESIGN PHASE

 Preparation of construction drawings and specifications.
 Preparation of right-of-way and easement documents.
 Furnishing the necessary engineering data.
 Preparation of the construction documents for the review of the client.

4. BIDDING OR NEGOTIATING PHASE

 Assisting of the client in advertising or obtaining bids.
 Assisting of the client in choosing the contractors.
 Preparing a review of all the bidders.

5. CONSTRUCTION PHASE
 Reviewing of test reports.
 Visiting the project site.
  Providing a full-time resident project representative.
 Making recommendations and sketches to resolve problems.

6. OPERATION PHASE
 Assisting the client in the start-up and operation of the project, including
periodic inspection.

SPECIAL SERVICES
 Geotechnical Engineering
 Special studies, tests and process determinations.
 Engineering Surveys.
 Inspection of materials
 Providing additional copies of reports.
 Valuing engineering
 Redesign
 Client’s expert witness in litigation in connection with the project.
 Final investigations
 Preparation of environmental assessment.
 Assisting the client in choosing the workers.
 Assessment of completed project’s ability to meet its design intent.

ENGINEERING SUPPORT SERVICES

 This involves engineering support services in general civil engineering
practice.
o It may involve:
 Drafting
 Land and Construction Surveying
 Data gathering activities

ACADEMIC SERVICES
 Involves full or part time teaching or training of prospective professionals
 Upgrading of knowledge and skill of fellow professionals
 Conduction of tutorial and refreshers
 Writing technical articles
 Serving as a resource speaker
THE SELECTION OF THE CIVIL ENGINEER
General
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.
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.
5. The Civil Engineer should have the necessary financial and
business resources to accomplish the assignment and provide
continuing service.

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.
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.
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.

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.
 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.

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. 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

Charges for Civil Engineering Services are usually computed using one of the six
methods:
1. Salary Cost Times Multiplier Plus Direct Non-salary Expense
(“Reimbursable”)
2. Hourly Billing Rates Plus Reimbursable.
3. Per Diem
4. Cost Plus Fixed Fee (“CPFF”)
5. Fixed Price
6. 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 direct salary times multiplier or as it is frequently called the direct labor times
multiplier version is very similar to the salary cost times the multiplier with the
exception that is applies a single multiplier to unburdened direct labor cost, i.e.,
direct salaries without employees benefits, overhead, and a margin for
contingencies, risk, and profit.

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
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.
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

GENERAL
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

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.

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.

LEGAL, LAND, ADMINSTRATION STAFFING AND FINANCIAL COSTS

These costs, which include audits, the costs of issuing bonds, land costs and
interest for borrowed money during construction, are part of the probable total
project cost and can best be estimated in cooperation with the client because
they are usually outside the knowledge and control of the Civil Engineer.
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.

SUMMARY
Estimate of probable total project cost should be periodically revised by the
engineers as the design moves forward and more information becomes known.
The client is normally responsible for providing estimates of those costs which
may lie outside the Civil Engineer’s knowledge or expertise, such as those in the
legal, land, administrative and financial areas.