Central Engineering

Engineering and Machine Shop Costing


 
 Engineering and Machine Shop Services Costing Overview:

Like other SAO overhead rates, the engineering burden rate is set every other year for two years at a time. It is calculated as a ratio of the estimated annual operating costs of the department to the value of the projected requirements for engineering services. Operating costs include: rent, communications, management and support staff salaries, supplies, maintenance of engineering lab space and computer systems, recruitment and relocation expenses, tuition reimbursement, etc.; plus CE's assessed share of the operating expenses of SAO overhead departments including Human Resources, Financial Management, and the Computation Facility.

The engineering burden rate, and its component base and expenses, are subject to the same monitoring, audit, and final approval by the external auditor as are the other SAO overhead rates. For fiscal year 2017 and 2018, the following are the rates applied:

            Personal Leave Rate: 22.3%
            Fringe Benefits Rate: 26%
            Fringe Benefits Rate Intermittent Appointees: 8.4%
            Engineering Overhead Rate: 28.7%
            General and Administrative Rate: 13.5%
            Management fee 3%

The costs of engineering services are calculated by charging an hourly rate for the actual time staff spend working on a project. For staff who are employees, the rate consists of the employee's hourly salary, multiplied by the personal leave rate, then by the fringe benefits rate, then by the CE overhead rate, then by the General and Administrative rate (this consists of CE's assessed share of the operating expenses of SAO overhead departments including Human Resources, Financial Management, and the Computation Facility). After that, the figure would be multiplied by the 3% management fee for a final dollar figure.

Example 1: Employee A earns $50 per hour: $50 x (1+22.3%) = $61.15 x (1+26.0%) = $77.05 x (1+28.7%) = $99.16 x (1+13.5%) = $112.55 x (1+3%) = $115.93

Occasionally, CE supplements its staff with technical services contractors. The rate for contractors' time would include the hourly rate paid to their employing agency plus the CE overhead rate.

Example 2: Contractor B earns $50 per hour: $50 x (1+28.7%) = $64.25 x (1+13.5%) = $72.92 x (1+3%) = $75.10

Additionally, if you require the Machine Shop to procure materials for you, the cost of those materials plus the CE overhead rate for that base cost would be billed to you monthly.


The biennial rate negotiations take time and effort and it is not uncommon to receive the two year rates after the first year of the cycle has commenced. When this occurs, we use the previous year’s rate and invoice as normal. Once we receive the new rates, we would issue a corrected invoice.


After determining your needs we can develop an estimate and a statement of work. Then, a proposal would be drafted from SAO to your company for your review and acceptance. We are a non-profit organization and your company will only be charged for actuals.

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