1

Page 1 of 11

2 1 STANDARD GUIDELINES ON PROFESSIONAL CONSULTANCY/ CONSULTING 2 SERVICES 3 4FOREWORD 5 6On March 20, 1980, then President Ferdinand E. Marcos, recognizing the role of the 7members of accredited professional organizations in nation building and in the pursuit of 8national goals, issued Letter of Instruction No. 1000 which directs all government agencies 9and any of its instrumentalities to give priority to members of the accredited professional 10organizations in the hiring of its employees and in the engagement of professional services. 11This amply demonstrated the Presidents confidence in the capabilities of Filipino 12professionals. 13 14Consequent to this, the Philippine Federation of Professional Associations (PFPA), the 15umbrella organization of all professional associations accredited by the Professional 16Regulation Commission (PRC), and the Philippine Technological Council (PTC), whose 17membership consists of fourteen (14) accredited technological associations at that time, 18initiated the preparation of a document entitled Standard Guidelines on 19Consultancy/Consulting Services. This document, which contained a comprehensive 20coverage of provisions in consonance with national policies and compatible with norms of 21accepted professional practices, was seen as a much needed vehicle by which the Filipino 22professionals can accelerate their contribution to national development. 23 24Three decades hence, it has become urgent to re-visit this document in the light of the influx 25of foreign consultants and the proliferation of professionals comporting themselves as 26consultants even without the adequate skills, training, and experience required for 27rendering competent services. This necessity does not spring only from narrow professional 28needs but more significantly it underscores the need for utilizing qualified Filipino 29professionals in the comprehensive development of our country. 30 31This new version of the Standard Guidelines on Consultancy/ Consulting/ Services 32embodies relevant provisions of professional codes of the various professional organizations 33accredited by the Professional Regulation Commission, national policies, principles and 34regulations governing professional practices as well as the basic terms and conditions for 35the engagement of Professional Consultants. 36 37All government agencies and instrumentalities, government-owned or controlled 38corporations and institutions, as well as those in the private sector and other non39government organizations adopt these Standard Guidelines on Consulting/Consultancy 40Services in the commissioning of consultants and in the conceptualization, development, 41implementation, monitoring and evaluation of projects that lend and/or lead to the overall 42national, regional and local development. 43 44 45 I. RATIONALE 46 47 The national government, through its various departments, agencies, instrumentalities, 48 institutions and entities, as well as the private sector and non-government organizations 49 commission or engage the services of consultants to achieve maximum efficiency, 50 economy and expediency in the preparation of program/project concepts, feasibility 51 studies, project evaluations, design and plan preparation, management and other related 52 activities. 53 54 Moreover, one important strategy for strengthening national capability in the various 55 fields of the consulting services is the full utilization of local expertise, which in turn

1 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 II. 49 50 51 52 53 54 55 56

Page 2 of 11 generates conditions for increased nationally produced scientific and technological knowledge. In recognition of the urgent need to set the general standards on professional consultancy services in the country, to enhance the participation of Filipino professionals in national development and to protect their rights in accordance with existing laws, policies, rules and regulations, the Council for the Built and Natural Environments (CBNE) and the Philippine Technological Council (PTC) spearheaded the formulation of these standard guidelines for the practice of professional consulting/consultancy services all professions under the Professional Regulation Commission. The full utilization of the services of Filipino professional consultants can minimize the importation of foreign expertise which entails considerable expenditure of hard-earned foreign exchange. Such importation also erodes the essence of maintaining an educational system geared towards the expansion of the countrys professional capability. For this reason, the displacement of Filipino Consultants by foreign consultants is irrational. The inflow of foreign consultants is often justified on the ground of technology transfer. In this sense, technology transfer is based on the assumption that the particular kind of technology involved is not yet available in this country or is inadequate in relation to the need for it. The problem presented by the dominant presence of foreign consultants in the Philippines, however, is precisely defined by the fact that the technology they bring in is already available in such adequate proportion that foreign consultants compete in terms adverse to Filipino Consultants and in fact displace Filipino professionals from participation in significant development projects. The disproportionate inflow versus outflow of expertise is becoming more and more serious. This means a tremendous loss to the country in terms of educational costs. More significant, however, is the fact that the country is deprived of the emigrants contributions to the countrys comprehensive development. The professional competence of Filipino Consultants is well established and adequate to meet the countrys requirements. In fact, in many cases, foreign consultants depend on the expertise and information furnished by Filipino Consultants. The primary purpose of these Guidelines is to complement existing laws governing the practice of the professions as defined in the enabling laws regulating the practice of various professions, and other pertinent laws such as. Presidential Decree 49 otherwise known as the Protection of Intellectual Property, etc., or as defined by the Professional Code ofEthics, Standards of Professional Practice and other laws, policies, rules and regulations approved and implemented by the Professional Regulation Commission. Therefore nothing in these Guidelines or the implementing rules that may supplement these Guidelines shall negate said existing laws, policies, rules and regulations, and Codes of Ethics and Standard of Practice. OBJECTIVES II.1 Standards and parameters to which professionals, who offer and/or make their services available, are adhered to in order to develop and nurture the competencies, credibility and integrity of professional consultants in their respective fields/areas of specialization. II.2 Scope, type, and nature of consulting/ consultancy services that only professional consultants shall be allowed to extend or perform for the government, private sector

