sorry...
When we do fee estimates for a client on a cost+fixed fee contract, we use an average company rate (includes people in NY making much more than say me in Georgia)for each engineer. So the rates we use are a little higher than what the people in our office make, so for the $50/hour we might use for a senior engineer, that $50 goes into the "spreadsheet" with the # of hours associated with the task. But in our office the guy actually doing the work might only make $30/ hour. We can only bill what they actually make, the $30 / hour.
What it does is give us more hours that we can charge to that task, but the total contract amount stays the same.
Alot of times govt's use the cost + fixed fee, for us, it would be the "Cost" $30/hour plus most DOT's fixed fee is around 10% to 12%. So we can at most only make a 12% profit on what the emplyee is getting billed out at. Usually we build into the cost an overhead rate which is also audited and that is reimbursed as well.
I have had one lump sum project so far, where we could bill a "rate table" and say we had 5 engineers working who make an average of $50/hour, and thats what we would invoice, we consider them to be "gravy trains" because if you are efficient you can make above the 12% profit, off course if your not, then you ultimatly dont get to be a PM anymore :true:
