Phase-based CM fees: pre-con, construction, post

Under the 2010 construction management forms, the construction manager earned one fee across the whole project, and owners argued at the end about how much of it had been earned when. The 2025 editions of CCDC 5A and CCDC 5B split the fee by phase: pre-construction, construction and, in CCDC 5A, post-construction. Each phase can have its own basis. Choosing those bases well is one of the cheapest ways an owner can control a construction management project.

Learning outcomes

• Describe how CCDC 5A-2025 and CCDC 5B-2025 separate the construction manager's fee by phase.
• Compare fixed, time-based and percentage fees, and match each to the phase it suits.
• Explain how pre-construction invoicing and reimbursable expenses work differently under CCDC 5B-2025.
• Build an illustrative phase fee model for a construction management version of Northgate and test it against cost growth.

The lesson

From one fee to three

Miller Thomson describes the change simply: the 2010 forms used a single fee for the construction manager's services across the project's life, and the 2025 forms divide it into pre-construction, construction and post-construction phases so it is clearer when fees are earned. The detail differs between the two forms.

• CCDC 5A-2025 (CM for services). The construction manager's Fee for Services can be allocated across the pre-construction, construction and post-construction phases, each with its own percentage or amount, according to Clark Wilson and Pallett Valo. Gowling WLG notes that post-construction services can be priced separately. Under CCDC 5A the construction manager does not perform the Work, so its fee is for services only; the trades are paid under their own CCDC 17 contracts (see lesson 13).
• CCDC 5B-2025 (CM for services and construction). Pre-construction Services are now a separate defined category with their own fee, which can be fixed or time-based. The construction phase follows the form's default: the Work is done on an actual-cost basis plus a percentage or fixed fee, as CCDC's own description says. Stipulated price, guaranteed maximum price (GMP) and GMP with shared cost savings are optional structures in separate appendices, which Gowling notes are taken up by Change Order. Lesson 12 covers those options.

Gowling places the fee terms in Article A-5 of both forms, with the services and time-based rate schedules now issued as separate editable documents.

Pre-construction under CCDC 5B is its own contract within the contract

Alexander Holburn describes how far the 2025 CCDC 5B goes. Pre-construction Services have their own scope, compensation, invoicing and administration. The definition of the Work now excludes them. Reimbursable expenses apply only to pre-construction services, and pre-construction payment applications go directly to the owner rather than through the Consultant, according to Clark Wilson. The Consultant also no longer interprets disputes about pre-construction compensation.

For the owner, that means two things. The owner's project manager, not the Consultant, has to review pre-construction invoices against the services schedule, so someone on the owner's side must own that review. And because the pre-construction fee is separate, the owner can end the relationship after pre-construction, at the break fee covered in lesson 14, knowing exactly what it has paid for.

Three fee bases and what each rewards

A fee basis is an incentive. Pick the one that rewards the behaviour you want in that phase.

• Fixed fee. A lump sum for a defined scope of services. It rewards efficiency and is easy to budget, but it needs a clear scope and a rule for adjusting it when scope changes.
• Time-based rates. Hourly or monthly rates from the schedule of rates. They suit early work where the effort is uncertain. They reward effort, not results, so pair them with an upset limit and a staffing plan.
• Percentage of cost. A percentage applied to the Cost of the Work. It scales with the project and adjusts itself for changes. It also rises when costs rise, which is the opposite of what an owner wants from the party running the budget.

Percentage fees and cost growth

On a cost-plus construction phase, the fee is usually applied to the Cost of the Work certified each month, and it follows changes automatically. That is convenient, but it means every dollar of cost growth earns the construction manager more fee. Owners manage this in three ways. First, convert the percentage to a fixed amount when a GMP or stipulated price is agreed, so the fee stops moving with cost. Second, set a rule for changes: for example, fee applies to added scope but not to the correction of the construction manager's own errors or to cost overruns inside the original scope. Third, keep a clear line between the Cost of the Work and the fee, so site staff and general conditions costs are not paid twice. Lesson 8 explains how to police the Cost of the Work.

Phase boundaries need dates and triggers

A phase fee only works if everyone agrees when each phase starts and ends. Define the trigger that ends pre-construction, such as the owner's written notice to proceed with construction or acceptance of a priced proposal. Define when post-construction starts, such as Ready-for-Takeover, and what ends it. Without those triggers, the construction manager can bill construction-phase fee on pre-construction work, or the owner can find post-construction services already paid inside the construction fee.

Northgate worked example

Northgate Distribution Centre (fictional) is a 12,000 m² tilt-up warehouse in Vaughan for Northgate Logistics Inc. (fictional). It is really design-bid-build under CCDC 2-2020, with a Contract Price of $34,950,000; see the Northgate fact sheet.

