How Much Does It Cost to Hire a General Contractor in 2025?

Hire a general contractor in 2025. If you’re planning a commercial project—whether a medical office, light industrial facility, retail fit-out, or a community space—the question on everyone’s mind is: what will it cost to hire a general contractor (GC)? The short answer: it depends on scope, delivery method, market conditions, and how your GC manages risk, schedule, and procurement. The longer (and more useful) answer is below, complete with current cost-trend context, typical fee structures, and a simple way to build a realistic line-item budget for your GC costs.

2025 cost climate: steady growth, still above pre-COVID norms

After the sharp run-ups of 2021–2022, escalation cooled—yet it hasn’t disappeared. Industry indices show continued (but moderate) increases in non-residential construction costs through 2025. Turner’s Q2 2025 Building Cost Index reports a 3.82% year-over-year increase; Mortenson’s Q1 2025 cost index shows U.S. costs up ~3.9% YoY, and Minneapolis specifically up ~5% over the last twelve months. ENR’s early-2025 reporting shows the Building Cost Index up ~1.6% and the Construction Cost Index up ~0.9% for 2024—illustrating a gentler slope than prior years, but still positive. CBRE and JLL likewise project continued—but more modest—cost growth in 2025 relative to the spikes seen earlier in the decade.

What this means for owners: plan for some escalation in both labor and materials and lean on early pre-construction to lock scopes, sequence procurement, and reduce exposure.

What a GC’s cost actually includes

When owners ask “what’s the contractor’s fee?”, they often mean the entire bundle of GC-related costs. Break it down like this:

1. Preconstruction services
   Budgeting, constructability, alternates, value engineering, phasing plans, logistics, early buyout strategy, and schedule development. On CM at-Risk (CMAR) or GMP projects, precon lays the groundwork for a reliable guaranteed number and risk plan.
2. General Conditions (Project delivery resources)
   The jobsite engine: superintendent and field staff, project management, temporary facilities, safety program, site logistics, project IT, jobsite utilities, cleaning, closeout, etc. These are time-based and scale with duration/complexity.
3. Bonds, insurance, and taxes
   Performance/payment bonds (when required), builder’s risk, general liability, and related costs. Public-sector CMAR guidance explicitly treats these as a distinct, percentage-based allowance.
4. Contractor fee (overhead & profit)
   The GC’s business overhead plus a reasonable profit. On CMAR, this is typically a negotiated percentage applied to the cost of the work; on fixed-price (lump sum), it’s embedded in the number. Public guidance for CMAR often pegs the management fee lower (e.g., ~2.5–4%) because bonds/insurance/taxes and general conditions are broken out separately, while private-sector GC fee structures vary by delivery method and project size.
5. Contingency and allowances
   Owner, design, and construction contingencies protect the budget from unknowns. Industry and AIA resources commonly recommend 5–10% depending on risk/complexity, with higher ranges on complex or fast-track work

Typical ranges you’ll see in the market (and why they move)

There isn’t a single “right” percentage because context matters:

• Delivery method & risk transfer
  • CMAR / GMP: Often shows a lower visible “fee” (e.g., a negotiated management fee) because general conditions, bonds/insurance, and contingencies are individually itemized. (Public CMAR examples show 2.5–4% management fees, plus other line items.)
  • Cost-Plus (with or without GMP): Owner reimburses actual costs plus an agreed fee; the FAR caps some cost-plus fee structures in public work. Private deals vary widely, but cost-plus requires robust cost controls and transparency
  • Lump Sum / Fixed Price: The GC holds more risk; the fee is baked into the price, and you won’t see individual markups unless specified in the contract.
• Project size & complexity
  Larger projects can leverage scale (lower % on very large programs), while small/complex, occupied-campus, or high-tolerance projects tend to carry higher general conditions and more contingency.
• Schedule & logistics
  Night work, winter conditions in Minnesota and the Dakotas, tight sites, restricted deliveries, and multi-prime coordination push general conditions higher.
• Market timing
  In tighter subcontractor markets (less competition, longer lead times), buyout is harder and fees/GC costs trend up; when competition increases, some downward pressure appears.

Rule of thumb: For private commercial work, owners often see all-in GC-related costs (precon + general conditions + bonds/insurance + fee) fall within a broad band that’s sensitive to the variables above. CM/PM fee components on sizable programs frequently land in the mid-single digits, with additional line items for GC services, risk, and contingency bringing the total GC-related spend to a project-appropriate level. Published public-sector references show CM fees around 2.5–4% (management fee), and industry resources suggest contingencies of 5–10% depending on risk.

