Why Charging by Construction Volume Is Broken

Charging by construction volume is broken when a PMIS fee rises with project value even though the number of users, workflows, documents and support requirements stays flat. Inflation and scope changes can increase the software bill without increasing digital workload or outcomes. Owners should instead evaluate predictable enterprise pricing, clear caps, portfolio-wide access, defined data standards and KPIs that connect PMIS spend to cycle times, adoption, rework, change control and cost predictability.

What Why Charging By Construction Volume Is Broken Means in Practice

Construction-volume pricing calculates a PMIS fee from a project’s financial scale. The contract may refer to total contract value, GMP, budgeted construction cost or the capital value managed in the platform during a year. The mechanism may be a percentage of construction value or a rate per unit such as dollars per $1 million of construction value. Some agreements use value bands or tiers.

The model is often misunderstood because it appears to scale fairly with project size. A larger project may have more parties, documents and commercial activity. But construction value is not a reliable proxy for the work a platform performs. A low-value brownfield upgrade can generate heavy RFI, submittal, inspection and risk traffic. A large, standardised greenfield package may generate less digital activity per dollar. Owner and contractor reports cited by ENR have indicated that RFI rates per $1 million can vary by more than five times between project types, although no universal ratio is published.

Construction value also changes for reasons unrelated to PMIS usage. Turner Construction’s Building Cost Index rose by about 40% between the first quarter of 2020 and the fourth quarter of 2023. The US Bureau of Labor Statistics’ Producer Price Index series for non-residential building construction also rose by about 40% between January 2020 and mid-2023. A volume-linked fee can therefore rise by 30–40% while the project count, user population and document workflow remain broadly unchanged.

The issue is not that every vendor uses this model or that every volume-based contract produces the same result. Enterprise pricing is frequently negotiated privately. Procore, Autodesk Construction Cloud and Oracle do not publish enough current information to establish a general policy that each charges solely by construction volume. The evaluation question is whether the proposed meter reflects the owner’s actual workload, governance needs and measurable value.

Why This Matters for Project Owners & Capital Program Directors evaluating PMIS platforms

For an owner, the software budget sits inside a multi-year capital plan, not beside one isolated project. Transport, healthcare, higher education, utilities and government programmes often pass through multiple funding approvals and reporting cycles. When the PMIS line rises automatically with construction inflation or scope additions, finance teams have to explain an increase that may not represent additional users, configuration, support or outcomes.

Consider an illustrative calculation, not a market benchmark: a $5 billion, five-year programme priced at 0.2% of construction value would imply $10 million in PMIS fees. If the construction value rises, the fee rises automatically under the same rate, even when platform usage is stable. The research dossier contains no public benchmark for a standard PMIS percentage, so the rate should not be treated as typical.

Volume pricing can also distort portfolio coverage. If project teams try to stay below a value threshold, smaller packages may move into spreadsheets, email or separate collaboration tools. That creates shadow IT and fractures the common data environment (CDE). The result is weaker portfolio reporting, incomplete audit trails and less consistent evidence for claims, quality, safety and approvals.

This matters because owners need a consistent view across projects. A central capital programme office may want the same minimum fields for an RFI, submittal, inspection, change order and risk item. It may also need to compare S-curves, contingency draw-down, cost value reconciliation and schedule exposure across project vintages. If every project adopts a different tool or workflow, those comparisons become reconciliation exercises.

Governance is equally material. The Government Accountability Office’s report GAO-22-104626, published in June 2022, highlights the importance of stronger oversight and cost-estimation controls in federal facilities programmes. For public and regulated owners, a software fee linked to higher construction spending can create difficult optics: the vendor’s revenue increases with the cost base, while the owner is seeking cost predictability and better outcomes.

That does not prove volume pricing causes overruns. The research does not establish that causal relationship. It does show why owners should separate software cost from construction inflation and test the commercial model against stable, operational measures.

The Traditional/Manual Approach — and Where It Breaks Down

The traditional approach treats the PMIS as a project-level purchase. Each major project negotiates terms, configures workflows and trains its team, often from scratch. The fee is tied to that project’s value. There may be no central rule stating which RFIs, submittals, inspections or change orders must be processed in the system, and no baseline for measuring performance before implementation.

