If you have a dream project that you are contemplating, chances are you are exploring how to get your project out of your mind and into the real world. Project managers help individuals and businesses achieve their goal of having their dream projects realized through planning and construction management. However, this service comes at a cost. Answering the question of “how much does a project manager cost?” is a necessary step towards figuring out if it is feasible to utilize a construction manager for your construction project.

While it is important to get a sense of how much does it cost to hire a project manager, it is equally important to get a firm understanding of what benefit you are getting with your money. How do project managers add value to a construction project? In some ways, this question is more important than simply looking at the actual cost of a construction project manager costs. This is because project managers offer a service. Whether that service is worth the additional costs depends largely on the benefit you are getting from it, and by association whether forgoing that service makes financial sense for your situation.

In this article, we’ll explore the costs associated with hiring a project manager. We’ll also take a look at what project managers do, with a focus on how they, as a project management professional, can add value through their services and access to whatever resources they may have. The truth is that not all construction projects need project managers. For construction projects that are small in scale or lack complexity, working directly with a general contractor may be more than sufficient. However, large-scale projects or inherently complex projects, working with a project management team can offer a range of benefits. Understanding this can help inform decisions about whether you should retain the services of a project manager. Ultimately, the choice of whether to use a project manager often comes down to your unique situation, with factors such as project size, scope, complexity, budget, and timeline for completion playing a major role in whether a project manager is necessary.

What is a Project Manager?

People are often confused when they are trying to figure out whether they need a project manager. The role of project managers often gets conflated with that of general contractors for individuals outside of the construction industry. This is due to the fact that they share responsibilities in some situations, such as accepting bids, outlining project costs, determining completion timelines, tracking account, and handling permitting. Put another way, for some projects a general contractor may perform some of the same duties that a project manager does. This is often the case when a project manager isn’t necessary, such as for small or simple projects.

So what exactly is a project manager? Put simply, a project manager is a person or organization that guides the completion of a construction project from beginning to end. Project managers are at once team leaders, organizers, communications directors, facilitators, and problem solvers. Project managers are used to oversee and facilitate the construction of new projects from the concept and design stage through to physical construction and the moment your doors open.

How Much do Project Managers Cost?

Utilizing the services of a project manager comes with a cost associated with it. If you choose to use a project management company, which can be advantageous for a number of reasons, you will want to fully understand the fees associated with using a project manager from the outset as this will have an impact on your total project cost. As you may have already guessed, determining the costs associated with a project manager can be difficult if you are just beginning to do research.

The reason it is difficult to pin down a defined cost for a project manager is that, in general, the fees associated with this kind of management professional can widely vary depending on the scope and complexity of the project and whether or not you will need an additional project team. This makes more sense once you get a firm understanding of what exactly a project manager does but consider the fact that project managers are responsible for guiding a project from concept to completion. In this stewardship role, project managers will have a great deal more work if a project is extremely complex. For complex projects, there needs to be clear and continuous communication between all parties involved to ensure that the project is completed on schedule. On complex projects, project managers will also have to interact with and direct the work of an increasingly large pool of entities. As such, project management services tend to vary depending on the size and difficulty of the project they are working on.

Project managers tend to charge either a flat rate or a percentage of the total project costs. Typically, this will be with the scope of the project in mind, but it is always a good idea to get an estimate before making a decision. Their fees may also vary depending on the person you are working with. This is true even for projects of the same size. In other words, if you bring your proposed project to two different project managers, chances are you will see two different fees associated with those services. In order to get a better sense of how project management fees are calculated, let’s turn to a source of publicly available information provided by Northwestern University. Northwestern University makes the project management fees associated with their projects publicly available, which is a useful starting point for seeing how these fees are structured in a general sense.

If we look at the chart, project management fees are assessed as a percentage of the total cost of the project. For projects from $0 – $500,000, the project management fee totals 5%. So, for a $100,000 project, you would expect to pay the project manager $5,000. As the cost of the project goes up, the percentage-based fee decreases. However, keep in mind that as the cost of the project goes up, the actual amount of money received by the project manager also rises. So, for a project that costs $10,000,000 the project manager would receive 3.5% or $350,000.