1 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
III. 23

Page 3 of 11 and other civil society organizations, relative to or in connection with any aspect of comprehensive development at all levels national, regional and/or local, are defined. II.3 Compliance with appropriate advisories and guidelines on the engagement of foreign consultants for projects and services in the country, promulgated and/or prescribed by concerned professional organizations duly accredited by the professional regulation commission as a measure to stimulate the local market for Filipino professional consultants and to protect and level the field of professional practice between and among local and foreign consultants. II.4 Application by Filipino professionals of their familiarity with local physical, social (e.g., educational, health, historical, cultural), economic, business, , and institutional (e.g., political, governance) and environmental conditions in relation to the practice of their respective professions towards sustainable and comprehensive development. II.5 A nurturing environment that will encourage Filipino professional consultants to practice and/or extend their services in the country rather than abroad and propel them to the same level as, if not to greater heights than their counterparts in the global market.

22
DECLARATION OF POLICY III.1 All PRC-accredited professional organizations are committed to submit to, advocate and steadfastly uphold the ideals enunciated under Section 14, Article XII of the 1987 Constitution of the Philippines which states that, The sustained development of a reservoir of national talents consisting of Filipino scientists, entrepreneurs, professionals, managers, high-level technical manpower and skilled workers and craftsmen in all fields shall be promoted by the State. The State shall encourage appropriate technology and regulate its transfer for the national benefit. The practice of all professions in the

24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 IV. 42 43

Philippines shall be limited to Filipino citizens, save in cases prescribed by law.... (Emphasis and underscoring supplied)
III.2 It shall be mandatory upon all professionals to strictly adhere to their respective policies and standards of professional practice within the framework and in support of the constitutional provision stated herein, including and most especially within the bounds of the scope of practice of each profession as defined by their respective charters.

DEFINITION OF TERMS 1. Associate Consultant 2. Comprehensive Development (TO BE DEFINED) refers to the holistic and progressive growth and advancement of a community, region and nation inclusive of their respective economic, social, physical, environmental and institutional sectors.

1 2 1
3. Consortium

Page 4 of 11

refers to a coalition of purely Filipino professional consultants or consulting firm/s; or Filipino professional consultants or consulting firm/s in collaboration with foreign professional consultant/s and/or foreign consulting firm/s authorized to render consulting/ consultancy services, as herein defined. means the actual total cost of the project excluding fees for professional services, the cost of land, right-of-way, and the legal and the administrative expenses of the client. (see Associate Consultant) (see Filipino Professional Consultant) (see Foreign Professional Consultant) (see Lead Consultant) (see Professional Consultant) means a covenant or understanding entered into between a professional consultant or consulting/ consultancy firm and an owner/ client, whether in government, private sector or non-government organization that provides such terms and conditions mutually agreed upon by both parties, under which specific work, study or joint venture requiring special or technical skills and expertise shall be undertaken. refers to a corporation, association, group or partnership duly registered with the Securities and Exchange Commission (SEC) or other concerned government regulatory agency or instrumentality; or a single proprietorship duly registered with the Department of Trade and Industry (DTI) to perform consulting/ consultancy services as herein defined. (see Construction Cost) (see Salary Cost) refer to expenses that may include the following: a) Living and travelling expenses of employees, partners, and principals when away from the home office on business connected with the project.

