Percentage-based estimating fees create a conflict of interest. We explain why we charge fixed fees and what you should ask any estimator you hire.
Most construction estimating firms charge a percentage of construction cost — typically 0.5% to 1.5%. On a $10m project, that's $50,000 to $150,000. On a $50m project, it's $250,000 to $750,000 for essentially the same scope of work. We think this is wrong, and we stopped doing it in 2014.
The conflict of interest
If your estimator is paid a percentage of your project cost, they make more money when the estimate is higher. This is not a hypothetical conflict — it is a structural one. We are not saying percentage-fee estimators are dishonest. We are saying the incentive is misaligned, and misaligned incentives produce predictable results over time.
Fixed fees align interests
When we charge a fixed fee, our income is identical whether the estimate comes in at $8m or $12m. Our only incentive is to be right — because our reputation depends on accuracy, not on your project cost. We quote the fee before any work starts. You know the cost before we pick up a pencil.
What to ask
When evaluating an estimating firm, ask: Is your fee a percentage of estimated construction cost? If yes, does that percentage change based on project type or size? The answer will tell you a great deal about how the firm thinks about its relationship with clients.
The exceptions
Percentage fees can make sense for owner's representative services where the estimator is managing a full programme over many projects. But for a single project estimate, the fixed-fee model is cleaner, fairer, and produces better work.