That arrangement creates four recurring failure points:

• Inconsistent adoption: one project uses the PMIS for formal correspondence and approvals while another relies on email, spreadsheets or shared folders, despite both contributing to the owner’s programme data.
• Unclear value: without baseline RFI cycle time, submittal duration, rework or change-order data, the owner cannot connect PMIS spend to a measurable change.
• Fee escalation without proportional workload: construction inflation or a programme extension increases the bill even when the user cohort and workflows are unchanged.
• Commercial ambiguity: teams may dispute whether the billing base includes contingency, FF&E, change orders above GMP, design packages or only construction contracts.

Fragmented information has operational consequences. FMI and PlanGrid’s 2018 report, Construction Disconnected, estimated that poor data and miscommunication account for about 52% of rework. McKinsey Global Institute’s Reinventing Construction report, published in 2017, found that large construction projects typically take 20% longer than scheduled and can be up to 80% over budget; it identifies fragmented information and weak controls among the factors associated with these outcomes. Neither source isolates volume-based PMIS pricing as the cause.

The practical implication is narrower and more useful: owners should not assess a PMIS by its fee formula alone. They should examine whether the contract encourages complete adoption, consistent information capture and a measurable operating model.

Step-by-Step Framework

This framework can be used before a procurement, during an RFP or at renewal. It is pricing-neutral until the technology selection step.

Step 1 — Assess current state

Start with a portfolio inventory. Record the number of active and planned projects, annual CAPEX, programme phases, delivery models and major packages. Then map the existing tool landscape: PMIS, CDE, ERP, scheduling system, risk register, document repositories and spreadsheet controls.

For each core workflow, document the actual path rather than the intended one. Follow an RFI from creation to response and closure. Do the same for submittals, design reviews, inspections, non-conformance reports, safety incidents, change orders and risk items. Record who owns each step, what information is mandatory, where approvals occur and which activities happen outside the PMIS.

Create five working artefacts: an application inventory, as-is process maps, a baseline KPI report, a stakeholder map and a three-to-five-year spend profile. If a KPI is unavailable, record it as unknown rather than manufacturing a baseline. Include PMIS fees, internal administration, integrations, training and change-management effort in the spend profile.

Step 2 — Define standards, templates & governance

Define the portfolio processes that must be consistent. At minimum, consider documents, RFIs, submittals, design reviews, inspections, safety, non-conformance, changes and risk. For each process, specify the minimum data fields, approval roles, status values, naming conventions, retention requirements and escalation path.

Use ISO 19650-1 and ISO 19650-2, published in 2018, as reference points for information management and CDE practices. The goal is not to force every project into an identical delivery method. It is to define the information that the owner must receive and the controls that make it reliable.

Assign governance explicitly. A central PMO or capital programme office should own the standards. Process owners should approve template changes, while project teams should document exceptions. This avoids a situation where every project customises the PMIS until portfolio reporting no longer works.

Step 3 — Select & implement supporting technology

Evaluate the commercial model alongside the workflow and data model. Ask whether fees are linked to users, roles, modules, usage bands or an enterprise licence. If a proposal uses construction value, define the billing base precisely, require annual caps or bands, explain treatment of inflation and change orders, and model the cost under programme expansion and contraction.

Test whether the model allows every relevant project and package to use the CDE without a financial penalty for inclusion. Ask for a three-to-five-year total cost of ownership model that includes configuration, integrations, training, administration and renewal terms. Exact enterprise pricing for major PMIS vendors is often not publicly specified, so the owner must compare written proposals on the same assumptions.

Assess interoperability with ERP, scheduling, risk and financial systems. For BIM-related information, ask about open formats such as IFC and BCF where relevant, and about alignment with ISO 19650 information requirements. Pilot the core workflows first: documents, RFIs, submittals, changes and inspections. Use two or three projects with different characteristics rather than a single showcase project.

Step 4 — Roll out, train and monitor adoption

Appoint process owners, not only system administrators. An RFI process owner, for example, is responsible for the workflow definition, mandatory fields, response roles and escalation logic. The project manager remains accountable for delivery; the process owner protects consistency across projects.

