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A Development Management Agreement (DMA) is a contract between a developer and a development manager. The agreement sets out what the manager is responsible for, how they’re paid, and what decisions they can make.

Let’s talk about what’s in a DMA, how it works, and why it matters on real construction projects.

What is a Development Management Agreement (DMA)

A Development Management Agreement (DMA) is a formal construction contract that gives overall responsibility for managing a development project to an independent development manager. The development manager acts as the developer’s agent and oversees the project from early planning through construction and final delivery.

Key Inclusions in a Development Management Agreement

A strong DMA clearly outlines the roles, obligations, and limits of authority between the developer and the development manager.

1. Scope of Services

The agreement lists specific responsibilities, such as land acquisition, feasibility studies, preparing development applications, managing design consultants, tendering contractors, overseeing construction, and assisting with leasing or sales. These services are often detailed in a schedule or appendix.

2. Delegated Authority

The DMA sets financial thresholds that determine which decisions the development manager can make independently. For example, contracts above a set value may require written developer consent, while lower-value decisions can be made under delegated authority.

3. Program and Deliverables

The DMA includes a detailed project program, with milestones tied to approvals, funding, construction start, and completion. It may also require the development manager to report regularly on budget, schedule, risk, and consultant performance.

4. Representation and Approvals

The development manager is authorized to represent the developer in meetings and to negotiate on their behalf. However, the developer or the owner usually retains approval rights for critical matters, such as procurement strategy, land deals, or material scope changes.

Fee Structures in a Development Management Agreement

The DMA outlines how the development manager will be compensated. The structure often reflects the project’s complexity, risk profile, funding strategy, and delivery method. Choosing the right model helps align the manager’s incentives with the project's success.

• Percentage of development costs: One of the most common fee models. The development manager earns a fixed percentage of the total development cost, which includes both hard costs (e.g. construction) and soft costs (e.g. design, legal, permits). This model suits projects with clearly defined budgets and stable scopes.
• Fixed fee per milestone: The fee is broken into fixed amounts tied to key project phases, such as achieving planning approval, securing finance, groundbreaking, or reaching practical completion. This model gives the developer more budget certainty and links payment to tangible outcomes.
• Success fee or profit share: Used to reward performance above baseline expectations. A success fee is typically paid when the manager delivers below budget, ahead of schedule, or hits specific KPIs (e.g. cost per m², tenant pre-commitments). Profit sharing may apply when the manager contributes to increasing the project’s return, especially in revenue-generating developments.
• Income-based or hybrid models: In some agreements, the fee is based on a percentage of development income, such as net sales proceeds or leasing revenue. These models are more common in mixed-use, retail, or investment-driven projects, and often combine base fees with performance incentives.

The fee structure must balance fairness, performance incentives, and risk. It should also account for the manager’s level of authority, responsibility, and commercial exposure throughout the development lifecycle.

Risk Allocation and Performance in a  DMA

The DMA functions as a governance tool. It allocates risk, sets performance benchmarks, and defines consequences for underperformance.

• KPIs: Key performance indicators are built into the agreement. This establishes measurable goals, such as completion dates, budget targets, or pre-commitment thresholds for tenants or buyers.
• Termination clauses: This gives the developer the right to end the agreement if key obligations aren’t met, or if the manager fails to perform.
• Dispute resolution: A standard DMA includes a clear escalation path for resolving disputes, often starting with negotiation and moving to mediation or arbitration if needed.

Final Thoughts on Development Management Agreement

A well-written DMA sets clear expectations between the developer and the development manager. It spells out who does what, how decisions get made, and how performance is measured before the first shovel hits the ground.

For project managers and owners is a tool to protect the project’s budget, timeline, and outcome. When roles, authority, and risks are defined early, it reduces friction later, especially during design changes, contractor claims, or delivery delays.