New project management fee structure now effective
To: Executive Vice Presidents, Chancellors, Vice Presidents, Vice Chancellors, Vice Provosts, Deans, Directors, and Heads of Schools, Divisions, Departments and Offices
From: Jim Keefe, Capital Program Management Senior Director
Date: July 2, 2019
Re: New project management fee structure now effective
Physical Facilities Capital Program Management, a division of Administrative Operations, has implemented a new project management (PM) fee structure for FY20. In most cases, the new structure represents an increase to the PM fee, which is typically a percent of the total project budget used to cover the salaries and benefits for Capital Program Management staff. The PM fee does not account for additional technical resources required to deliver capital projects, such as campus planning, engineering, fire and safety, etc.
The new fee structure helps meet strategic funding targets identified by Administrative Operations and the Office of the Treasurer and Chief Financial Officer.
The complete tiered pricing structure of previous and new rates is detailed in the table below.
|
Project Pricing Tiers |
Previous Rate |
New Rate |
|
$0-$149,999 |
6% |
6% |
|
$150,000-$499,999 |
3.75% |
5% |
|
$500,000-$999,999 |
3.25% |
4% |
|
$1,000,000-$4,999,999 |
2.75% |
3% |
|
$5,000,000-$9,999,999 |
2.25% |
2% |
|
$10,000,000-$49,999,999 |
$250,000 |
0.8% |
|
$50,000,000-$99,999,999 |
$250,000 |
$650,000 |
|
$100,000,000 and over |
$250,000 |
$700,000 |
As in recent years, the new fee structure is a calculation that uses tiered pricing. This means that the PM fee should be calculated for each tier, beginning with the $0-$149,999 tier and continuing through the tiers to the total project budget amount, and then added together.
Prior to finalizing the new rate structure, Capital Program Management and the Administrative Operations Business Office collaborated to benchmark how a handful of peer institutions handle their PM fees. In all cases, Purdue’s new rate structure was competitive with peer institutions and significantly lower as the project budgets increased.
The total number of staff in Capital Program Management has decreased in recent years in order to create more efficiencies while continuing to deliver quality services that demonstrate sound fiscal stewardship, with 89% of capital projects delivered on time and 100% under budget in the first three quarters of FY19.
Questions about the new rate structure or how to calculate a project’s PM fee may be directed to jkeefe@purdue.edu or (765) 494-0467.