Use role-based training for owner project managers, consultants, contractors, commercial teams and inspectors. Provide just-in-time refreshers at design release, mobilisation, construction start and handover. Monitor the percentage of RFIs created in the PMIS rather than email, the percentage of submittals processed through the defined workflow and usage by role.

Report adoption to programme leadership at an agreed interval. Low usage is not simply a training problem. It may indicate that the workflow is too complex, the required fields are poorly designed, mobile access is inadequate or the contract does not require the project team to use the process.

Step 5 — Measure impact against baseline KPIs

Compare pilot projects with similar legacy projects where possible. Track average RFI turnaround time, submittal approval time, change-order approval time, change-order volume and value, rework cost as a percentage of contract value, safety reporting completeness and closure time.

For portfolio governance, track cost predictability by comparing final or forecast cost with the authorised budget, contingency draw-down curves, and the proportion of required processes executed in the PMIS. The UK Infrastructure and Projects Authority’s Project Routemap materials, published between 2017 and 2022, identify cost predictability as a core project KPI.

Dodge’s 2020 report, Connecting Teams, Improving Project Outcomes, reports that standardised digital workflows can reduce RFI cycle times by 20–50% on best-in-class projects. Treat that as a cited relative finding, not a guaranteed target. Establish the owner’s own baseline and target, then calculate value per dollar of PMIS spend. Also track PMIS cost per $100 million of CAPEX year over year, while separating inflation effects from changes in project count, scope and platform usage.

Common Mistakes to Avoid

• Leaving the billing base undefined. Specify whether construction volume includes contingency, FF&E, design, change orders above GMP and newly added packages.
• Accepting no cap or banding. Model the fee under inflation, rebidding, programme expansion and scope reduction. A fee that floats without a maximum creates an avoidable budget risk.
• Treating the PMIS as a project bid item. Project-by-project procurement can produce different tools, data structures and reporting logic across one capital programme.
• Under-specifying adoption. The contract and implementation plan should state which RFIs, submittals, changes, inspections and approvals must run through the PMIS.
• Ignoring TCO. Include internal administration, integration, training, configuration and change management rather than comparing licence fees alone.
• Adding AI without changing the operating model. Document classification, risk scoring or automated review needs relevant metadata, human approval rules and new measures such as classification accuracy and review time saved.

How AI-Native Platforms Like Zepth Change This Workflow

An AI-native platform starts with the project data model and CDE rather than adding isolated automation around a collection of project tools. That architecture matters when the owner wants to standardise information across a portfolio while increasing the amount of data that can be reviewed.

In Zepth, the unified project record in Zepth Core brings documents, quality and safety, site operations, project controls and risk management into the project workflow. Zepth AI is the intelligence layer across the platform. It can review submittals and RFIs against drawings and specifications, return a confidence score, draft RFI responses with cited references and flag risk early. A human must sign off on consequential outputs.

That operating model gives the owner a specific way to apply the framework. Standards and templates define the required information. The CDE holds the record. AI can classify documents, identify missing information, surface repeated design issues and draft workflow actions. The responsible project or commercial role reviews and approves the result.

The same principle extends beyond project delivery. Zepth Vector’s procurement workflows compare tender bids line by line, support contracts and vendors, and perform three-way matching before payment. Zepth Edge’s CapEx and financial management supports budgets and MIS reporting. Together, these capabilities let an owner connect procurement, delivery and financial information rather than treating each project as a separate value bucket.

Zepth does not charge per seat or per collaborator and does not price on construction volume. That separates platform access from construction inflation and makes it easier to budget for portfolio-wide adoption. The commercial question remains the same one any owner should ask: does the proposed model provide predictable access and produce measurable improvement in the workflows that matter?

The relevant comparison is not whether AI performs work without oversight. It is whether the platform reduces manual review, improves information consistency and gives the owner evidence for decisions. A human remains responsible for consequential approvals, while the system handles classification, comparison, drafting and early signal detection.

FAQ (schema-marked)

For the commercial review, use the framework to define your billing assumptions, baseline measures and adoption requirements before comparing proposals. Book a walkthrough and request the related framework and checklist for evaluating predictable PMIS costs.