Subcontractor Project Manager vs Employee - Which Saves You More?
- John Mortensen
- Oct 10
- 5 min read
Introduction
Every construction owner or contractor eventually faces the same question: “Should we bring project management in-house, or hire it out?”
On the surface, paying a full-time project manager a $150,000 salary seems comparable to hiring a professional subcontractor or consultant for the same amount. But in reality, the true cost of an employee far exceeds the paycheck — and that doesn’t include the hidden risks, overhead, and downtime.
For most owners—especially in Alaska, where project workloads fluctuate dramatically between seasons—hiring an experienced subcontractor project manager is both cheaper and more effective.
1. The Hidden Costs of “In-House”
Why Employee Costs Are Higher Than the Salary You Are Paying
When you hire a full-time project manager, you’re not just paying a salary. You’re taking on a fully burdened cost structure that includes payroll taxes, insurance, benefits, paid time off, and tangible assets like company vehicles, laptops, and software subscriptions.
In Alaska, where project managers frequently travel to remote sites, these vehicle and travel benefits alone can add $15,000–$25,000 per year to the employer’s cost. Once you factor in insurance, vacations, office space, and administrative overhead, the math changes dramatically.
The True Cost Breakdown of a $150,000 Employee Project Manager
Base Salary: $150,000
Payroll Taxes (FICA, Medicare, FUTA, SUTA): $13,500
Workers’ Comp & Liability Premiums: $4,500–$7,000
Health, Dental, Vision Insurance: $14,000–$18,000
401(k) / Retirement Match: $4,500–$7,500
Paid Time Off (Vacation, Sick, Holidays): $12,000
Training / Licensing / Continuing Education: $2,500–$5,000
Company Vehicle: $12,000–$18,000
Fuel / Mileage Reimbursement: $3,000–$6,000
Cell Phone, Laptop, Software, IT Support: $3,000–$5,000
Travel Per Diem / Lodging (Rural Alaska): $8,000–$12,000
Office Space & Administrative Overhead: $8,000–$10,000
Estimated Fully Burdened Employee Cost: $235,000–$269,000 per year
That’s 57–79% more than base salary — meaning every $150,000 employee effectively costs the company between $19,500 and $22,500 per month.
2. The Subcontractor Advantage
Flat-Rate Simplicity and No Hidden Burdens
By contrast, a subcontractor Construction Project Manager (CPM) or Owner’s Representative consultant can deliver the same or higher-level expertise without those burdens.
When you engage a subcontractor for $150,000 per year (or a comparable hourly rate), that figure is the total cost — no benefits, no taxes, no HR overhead, no paid time off, and no hidden liabilities. You pay for productive, measurable work only.
Cost Savings at a Glance
Total Annual Cost: Employee $235,000–$269,000 | Subcontractor $150,000 flat
Taxes, Benefits, Overhead: Employee adds $85k–$120k | Subcontractor included in contract
Idle Time: Employee paid year-round | Subcontractor paid only for active work
Liability Exposure: Employee = Employer bears risk | Subcontractor = Contractor insured
Termination Cost: Employee = Severance, notice, unemployment | Subcontractor = Ends cleanly
Administrative Burden: Employee = HR, payroll, recruiting | Subcontractor = Simple invoicing
Flexibility: Employee = Fixed full-time | Subcontractor = Scalable by project or season
Net Owner Savings: $85,000–$120,000 per year (35–45% lower cost)
3. Alaska Makes the Difference Even Greater
Why Flexibility Matters in Alaska Construction
For owners in Alaska, the advantages of subcontracting multiply:
Seasonality: Construction seasons are short; downtime is long. Paying a full-time PM year-round wastes capital.
Remote Logistics: Subcontractors already manage barge schedules, freight, and rural travel costs — they absorb that complexity, not you.
Specialization: Federal, State, or DEED compliance, Davis-Bacon wage tracking, and rural site logistics are specialized skills already mastered by subcontractors.
Reimbursable Funding: Many public entities can directly bill contracted project management services to Federal, State, capital or DEED grant budgets, while employee costs must run through payroll.
In short: Alaska’s environment rewards flexibility, not fixed payroll.
4. Quality and Accountability
Performance-Driven Results
A key misconception is that subcontracted project managers are “less invested” than employees. In reality, the opposite is true — a subcontractor's livelihood depends on performance and reputation.
Unlike an employee who is paid regardless of results, a subcontractor’s contract can be terminated for non-performance. Renewals depend entirely on delivering quality, documentation, and on-budget outcomes.
Risk and Cost Transparency
Motivation: Employee = Job security | Subcontractor = Performance-driven
Accountability: Employee = Annual HR review | Subcontractor = Continuous deliverable-based oversight
Cost Transparency: Employee = Fixed payroll | Subcontractor = Itemized, measurable billing
Risk Coverage: Employee = Owner bears risk | Subcontractor = Contractor insured
5. Real-World Financial Impact
Employee vs Subcontractor Cost Comparison
Employee Project Manager (W-2):
Base Salary: $150,000
Payroll Taxes: +$13,500
Health & Benefits: +$16,000
Retirement / 401(k): +$5,000
Insurance & Workers’ Comp: +$6,000
Company Vehicle, Fuel, Per Diem: +$20,000
Office, Equipment, Admin: +$10,000
PTO & Training: +$12,000
= Total Annual Cost: ≈ $232,500
Subcontractor Project Manager:
Contract Fee: $150,000 flat total cost= Annual Savings: ≈ $82,500 (35% less)
The True Savings Potential for Owners
Even a single avoided change order or delay—common in rural Alaska projects—can save an additional $50,000–$100,000, compounding the financial advantage of outsourcing.
6. When to Use a Subcontractor Project Manager
Project Types and Funding Scenarios That Benefit Most
Projects are seasonal or intermittent (mechanical, electrical, plumbing (MEP), civil, road, and underground construction, summer renovations, roof replacements, HVAC & HVAC Controls upgrades).
Funding is capital-based or grant-funded, not general operations.
Specialized compliance or technical oversight is needed temporarily.
You want flexibility to scale management with workload.
You value documentation and accountability for federal, state, DEED reimbursement or audits.
In other words, when precision and flexibility matter most — which describes nearly every Alaskan contractor or construction project owner.
7. Fremontii’s Approach: Expertise Without Overhead
How Fremontii Delivers Value Across Alaska
Fremontii, LLC, was built on one core principle: owners and contractors deserve expert representation without the burden of permanent payroll.
Our subcontractor project management model delivers Alaska-experienced professionals, transparent billing, defined deliverables, and scalability for every project.
Whether managing a $6M roof replacement in Nome or a $100M building modernization in Anchorage, Fremontii provides the owner’s and contractor's perspective — protecting your funds, scope, and schedule.
Conclusion
For Alaska construction project owners and contractor's the numbers and logic are clear. Hiring a subcontractor construction project manager isn’t just cheaper — it’s smarter business.
It cuts payroll overhead by up to 40%, eliminates idle time, transfers liability, and gives owners the flexibility to bring in top-tier expertise only when it’s needed.
When you hire Fremontii as your subcontractor project manager, you’re not adding overhead; you are reducing it — you’re investing in precision, protection, and performance.
About the Author
Written by John Mortensen, President of Fremontii, LLC — a boutique owner’s representative and construction project management firm serving Alaska’s commercial, industrial, and private and public-sector markets. Fremontii specializes in representing owner's interests in complex, remote, and capital-funded construction projects across the state.
Learn more about our comprehensive project management services, from pre-construction planning to closeout, ensuring efficient execution and timely delivery.
