Two projects, each with a total price tag of $100K can require very different resources and time to execute. They can have very different inherent risks depending on initial conditions and project scope.

An equitable project management fee would be based on the number of hours of management time required to execute the project multiplied by the going hourly rate for such services.

As Sophie notes, a project manager is not the same as a general contractor. Your state may have no licensing requirement for a project manager and they likely have no warranty obligation for the project. Make sure you understand all the costs and benefits before entering into an agreement.

Assuming you're going to pull a homeowners' permit, but not oversee the work, what's the sense in hiring someone who will have zero accountability?

The really big issue is that if you DO give a PM the ability to hire and fire, and pay the subs, he’s contracting without a license. Which is illegal.

^ Depends on the state, but illegal in Florida.

With more details I can give more guidance. We use a project manager on many of our projects and I have used them occasionally in residential stuff. However, there is a lot of variation in the terminology.

Typically, the major difference is agency. A general contractor is arms length while a project manager is supposed to be an agent of the owner. So he steps in as a knowledgeable person to make decisions that the owner would normally make when the owner doesn't want to. Although it isn't really the case, you can think of them as a construction power of attorney.

In reality, however, it is a contractual relationship and is defined by the contract, so the term project manager is just about useless. What are his contracted responsibilities?