4. Construction Cost

5. Consultant, Associate 6. Consultant, Filipino Professional 7. Consultant, Foreign 8. Consultant, Lead 9. Consultant, Professional 10. Consulting/Consultancy Agreement

11. Consulting/Consultancy Firm

12. Cost, Construction 13. Cost, Salary 14. Direct Costs or Reimbursable Expenses

1 2

Page 5 of 11 b) Identifiable communication expenses, such as longdistance telephone, telegraph, internet, short messaging system (SMS), cable, express charge, postage, etc.. c) Services directly applicable to the work, such as special legal and accounting expenses, computer rental and programming costs, special consultants, borings, laboratory charges, commercial printing and bindings and similar costs that are not applicable to general overhead. d) Identifiable expenses for supplies and materials charged to the project at hand, as distinguished from such supplies and expenses applicable to two or more projects. e) Identifiable reproduction costs applicable to the work, such as blue-printing, mimeographing, printing, etc. These also include expenses, which seldom can be determined in advance with any invoice costs, plus a service charge of 10% to 15%, or as may be mutually agreed upon by the professional consultant and his/her client. 15. Filipino Professional Consultant 16. Foreign Professional Consultant refers to a Filipino citizen, who possesses the qualifications of a Professional Consultant as herein defined. refers to an individual, not a citizen of the Philippines, who: a) satisfies the definition of a professional consultant as herein provided; b) has acquired a permit to work and/ or do business in the Philippines in accordance with the rules and regulations of the PRC Guidelines for the Registration of Foreign Professionals (Res. No. 98547) ; c) is allowed by the Bureau of Immigration and other concerned regulatory agencies and/or instrumentalities of government to practice the regulated professions in the Philippines, under pertinent laws, rules and regulations; and d) is a registered professional in his/her own country of origin. (TO BE DEFINED) refers to a factor which compensates the Professional Consultant for the following items: a) Overhead costs of the office b) Fringe benefits and social charges c) Fee for contingencies,

15. Lead Consultant 16. Multiplier

1 2
d) Interest on capital reserves and e) Profit.

Page 6 of 11

The size of the multiplier varies according to the types of work, the organization and experience of the Professional Consultant and the geographic area in which his/her office is located. 16. Overhead refers to the following: a) provisions for office, light, air conditioning, and similar items for working space, b) depreciation allowances or rental of furniture, equipment and instruments, c) automobile expenses, d) office supplies e) taxes and insurances other than those included as salary cost f) library and periodical expenses and other means of keeping abreast with new developments and/or technologies g) executive, administrative, accounting, legal, stenographic, and clerical salaries and expenses, other than those that are identifiable as salaries including reimbursable non-salary expenses, plus salaries or imputed salaries of partners and principals to the extent that they perform general executive and administrative services as distinguished from technical or advisory services directly applicable to particular projects. These services and expenses, essential to the conduct of the business, includes preliminary arrangements for new projects or assignments, and interest on borrowed capital. h) business development expenses, including salaries of principals and salary costs of employees so engaged. i) provision for loss of productive time of technical employees between assignments, and for time of principals and employees on public interest assignments. 17. Professional Consultant refers to any person, whether natural or juridical, duly licensed, registered and/or accredited by the Professional Regulation Commission, and certified by the concerned PRC-accredited ofessional organization as one who possesses the appropriate skills training, and relevant experience needed to perform and/or render the service/s required.

1 2 1
18. Professional Consulting /Consultancy Service

Page 7 of 11

means the rendering by a professional consultant or consulting/consultancy firm, of independent advice, extension of technical assistance and services, as well as undertaking of activities, requiring appropriate knowledge, skills, training and experience, recognized competence, integrity, and/or financial and logistical capability. (see Direct Costs) means the cost of salaries (including sick leave, vacation, holiday and incentive pay applicable thereto) of professional consultants for the time directly chargeable to the projects; plus excise, and payroll taxes; and contributions for social security and insurance benefits.

