Typical Project Management Fees in Construction: What % Should I Expect to Pay?

When planning a construction project, one of the biggest questions is: ‘How much should I budget for project management?’ It’s a crucial piece of the puzzle and one that often gets misunderstood.

While every project is unique, project management fees are typically charged as a percentage of the total construction cost. Understanding how these fees are structured can help developers, education institutions, and regional airports make informed decisions when engaging a project management firm.

At Iconic Project Management, we provide transparent and value-driven project management services, ensuring that every pound spent delivers maximum efficiency and quality. This article explores typical project management fees in construction, the factors that influence these costs, and why investing in expert project management is a smart decision.

What Are the Typical Project Management % Fees in Construction?

Project management fees in construction generally range between 3% to 10% of the total construction cost. However, this percentage can vary based on several factors, including project complexity, scope, and duration. Here’s a general breakdown of what you can expect:

• Small Projects (£500k - £2m): fees typically range from 6% to 10%

• Medium Projects (£2m - £10m): fees range from 4% to 7%

• Large Projects (£10m+): fees tend to be between 3% to 5%

  
  

These figures provide a guideline, but actual costs will depend on the level of service required, contractual structure, and the risks involved in the project.

Factors Influencing Project Management % Fees in Construction

Several factors impact project management fees, and understanding these can help clients budget appropriately:

1. Project Complexity

A straightforward office refurbishment will attract lower fees than a multi-phase airport expansion. Complex projects require more intensive planning, coordination, and risk management, increasing the percentage fee.

2. Scope of Services

Project management can encompass a wide range of services, including:

• Programme and schedule management

• Risk assessment and mitigation

• Contract administration

• Stakeholder coordination

• Cost control and reporting

  
  

The more extensive the services, the higher the fee percentage.

3. Procurement Route

The procurement strategy chosen also affects costs. Traditional design-and-build contracts may require less intensive project management than a complex multi-stakeholder delivery using NEC or JCT standard contracts.

4. Location and Site Constraints

Projects in city centres, historic buildings, or constrained sites (such as airports) often require more meticulous planning, leading to higher fees. Our work with Oxford University’s Castle Bailey Quad project is an excellent example - navigating heritage considerations, stakeholder engagement, and utility constraints required significant project management expertise.

5. Client-Side vs. Contractor-Side Management

Some clients engage project managers as employer representatives, while others may rely on contractors to manage the project. A dedicated client-side project manager ensures greater control and value delivery but may carry a higher percentage fee.

Why Investing in Project Management Pays Off

Some clients look at project management as a cost. We see it as a safeguard. A well-structured project saves time, money, and stress because your PM is the one constantly scanning the horizon for risk, protecting the budget, and holding everyone to account. Here’s how:

1. Cost Control and Budget Adherence

Project managers oversee budgets rigorously, ensuring that unexpected costs are minimised. Our work with major blue-chip clients has demonstrated how effective cost management can prevent overruns.

2. Time Savings and Programme Adherence

A well-managed project runs efficiently, reducing delays that could inflate costs. Our experience delivering projects at regional airports proves how strict project governance keeps operations on track.

3. Risk Management and Issue Resolution

Construction projects are fraught with risks - unforeseen site conditions, contractor disputes, supply chain disruptions. Our project managers at Iconic handle these challenges daily, preventing minor issues from escalating into costly problems.

4. Quality Assurance and Compliance

Ensuring compliance with regulations, planning conditions, and quality standards is crucial. Whether it’s delivering a retail fit-out or an aviation infrastructure project, we uphold high-quality delivery standards, protecting clients from potential rework costs.

Are Fees Negotiable?

We’re often asked whether project management fees are negotiable. The short answer is: sometimes, but with a caveat.

Negotiating a lower fee usually means narrowing the scope of service. For example, reducing PM input at early stages, or limiting their role during delivery. This can be a false economy, especially if early risks are missed or communication breaks down on site.

A good PM provides clarity, confidence, and leadership. Cutting corners on that support can have much bigger downstream costs.

Personal Insights from Our Project Managers

Our team has worked across a diverse range of construction projects, from retail developments to large infrastructure schemes. Here’s what some of our project managers say about the value of professional project management:

"Every project has unique challenges, but the key to success is setting clear objectives from the outset and managing people to deliver what they’ve agreed. A good project manager ensures alignment across all teams, making the difference between a successful outcome and a costly failure." – Darren Hewitt, Director of Project Management

"One of the biggest misconceptions is that project management fees are just an overhead. In reality, we often save clients far more than our fees through proactive risk management, value engineering, and negotiation with contractors." – Mike Weeks, Senior Project Manager

"A successful handover isn’t just about finishing on time—it’s about ensuring clients have all the documentation, training, and operational knowledge to maximise their new asset. That’s where great project management adds long-term value." – Rachel Hounsell-Roberts, Project Manager

What About In-House Project Managers?

Some clients employ in-house PMs and outsource only part of the service. In these cases, external PMs may offer advisory support, lead specific phases, or take on coordination roles between stakeholders.

We’re always happy to flex our service to meet the needs of the project—but we’ll also be honest if we think something isn’t going to work.

Final Thoughts

Understanding project management fees in construction is key to budgeting effectively and ensuring a project runs smoothly. While fees typically range from 3% to 10% of construction costs, the true value lies in the expertise and risk mitigation that project managers bring. Project management is a relatively small line in the overall budget—but it plays an outsized role in delivering a project you can be proud of.

At Iconic, we believe construction should be something people are proud to be part of, starting with the way it’s managed. Whether you’re developing a major infrastructure project, a new educational facility, or a commercial development, our experienced team can help you navigate the complexities of construction with confidence.

Thinking about your next project? Let’s make it one to be proud of. Get in touch to talk through your goals. We’ll help you build it on time, on budget, and on brief.

Author

Lizzie Hewitt

Lizzie is the CEO of Iconic Project Management and the driving force behind its creative, people-first approach. She builds bold strategies that deliver value for clients and empower her team to excel—on time, on budget, and on brief. Passionate about innovation and culture, Lizzie is on a mission to reshape construction into a place where people and projects thrive.