Pricing
Project management services in the construction industry involve the role of a project manager in:
- Planning
- Executing
- Monitoring
- Controlling
- Implementing
And of course, bringing a project to a successful closure.
It is the sole duty of a construction project management team to accomplish specific goals with success, despite given constraints, within a specified time. This goes way beyond setting up meetings, reminding contractors about deadlines, or taking stock of building materials.
How Do Construction Project Managers Charge their Clients?
In the building industry, the way you manage and oversee a project is the key to its successful implementation. This is essentially what a project manager is hired for.
So, how do project managers charge their clients for the management services they are hired for?
There are several ways costs can calculated for services as a project manager managing a building project. It can apply to both residential projects and some minor commercial projects like restaurants, shops, hotels, and educational institutions.
Ways to charge (though not limited to those mentioned) include the following popular choices:
- Invoicing based on hourly rates
- Flat fee per project
- Phase payments
- Retainer fee structure
- Percentage of project costs
1. Invoicing Based on Hourly Rate
Charging based on hourly rates for a building project should not go beyond the consultation phase if you can help it. After that, time-keeping will soon become an issue between the two parties (client and project manager).
A majority of clients do not feel very comfortable with this way of charging for services, especially those who have trust issues. It is based on scope, time, and the complexity of the project.
“The median hourly wage of project managers average $150.00 and half of all project managers reportedly receive wages of between $200.00 and $300.00 per hour.”
2. Flat Fee-Based Charges
This is based on a percentage of the total project cost and is a good way to charge, especially if it is for simple projects with a short execution and completion period.
Many clients prefer this way of charging and feel more comfortable with it because both parties know what to expect before work commences. Also there can be a bit of flexibility with a clause so that if anything beyond the scope of work pops up, it can be charged for accordingly.
Typically, flat-fee rates typically work out to about 10% to 15% of the entire construction cost, depending on the scope, size, and location of the project. So, for instance, for a residential building construction project, on a labour and materials budget of about $100,000, the project management fee should be $10k to $15k. (Fees for larger value projects, say in the million dollar range, will likely amount to anything between 1.5% and 2.5 %).
DSDC waives the project management fees, with years of exploring and building relationships with manufacturers and suppliers both locally and internationally, including all service providers, we are armed with the knowledge of client expectations, design requirements, demographics, accessibility, material specifications and applicable requirements to get to foundation, these must be among the first and most important factors for DSDC to meet our customer's expectations and deadlines.
Given the current economic climate locally and internationally DSDC has secured agreements for bulk and consistence purchasing, this can not be achieved with one customer therefore orders need to comprise of several customer purchases within a certain timeframe and ensures the availability of products and raw materials at dealer's discount, which is grater than the contractor's discount. This arrangement gives guarantee to no price increases for the agreed duration of the construction project and the scope of work must be well detailed and documented in the contract before signing.
3. Phase
There are five phases of project management until completion. In some cases, a project manager may split these five stages of construction. In other words, each stage is independent of the others. These phases constitute the project’s life cycle and are carefully tailored to suit a project’s requirements.
- Project initiation phase – Basically the feasibility testing stage, this first phase is usually more of the business ‘putting together the project’ phase. This is when to know whether the project is feasible or not and if it should be embarked upon.
- Project planning phase – The setting goals stage. This is an important aspect that is key to a successful project management. Its main focus is to develop the ‘roadmap’ that everyone involved in the project will follow.
- Project execution – There is a lot of action during this phase of construction works; setting up site meetings, providing status reports, performance reports, and regular updates on project developments. This is the time when deliverables are developed and completed.
- Performance - This is all about monitoring and measuring project progression while ensuring that every task aligns with the project manager’s plan.
- Project conclusion - Once the project is brought to a close, project managers will need to make a detailed punch-list of things that didn’t get accomplished during the project implementation. He/she must assign and work with team members to complete them. A final project report must be prepared at this stage
Invoices are sent to clients once each project phase milestone is reached, this is based on the documented billing agreement which must have been pre-determined and agreed on by the two parties.
Why You Need to Hire Dasrat Sugrim Design Center Ltd ?
Hiring DSDC as your construction management team will greatly reduce the risk of unnecessary delays, overspending, and inability to meet set targets. Additionally, DSDC will ensures tighter control of your budget and ensures everyone stays within the expected construction costs and deadlines.
With the rate at which people over-spend on their building costs, sometimes by up to 35%, DSDC offers the most effective way of keeping your costs down and eliminating losses.
DSDC's comprehensive project management service starts from the building project’s tender stage, through its implementation, until its successful completion.