New CM/PM Fees Study Published

For Release: Upon Receipt                    Contact: John McKeon
January 29, 2015                                      703-677-3361, jmckeon@cmaanet.org

New CMAA Survey Finds CM/PM Fees Vary Widely

A new national study of construction management and program management fees has found wide variation in the fees being charged, probably reflecting differences in the services required by individual project or program contracts nationwide.

The Construction Management Association of America has conducted similar surveys twice before, most recently in 2007. The latest study, performed in collaboration with FMI Corporation, was conducted during the third quarter of 2014, and involved data from 161 participating organizations and 239 individual projects.

In general, the new study found that CM/PM fees are lower in 2014 than they were in 2007. In addition, owners showed a much more pronounced preference for fixed-fee procurements of CM/PM services. For example, the lump-sum-bid contract method accounted for seven percent of all projects in the 2007 study but 27 percent in 2014. Similarly, negotiated-fixed-fee contracts rose from 23 percent of all reported projects in 2007 to 35 percent and cost-plus-fixed-fee arrangements went from 16 to 22 percent.

Nationwide, across different project types, owner types and project delivery methods, the average CM/PM fee was 5.6 percent. Fees reported for individual projects, however, ranged from a low of 0.6 percent to more than 18 percent. The standard deviation of the data set was 4.0, indicating significant variability among the projects reported.

“CM/PM fees are established in the project contract, which is negotiated between the owner and service provider(s) for each individual project,” the study report notes. “These contracts also spell out the exact CM/PM services to be provided, which are likely to vary from project to project.”

The study found some striking differences between owners and service providers when it comes to defining what activities are “core” CM/PM functions and which ones are enhancements, justifying additional fees. For example, 55 percent of owners believe preventive maintenance plans are a core CM/PM function, while only 21 percent of service providers agree. Commissioning was viewed as a core function by 70 percent of owners but by only 54 percent of service providers.

Survey respondents also identified what they saw as the biggest benefits of working with a professional CM, including:

•    Avoiding or minimizing schedule problems            77 percent
•    Avoiding or minimizing budget problems             77 percent
•    Leadership for the whole project team                 76 percent

The 2014 Comparison of Construction Management and Program Management Fees includes appendices breaking down the overall data by geographic region, project type, fee type, owner, and a variety of other characteristics. The 52-page report is available for sale in the CMAA online bookstore at www.cmaanet.org/bookstore.

 

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