19. Reimbursable Expenses 20. Salary Cost

2 3 V. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 VI. 29 30 31 32 33 34 35 36 37 38

SCOPE OF PROFESSIONAL CONSULTANCY/CONSULTING SERVICES The scope of professional consultancy shall be defined and determined in accordance with the charter, by-laws, policies, rules and regulations of the concerned PRCaccredited professional organization to which a professional consultant belongs as a member in good standing. It includes, but is not limited to the following: 1. Program/project conceptualization and development 2. Rendering of technical advice, consultation and/or counselling 3. Preparation of schematic plans, drawings, designs and technical specifications 4. Teaching, lecturing, coaching, mentoring 5. Research 6. Documentation 7. Conduct of pre-investment/pre-feasibility and feasibility studies 8. Marketing and promotional studies 9. Land use and multi-sectoral development planning, development and management 10. Site selection and development 11. Construction 12. Project/ Construction Management and/or Administration 13. Post-construction evaluation 14. Monitoring and evaluation 15. Training, capability building and Continuing Professional Education 16. Capital Investment Programming QUALIFICATIONS OF PROFESSIONAL CONSULTANTS A Professional Consultant shall possess all of the following qualifications: 6.1 A citizen of the Philippines, or if a consulting firm or single proprietorship, duly registered with the Securities and Exchange Commission and the Department of Trade and Industry, respectively and/or concerned regulatory agency/ies; 6.2 Duly licensed and registered with the Professional Regulation Commission.

1 2 1 2 3 4 5 6 7 8 9 10 VII. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 VIII. 27 28 29 30 31 32 33 34 IX. 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54

Page 8 of 11 6.3 Must have the minimum number of years of active and uninterrupted professional experience as may be determined by concerned PRC-accredited professional organization; 6.4 Endorsed and certified by the appropriate PRC-accredited professional organization as a member in good standing. 6.5 Has never been convicted of any criminal or administrative offense; SELECTION OF PROFESSIONAL CONSULTANTS Clients are enjoined to consider the following criteria or general guidelines in the selection of professional consultants: 7.1 The major consideration in hiring the services of a Professional Consultant is his/her qualifications as herein provided, competence, capabilities and integrity as a professional. 7.2 Preferential treatment shall be accorded to Filipino professional consultants. 7.3 For government projects, the selection of professional consultants shall be in accordance with the relevant provisions of Republic Act No. 9184, otherwise known as the Procurement Reform Act of the Philippines. MANNER OF PROVIDING SERVICES A professional consultant may provide services directly to the client, or indirectly as an associated consultant to a lead consultant in the manner prescribed, suggested or promulgated by the PRC-accredited professional organization where the Professional Consultant belongs as member in good standing. COMPENSATION 9.1 The computation of the compensation of fees for consulting services shall depend on the type of services to be rendered and the conditions under which they are to be performed. 9.2 Compensation for services that require only one kind of expertise or related types of expertise shall be treated differently from those services that require the use of more than one type of expertise. 9.3 Compensation and allowances shall be comparable with foreign consultancy compensation standards. 9.4 For the same scope of work, there shall be no disparity in the compensation between Filipino professional consultants and their foreign counterparts. 9.5 Professional Consultants shall adhere to and be governed by the relevant provisions pertaining to compensation of their respective Codes of Ethics and Standards of Practice as approved by the PRC.

1 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55

Page 9 of 11 9.6 All entities, whether in the government or non-government sector shall respect and take cognizance of said Codes and Standards of Practice mentionedunder 9.5 above. 9.7 Compensation of a professional consultant, whose accredited professional organization does not have a governing Standard of Practice, may be computed based on one or a combination of the following methods, with modifications applicable to the types of services and/ or specific cases, if and when needed: a. Per Diem or hourly basis - This method is particularly suited to engagements involving intermittent personal service. When such consulting/ consultancy services are furnished, the Professional Consultant is compensated for all the time he/she devoted to the work, including travel time. The per diem charge should be based on the complexity of the work involved and the extent of his/her experience. In addition to the compensation based on per diem, his/her expenses for travel, subsistence, and other out-ofpocket expenses incurred while away from his/her home/office shall be reimbursed by the Client. b. Retainer - This method of remuneration is used when the services of a Professional Consultant is expected to be required at intervals over a period of time. It is a means of ensuring in advance that his/her services will be available to the client when required. Under this method, a stipulated amount is paid at regular intervals for which the Professional Consultant is obligated to render a certain service or to spend a certain amount of time on clients requirements. The compensation is usually enough to pay for the minimum services required by the client. All additional services are paid separately. In addition to the retainer, the Consultant may be reimbursed for travel, subsistence and other out-of-pocket expenses incurred while away from his/her home/office. c. Salary cost times a multiplier, plus direct cost or reimbursable expenses This method is based on the total basic salaries of all professional consultants and their staff multiplied by a factor from 3.0 as a multiplier plus cost of certain items that are reimbursable to the Consultant classified under Direct Cost or Reimbursable Expenses. The following formula is used to compute the fee: Fee = Salary Cost x Multiplier + Reimbursable Expenses

This method of remuneration is best suited for Projects whose costs are difficult to predetermine, or in cases where it may become necessary to undertake additional experimental or investigative work, the result of which may further alter the scope of the project. The method however, cannot be used as a measure of compensation for services which cannot be measured by the length of time spent on his work. The other part of the remuneration by this method is made up of the reimbursable direct costs. These costs are billed to the client supported, if required by receipts and other documents.