The information provided by Northwestern University isn’t meant to be representative of all fees charged by project managers. Companies that offer project management services will each have their own fee structure associated with their services. What the information provided by Northwestern University does show is that as the complexity of the project increases, in this case, illustrated by a larger project budget, so too does the fee assessed by the project manager. So, to find out how much your projected project manager fees are you would have to schedule an introductory assessment with your proposed project manager and determine their specific fees for your project.

Why Work With a Project Manager?

If you are assessing whether utilizing a project manager is worth the cost, you’ll want to get a good sense of what they do. The reality is that due to the complexity and size of some projects, a project manager will always be necessary. There really is no choice, given that some projects are so large that they require teams of individuals to keep them organized and on track for completion. However, some projects have more wiggle room, where utilizing a project manager can seem like much more of a value proposition. Let’s explore some of the ways that project managers add value to the construction projects they oversee.

Clear Vision

One of the core tasks of a project manager is to listen closely to what the client wants out of the project. Determining the goals of the project and the fundamental outlines of the scope of the project, such as a fixed desired occupancy date and a static budget, are essential to creating a steadfast strategic plan. Effective project managers work with their clients to take their conceptual project and make it a reality. This requires understanding at a deep level exactly what the client wants and what it’s going to take to achieve that goal.

One of the ways that project managers add value to construction projects is through the development of a clear vision for your project. You may already have a clear vision of what you want. Making that vision a reality requires understanding what it is you want and what exactly it will take to make it happen. Effective project managers use this vision as a baseline that guides the entire course of the project. By ensuring that each party utilized to complete the project, such as design and engineering teams as well as the general contractor, are all on the same page, project managers ensure that you are getting exactly what you want by the end of the process.

Effective Communication

Too often, construction projects get bogged down by poor communication. Clear and streamlined communication between each of the teams involved in the project is essential for completing the project on schedule and within your budgetary constraints. Project managers must be excellent at facilitating communication between the parties involved in a project. Part of this is being extremely detail oriented, which ensures that key information needed by certain parties doesn’t fall through the cracks. Effective project managers will ensure that information is flowing seamlessly between team members so that each member has the information they need to meet their contractual obligations.


One of the core facets of what a project manager does is keep your project organized. Organization is a key factor in keeping construction projects on schedule and within the outlined budget. Consider how complex a large-scale construction project is. You’ll have design and engineering teams that will need direction, while you’ll also be choosing a general contractor, getting the proper permitting, working closely with vendors, and ensuring that the logistics necessary to get your project done on time are all in place. Project managers add value to construction projects by adeptly organizing all of the different moving parts involved in a project. At the same time, effective project managers are able to quickly identify areas of risk of potential delay, and work quickly to develop and implement ways to address those risks or delays so as not to impact the final project completion timeline. Keeping all of the moving parts involved in a construction project on-schedule requires working with someone that is adept at organizing complex projects.


Project managers fulfill a vital oversight role in the projects they are involved in. In some ways, this is one of the most important functions that a project manager provides, and is one of the most important methods of keeping a project on schedule and under budget. In complex construction projects, small missteps can result in large delays. Identifying when a party involved in the project isn’t meeting their obligations early on is essential to avoid any costly delays. Project managers address this through an ongoing effort at oversight. For example, during physical construction effective project managers will conduct regular walkthroughs of the work site to ensure that construction is keeping pace with the project timeline.

Project managers will also ensure that the construction being completed matches the engineering and design requirements of the project impeding on the project cost and construction time. This type of oversight activity is important for a couple of reasons. First, it allows project managers to catch any problems early on and address them before they impact the project timeline. Second, it also allows the project manager to provide the client with regular updates about the progress of the construction project.

Final Thoughts

Understanding the fees associated with using a project manager is important for understanding your total project costs. Project management fees vary depending on the project manager and the scope and complexity of the project they are working on. Larger and more complex projects will typically have higher project management fees associated with them, with a commensurately higher workload for the project manager themselves.

If you are considering working with a project manager, it is important that they are clear about the fees they charge from the outset and settle on a cost estimation for the entire project. You should have a clear understanding of how much their services cost and what exactly you are getting for your money. Please contact Gilliland Construction Management today to find out how a project manager can help you make your dream project a reality.

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By Kirt Gilliland

Dec 06, 2018