The fee model

The construction-phase fee is 3.5% of $33,580,000, which is $1,175,300. Adding the two fixed fees gives a total fee of $1,370,000, or about 4.1% of the Cost of the Work. Figure 3 shows how it splits.

Stress-testing the percentage

Suppose changes push the Cost of the Work up by $1,000,000, to $34,580,000. At 3.5% the construction-phase fee rises by $35,000 to $1,210,300 without anyone negotiating it. If $400,000 of that growth is the cost of fixing coordination errors the construction manager should have caught in pre-construction, the owner is paying $14,000 of fee on the construction manager's own miss. That is why the owner's Supplementary Conditions should say which costs carry fee.

Now suppose the parties agree a GMP when design is complete and the trades are mostly priced. At that point the owner's representative should propose converting the construction-phase fee to a fixed amount, here $1,175,300, adjusted only for owner-directed changes. The construction manager then has no fee reason to let costs drift.

Paying the fee month by month

In the construction phase, the fee is invoiced monthly with the Cost of the Work and certified with it. Under Ontario's Construction Act the owner pays within 28 days of a proper invoice and retains the 10% holdback from each payment; Clark Wilson notes the 2025 forms now let the construction manager's own work share in progressive holdback release. Pre-construction invoices, by contrast, come straight to Northgate's project manager under CCDC 5B, so the owner needs its own review step for them.

Owner's move

• Price each phase on the basis that suits it. Use a fixed or capped time-based fee for pre-construction, and a fixed fee for post-construction.
• Write phase triggers into the contract. State the event that ends pre-construction and the event that starts and ends post-construction.
• Say which costs carry fee. Exclude the correction of the construction manager's own errors and overruns within the original scope.
• Convert the percentage at GMP. When price certainty arrives, fix the construction-phase fee and adjust it only for owner changes.
• Assign the pre-construction invoice review. Under CCDC 5B the Consultant does not certify these, so name the owner's reviewer.

Common mistakes

1. Applying a percentage to pre-construction. With no reliable cost base, the fee floats with the estimate.
2. Uncapped time-based rates. Without an upset limit, slow pre-construction is the construction manager's revenue.
3. No rule on fee for changes. The fee then grows on every dollar, including the construction manager's own errors.
4. Double-paying site staff. General conditions in both the Cost of the Work and the fee.
5. Vague phase boundaries. Pre-construction work billed at construction rates, or closeout billed twice.

Quick quiz

1. Under CCDC 5B-2025, how can the pre-construction fee be set?

   1. Only as a percentage of the estimate
   2. Fixed or time-based
   3. It is included in the construction fee
   4. Only as a GMP

2. Who receives the construction manager's pre-construction payment applications under CCDC 5B-2025, according to Clark Wilson?

   1. The Consultant, for certification
   2. The owner, directly
   3. The lender
   4. The trade contractors

3. Which form expressly allows a separately priced post-construction fee?

   1. CCDC 5A-2025
   2. CCDC 17-2025
   3. CCDC 2-2020
   4. CCDC 4-2023

4. On the illustrative Northgate model, Cost of the Work rises by $1,000,000. How much does a 3.5% construction-phase fee rise?

   1. $3,500
   2. $14,000
   3. $35,000
   4. $350,000

5. What is the best time to convert a percentage construction-phase fee to a fixed amount?

   1. At Ready-for-Takeover
   2. When a GMP or stipulated price is agreed
   3. At the first payment application
   4. Never

Key terms

Phase-based fee

A construction manager's fee split by pre-construction, construction and post-construction phases, each with its own basis.

Pre-construction Services

Under CCDC 5B-2025, a separately defined set of advisory services with its own fee, invoicing and reimbursable expenses, excluded from the Work.

Fee for Services

The construction manager's compensation under CCDC 5A, which can be allocated across the three phases.

Upset limit

A cap on time-based fees that cannot be exceeded without the owner's written approval.

Cost of the Work

The actual costs reimbursed to the construction manager in a cost-plus construction phase, to which a percentage fee is applied.

Guaranteed maximum price (GMP)

A ceiling on the price the owner pays; under CCDC 5B-2025 an optional structure taken up by Change Order.

References

1. CCDC, CCDC 5B-2025 Construction Management Contract for Services and Construction (document page).
2. Gowling WLG, Updates to the 2025 CCDC construction management contracts (July 2025).
3. Clark Wilson LLP, Key updates to the 2025 CCDC 5A, 5B and 17 (August 2025).
4. Miller Thomson LLP, via Mondaq, Important updates to the CCDC 5A, 5B, 17 and 30 contracts (September 2025).
5. Pallett Valo LLP, 2025 CCDC contract updates: what construction professionals need to know (January 2026).
6. Alexander Holburn, via Mondaq, The new and improved CCDC 5B 2025 (2026).
7. CCDC, CCDC 5A-2025 Construction Management Contract for Services (document page).

Verified on November 6, 2026.