Actually, the management end depends more on the sub contractors than the job. A good sub can be contacted, given the plans/job description and then just inspect the job periodically.

A bad sub will often need much more supervision and wind up costing the GC more profit by requiring more time for the same money.

I mean, given a specific sub, why should the management fee rise just because more expensive materials are used?

Maybe because he's taking on the responsibility that it will be done right. If a mistake is made, the more expensive materials will cost him more to replace/fix.

The sub would be doing the installation, so if there's a mistake, it will cost the sub more to replace/fix, not the GC.

It may also depend upon how the project is permitted.

If the GC is to manage, then the % is expressed as a value of his time. This might also apply if he is unfamiliar with the product or a specific tradesmen.

The GC's fee should not be thought of as compensation for managing individual parts of the job; it is a crude but convenient method for calculating the GC's compensation for the whole job.

There are many inexpensive issues that involve a disproportionate amount of the GC's time and the converse is also true. And it would be a practical impossibility to break down a fee for every part of the work and every change would require a fee negotiation. The apparent inequities will, of course, balance out in the end.

If you insist on taking a narrow view of the arrangement consider the fact that expensive field-measured and hand-fabricated work carries a greater financial risk for the GC and he deserves greater compensation.

Some owners buy such things themselves (against my recommendation) and are then shocked when the GC will not protect them from late deliveries, wrong dimensions, and poor coordination with other work.

A GC does not just manage subs; he manages the whole project and his compensation should reflect that fact.

However, in a few instances, he is indeed managing some individual parts, which is flooring, countertops, and backsplash. His compensation for these jobs states that it is 15% for managing them. Everything else, electrical, plumbing, framing, drywall, installation are done by his people and are separate.

So if it takes the same amount of time to manage a wood countertop install that costs $1000 vs a gold-plated countertop install which costs $100,000, I don't get why his compensation should go from $150 to $15,000. If anything goes wrong, the countertop company is on the hook, not him.

I guess this percentage-based compensation is common not only for GCs. For example, real estate agents generally get 3% for a 100,000 house, and that same 3% for a 1,000,000 house. I think a flat fee makes more sense, but that's me as a consumer thinking. If I were doing this business in a high-cost area, I'd love the percentage-based calculation.

The GC is always on the hook to you because you do not have a contract with the sub and the sub has no obligation to you other than certain predetermined warranties. Are you suggesting the GC's fee be on a sliding or graduated scale? Make the GC an offer ans see what he says.

"yoyoma"

You're absolutly correct.

There are several methods used by GC's in dealing with a project, and all are common, and all should have responsibility clearly established and understood.

When a GC is first contacted the option are;
His subs and his total control.

A list of subs with whom he is familiar, from whom YOU
obtain bids and select for the project and the GC establishes a fee to "manage".
That management agreement can vary from full quality of performance to a phone call and a fair-thee-well.

Another is the method which you used as an example of, and the devil is in the details.Know all of them.

Remember, a contract is a process of negotiations and they can continue throughout a project and at no time should a customer bury their head in the sand.

The contractor is also responsible for customer relations.

This is your house, you are paying the freight, stay engaged.

My situation is the, 'A list of subs with whom he is familiar, from whom YOU obtain bids and select for the project and the GC establishes a fee to "manage".'

For a different sub, for windows, I did an upgrade, and asked the GC if he can just do the 15% for the orginal bid, and he agreed. But I don't like this haggling. And I feel that he'd make it up however he wants by pricing change orders differently anyway. I'd have no way of knowing.

"I'd have no way of knowing"

When did this suspicion and distrust began?

In the case of the infamous "change order", some contractors will bid a project knowing that there are those opportunities built in, by visible exclusion of others, usually architects or the customer not wanting to make specific commitments and detail them on a spec. sheet.

You may not like it, but you can seek competitive bids any time during the project for any service he is managing and if their is not an exclusion clause in the agreement, remove that sub from the agreement.

I've been doing this for almost 40yrs. and it never ceases to amaze me that people are not more careful.
I avoid change orders by making a nuisance of myself at the front end., but when they occur I'll have the customer deal with the vendor separately, as a matter of expediency.

As Mightyanvil pointed out earlier, whatever system is used for setting prices has to be quick and easy. It also has to be transparent, and all of these qualities are necessary so that adjustments can be made along the way without the larger project getting bogged down in exactly the sorts of negotiations you say you don't like. In the abstract, there are reasons for both contractors and consumers to want a pricing system that accurately reflects the actual costs (in time, effort, materials, risks, etc) associated with each line-item of a given project. But your house is not a Big Mac or a Toyota. The myriad unpredictabilities of remodeling make such accuracy of foresight impossible, and the fact that a given project has a great many line-items means that things tend to average out anyhow, so that the utility of this fantasy pricing system is pretty much nil.

Yes, there are times when the system doesn't make sense. A brief appeal to common sense is usually all the negotiation that's necessary to improve such a situation, but one has to remember that for every solid-gold countertop installation, there's a fifty cent light switch that's installed incorrectly and burns the house down, at which point the electrician who installed it skips town and leaves the GC on the hook.

As far as the laws of mathematics refer to reality, they are not
certain, and as far as they are certain, they do not refer to reality.
-- Albert Einstein

It's been my experience that the ethics and integrity of both parties are only revealed through the negotiation process.
Not through the "sign the paper, write the check and get out of the way" method.

Stay engaged.

To give advice about negotiating and/or bidding directly with subs you would need to read the OP's contract.