PM fee?? Is this common?

[Ricky Sabogal]

Is it common practice for the contractor you hire to charge a “PM fee”? I’m interviewing contractors in Hampton Roads, Virginia, and one of them said their structure with other investors is they charge a 10% (of profit) as a Project Management fee. That is in addition to the money charged to remodel the house. According to him, they are just charging materials and labor costs but not their profit. I had never heard of this model, so hoping someone can shed some light. To me it only makes sense if their bids are lower than the other contractors that already build in their margin to the quote. Thanks for any insight!

[Account Closed]

It is called overhead and profit. The GC charges anywhere from 10-12 % of the project cost. Technically, he shouldn't be making any money on labor and materials if he's charging you OH&P.