1 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 X. 48 49 50 51 52 53 54 55 XI. 56

Page 10 of 11 d. Fixed/Lump sum payment This method of compensation may be used when the scope of services required can be clearly and fully defined. Two methods may generally be used to arrive at a lump-sum compensation for the basic services. The first is the computation of a lump-sum as an appropriate percentage of the estimate total cost of the project. The second is direct development of a fixed amount of compensation by estimating the individual elements of the cost outlines, plus a reasonable margin of profit, all expressed as a single lump-sum. These two methods are frequently used concurrently with one serving as a check on the other. Where compensation is given on a lump-sum basis, the agreements should contain a clearly stated time limit during which the service/s will be performed, and a provision for additional compensation for extra time used. In design assignments, these should be a provision for charges required after the approval of preliminary designs, with a clear understanding as to where the final approval authority lies. e. Percentage of construction cost The remuneration under this method is calculated as an agreed percentage of the ultimate cost of the project/service. The validity of the Percentage of Construction Cost Method rests upon the assumption that consultancy costs vary in proportion to the total project cost regardless of the type or location of the project. Therefore, this method should be applied only where experience has established some approximate correlations between consultancy costs and project costs. 9.8 Furthermore, fees for services that require inputs of an artistic and creative endeavor in the fields of architecture, interior and landscape designing shall not be determined in the same manner as services that involve purely technical and scientific undertakings. 9.9 Criteria for Establishing Method of Compensation The criteria for establishing method/s of compensation shall be promulgated, approved and adopted by each PRC-accredited professional organization. 9.10 Interest Due on Late Payment of Fees.

The Professional Consultant shall be entitled to interest at the prevailing rate set by the Banko Sentral ng Pilipinas (BSP) in additional to a percentage as may be determine by the PRC-APO unless otherwise mutually agreed upon by the Professional Consultant and his/her client, on all fees, other charges and reimbursements due and not paid within 30 days from receipt of billing. SEAL AND USE OF SEAL A duly registered professional shall sign and affix his/her professional license number and the seal approved by the professional regulatory concerned on all documentary outputs and materials such as, but not limited to plans, technical drawings and specifications, feasibility studies as well as instruments of service, prepared by him/her, or under his/her direct supervision. INTELLECTUAL PROPERTY RIGHTS

1 2 1 2 3 4 5 6 7 8 9 10 11 12 XII. 13 14 15 16 17 18 19 20 21 22 23 24 XIII. 25 26 27 28 29 30 XIV. 31 32 33 34 35 36 37 38 39

Page 11 of 11

All documentary outputs and materials delivered or rendered by a professional consultant, such as, but not limited to plans, technical drawings and specifications, feasibility studies and instruments of service, shall be protected under the Intellectual Property Code of the Philippines, whether such outputs and materials are executed or not. No person without the written consent of the professional consultant or author of said documents and/or materials shall duplicate or make copies of said documents for use in the repetition of and for other projects, whether executed partly or in whole. PROFESSIONAL LIABILITIES Any individual, partner, firm/corporation/consortium or joint ventures who engaged in the practice of Professional consulting services is legally responsible for the conduct and performance of his/her services to their clients, whether in the government or private sector. (It is imperative that a Professional Consultant secures a Professional Liability Insurance Policy or equivalent in bond form commensurate with the magnitude and scope of project involvement with the corresponding compensation.) FOR FURTHER RESEARCH APPLICABILITY This document of Standard Guidelines for Professional Consultancy/ Consulting Services shall be adopted by all the PRC-APO. PENALTY CLAUSE AND SANCTION Any individual, partner, firm/corporation/consortium who engages in consultancy/consulting services, but are not qualified in accordance with the provisions of these Guidelines, or who violates any provisions of the Code of Ethical Conduct and Standard of Professional Practice of the concerned PRC-APOl t shall be liable to sanction/s by the appropriate body, without prejudice to the filing of appropriate criminal or other administrative cases pursuant to existing laws.