The three most common pricing models (and how they influence cost)

1) Construction Manager at Risk (CMAR) with GMP

The contractor provides preconstruction, then commits to deliver within a Guaranteed Maximum Price. Savings may revert to the owner if actuals come in below the GMP, depending on contract language; the fee is negotiated and visible, and risks above the GMP (if scope doesn’t change) sit with the CM/GC. Owners like CMAR for transparency and early collaboration.

2) Cost-Plus

You pay the actual cost of work plus an agreed fee (percentage or fixed). This can be fast to start and fair when the scope is evolving, but it requires strong reporting and controls to manage the open-ended nature of costs.

3) Lump Sum (Design–Bid–Build)

You receive a single fixed price based on complete documents. This shifts more risk to the contractor but reduces flexibility once awarded; changes flow through formal change orders.

A quick way to model GC costs in your 2025 budget

Let’s say your conceptual project budget for construction cost of the work (trades, materials, equipment—not including land/FF&E/soft costs) is $8,000,000. A reasonable GC budget framework could look like:

• Preconstruction: Often included or billed as a modest fixed fee credited at GMP—assume $25,000–$75,000 depending on complexity and duration.
• General Conditions: 6–12 months of field staffing and site logistics—assume $450,000–$900,000 (scale with duration and site constraints).
• Bonds/Insurance: Project-specific; 0.8%–2.0% of the cost of the work is a typical planning band.
• Contingency: Start at 5–10% (risk-based; may be split as Owner/Design/Construction contingencies).
• CM/GC Fee: Negotiated. On CMAR, a visible management fee (e.g., a few percent) plus the other line items above; on a lump sum, the fee is embedded.

Tip: Ask bidders to use a common alternates matrix and to break out general conditions, bonds/insurance, fee, and contingency the same way. Apples-to-apples formats reveal where the differences really are: staffing, logistics, procurement strategy, or risk assumptions.

What drives your GC number up or down? (Hire a General Contractor in 2025)

• Procurement strategy: Early packages (site, steel, long-lead MEP gear) can pull risk out of the critical path and trim general conditions.
• Design maturity: Clear, coordinated documents reduce RFIs/rework; fewer unknowns = lower contingency.
• Market intelligence: Sub coverage, trade partner relationships, and live pricing during precon determine how “real” your GMP is.
• Schedule realism: A three-week schedule shave can cost more in premium time and inefficiency than it “saves” on paper.
• Delivery method fit: Complex, mission-critical, or occupied projects usually benefit from CMAR/GMP collaboration.

Why owners choose APX Construction Group in 2025

APX serves Minnesota and the Upper Midwest from our Mankato hub (with a growing presence in Sioux Falls), delivering transparent preconstruction, tight schedule control, and right-sized logistics plans that protect your budget. We put cost data to work early—pairing local trade outreach with target-value design—to lock in pricing and sequence critical materials (like switchgear, air handlers, and specialty finishes). We also use field-proven tech (drone documentation, model-based quantity checks, collaborative schedules) to keep stakeholders aligned and change exposure low—key advantages in a market where costs are still rising modestly. (Regional indices continue to show year-over-year increases through 2025, especially around Minneapolis–St. Paul.)

FAQ

Is a “10% fee” good in 2025?
It depends on what’s included. If bonds, insurance, and general conditions are called out separately (CMAR), the management fee may look small (e.g., a few percent), while the overall GC budget is carried elsewhere. If you’re seeing one blended number (lump sum), a “fee” may be absorbing several cost categories. Always evaluate the total GC-related spend and the risk posture.

What contingency should I carry?
A 5–10% range is a common planning target, adjusted for scope maturity, schedule tightness, and complexity. Highly complex or fast-track projects may justify more; well-defined, uncomplicated scopes may need less.

Are costs going up or down this year?
Most reputable indices point to modest upward movement in 2025—lower than the spikes of 2021–2022, but still positive. Owners should plan for escalation and get strategic about early procurement.

Which contract type will save me the most?
The best value comes from aligning the delivery method with project risk. CMAR/GMP often delivers better outcomes when the scope is evolving or when schedule and phasing complexities are high; a lump sum can be efficient for fully designed, straightforward projects. Cost-plus fits highly fluid scopes—but only with strong controls and transparency.

Next steps: get a real number (not a guess)

If you’re exploring a 2025 commercial project in Minnesota or the Sioux Falls region, invite APX Construction Group in early.

• Build a target-value budget with alternates and “good/better/best” options
• Produce a risk-adjusted schedule and logistics plan that right-sizes general conditions
• Identify early packages to de-risk long-lead items and winter work
• Deliver a transparent GMP (or lump-sum) backed by real trade coverage

Let’s talk about your scope, schedule, and budget drivers, and what your GC costs should be in 2025, and let’s get your project started!