Turning Your Project Managers into Business Managers


A special guest blog by Tyler Pare of FMI

Project managers often control in excess of $1 MM, $5 MM, even $ 10 MM in annual contract revenue and risk. However, project managers often do not view themselves as business managers. They view themselves as middle management—cogs in the wheel of a great machine that churns through backlog year-in and year-out—leaving the business issues up to division managers and executives. FMI Corporation has been on the consulting equivalent of a crusade for more than six decades, attempting to dispel the faulty notion that shrewd business acumen amongst project managers is anything less than essential for successful construction firms. If financial awareness and leadership capabilities are lacking at the project manager level in your organization, consider the tactics below to hone the focus of the most important management echelon in your organization.

Connect Vision—Do your project managers understand the importance of their role in achieving the vision for your business?

Project managers must be able to see the forest for the trees. In this application of idiom, the trees are projects. Without comprehending the vision for the business, project managers focus on the task-at-hand and the day-to-day. However, sound business decisions must be made in the context of the business as a whole, not a singular project. How would your project managers approach their roles differently if they felt responsible for achieving the ten-year vision for the business? Would it change the way they interact with customers? Would it change the way they develop and mentor assistant project managers or project engineers? Would it change the way they view their own careers and inspire them to achieve not project milestones, but personal milestones? Share your vision for the business with your project managers and ask them to help you build a successful organization.

Set Expectations – Have you clearly defined what you expect from your project managers?

It sounds simple, but few construction firms have clearly defined what they expect from their project managers. Ultimately, project managers should be responsible for the financial performance of the project and delivering value for the customer throughout the project lifecycle and beyond. Gross margin (gain) and cash flow (positive) are two project-specific key performance indicators for which every project manager should be held accountable. In addition, project managers must deliver and maintain a high degree of customer satisfaction. The vast majority of construction businesses thrive on repeat business. It is the project manager’s responsibility to ensure that customers will purchase your firm’s services again in the future.

Share Information – You cannot hold project managers accountable for information that you do not share with them.

Project managers need to know and understand how their projects are performing financially on a monthly, weekly and daily basis. Many construction business owners are hesitant to share “the numbers” with their project management team. If project managers are not privy to financial performance, they certainly cannot manage it. Furthermore, many firms will say that project managers “have access” to project accounting software, and that the information is available for their review, if they want it. Reviewing project financials should be mandatory, and there must be an accountability mechanism in place. Do your project managers report-up to division managers or executives on the performance of their projects? If so, how often? If project managers feel a sense of accountability for performance, they typically approach their roles differently and with a higher sense of purpose.

Lead – Do you motivate and inspire your project managers?

All great organizations have an undeniable commonality – great leadership. When motivation is lacking in the project management ranks, rarely is it a symptomatic of weak project managers. Rather, low morale typically stems from absent or misguided executive leadership in the business. Who is responsible for inspiring the troops in your business? Project managers often feel like they are on an island, stationed in some distant outpost a.k.a. a jobsite trailer. Without regular reinforcement, encouragement and leadership, project management performance can languish. Task your company’s leadership with regular jobsite visits and ensure that you are providing focused motivation for your project managers. In addition to expecting more from project managers, inspire them more.

The strength of you project management team will be the difference between winning and losing in a increasingly fierce, competitive landscape.

What steps will you take to empower your project managers, inspire them, and turn them into business managers?

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As a consultant with FMI, Tyler focuses on leveraging his construction experience, coupled with his advanced knowledge of business mechanics, to help clients mitigate risks and improve productivity.

Prior to joining FMI, Tyler worked for multiple general contractors in the Southeast while completing his undergraduate and graduate educations. Tyler has substantial experience in construction estimating, both in negotiated and hard-bid environments. He also has operations experience, serving as project manager on several commercial and industrial projects. Tyler can be reached at tpare@fminet.com or by phone: 813-636-1266.

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