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PM Fees as a Percentage of Total Contract Value
Last Post 25 Apr 2012 09:31 PM by reggies. 2 Replies.
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Author Messages
terry.f@rogers.com New Member New Member Posts:1

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24 Apr 2012 04:59 AM
    My client is extremely cost conscious and views PM charges as "overhead" and to be avoided where possible. Is anyone aware of guidelines that may exist that indicate what is a reasonable charge for project management as a percentage of the total contract value?

    Thanks,
    Terry
    cooperma New Member New Member Posts:1

    --
    24 Apr 2012 05:55 AM
    This may depend in part on the industry. Years ago, when I was doing IT development for a consulting company, a general rule of thumb was that a full time project manager was needed if the team size was 10 or more. One thing to think about is "what is PM". If you have a project with multiple teams, and team leaders, then the team leaders, in addition to doing their own technical work, will also be doing some leading / planning / managing - which could be considered part of the overall PM budget. So there may be ways to represent the PM budget as more than just the project manager. I would be very interested in what others with more recent experience have to say about this topic.
    reggies New Member New Member Posts:2

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    25 Apr 2012 09:31 PM
    Sir,

    For the construction industry in the South; PM charges are typically a little lower. Thus, these are the standard 2012 figures:

    "Engineering fees"
    __________________________________________________________________________

    "Craft@Hrs","Unit","Material","Labor","Total"
    __________________________________________________________________________

    "Principal engineers (project management, client contact)"
    Assistant principal engineer / PM --@.000 Hr -- -- 149.69

    Senior principal engineer / PM -- @.000 Hr -- -- 201.88

    Job site engineer (specification compliance)--@.000 Hr -- 83.71


    Specification Fees
    "General non-distributable supervision and expense"
    __________________________________________________________________________

    "Craft@Hrs","Unit","Material","Labor","Total"
    __________________________________________________________________________

    "General Non-Distributable Supervision and Expense"

    Project manager, typical--@.000 Mo -- -- 6,489.83

    Job superintendent --@.000 Mo -- -- 5,022.48

    1. Therefore the Assistant Principle Construction PM etc, can charge as much as 287,4048.
    So, 30,000,000/287,4048 = 10.43%
    2. The Senior Principle Construction PM can charge as much as 201.88 per hr. = 387,6096.
    Thus, 30,000,000/387,6096 = 7.739%
    3. The Job Site Construction PM can charge as much as 83.71 per hr. = 160,7232.
    So, 30,000,000/83.71 = 3.58%: Therefore one could safely assume that the typical percentage rate
    of PM Fee Charges will vary from 3 1/2% to around 10 1/2% depending on the project cost.
    4. The above fees can also apply to standard Consultant Charges. Especially some variation of the $84.71 per hr. Thus, one can see that in the descriptive the term Engineer also refers to and defines the term Project Manager.

    I hope this gives you some idea of the possibilities.

    Source: 2012 National Construction Estimator Cost Book; page 314:





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