Business

Scaling to 8 figures: What makes a construction project manager successful (Part 2 of 3)

You want your construction company to stand out from the competition, but you're not sure what steps to take next? Discover how project managers can help scale your business – and fast.

Graphic showing a construction project manager using software to help with this job.

Scaling to 8 figures series: This is the second installment of our three-part series highlighting business growth strategies. Previously, we shared four simple strategies to scale your company to eight figures. Today, we are highlighting a construction project manager’s role in that growth.

Here’s the scoop: In the world of residential construction, the terms “project management” and “project manager” have become somewhat watered down. There’s more to the job than what first comes to mind. Much more.

Behind the fancy title and company truck, most project managers are essentially professional firefighters. They’re doing their best with what they have, but more often than not, they’re running from one fire to the next. Project managers in title but not in practice. If this scenario resonates with you, keep reading.

The principles of project management are universal. You can use them to organize your kid’s carpool or build a $2 billion airport terminal expansion. It’s a system. A science. A craft to be mastered. And not just something you slap on a business card because it looks good to a client.

At its core, project management is the process of leading a team to achieve a job’s goals within the given constraints: scope, budget and time. It’s a learned skill with nuance and complexities, not something you could expect yourself to just “pick up on the job site.” You can get a master’s degree in this stuff!

So don’t worry… if you’re feeling behind in this area, we’re here to tell you so are many other home builders. Construction is a fragmented space and sometimes slow to pick up on technologies and methodologies other industries have had for decades.

But, if you get going on this now, you’ll still be way ahead of most of your competition. Now, the specific details of project management for building a home versus project management for building software are obviously going to differ. But the fundamental underpinnings are the same.  And it’s these “fundamental underpinnings” that, from our perspective, are missing for many contractors.

How can you tell if your construction project management needs work?

When construction coaching programs like the Breakthrough Academy work with builders, they look for clear signs a project management system needs an upgrade. Read through this checklist and see if any of the following apply:

Your relationship with the client gets worse (not better) as the project goes on.

Good project managers earn the trust and respect of their clients as the job progresses. Bad project managers lose it. If there’s a lot of grumbling or frustration between all parties at the close of your jobs, you have a problem.

Your organizational culture normalizes missed budgets and deadlines.

If delivering projects on time and on a budget is some ideal you strive for but rarely achieve, something’s up. While other issues might play a role (estimating, incompetent trade partners, weather or unreasonable clients), the normalization of missed deadlines and cost overruns is a surefire sign a company’s processes are inadequate or non-existent.

With world-class project management, budgets and schedules are commitments that are upheld, not just ‘best guesses’ that may or may not end up a reality.

Your net profit is below 8%.

As a contractor, your goal every year is to cram as much revenue through your overhead as possible. You have fixed expenses every month. This is stuff you need to pay whether you build a lot or a little: office, vehicle leases, insurance, salaries … the list goes on.

Excellent project management systems ensure you hit milestones, invoice on time and get paid. Over the course of an annual business cycle, these accumulate into more revenue in your pocket to recoup fixed expenses and then build a healthy bottom line.  When this is working for you, year-end net profit percentages of 10%, 15% and 20% are possible.

Your project managers are visibly frustrated or overwhelmed almost every day.

Sound project management fundamentals – like a detailed project plan, critical path and stakeholder communication plan – reduce your team’s stress levels. They control the job from start to finish with clear and simple procedures in place for when little fires do inevitably erupt.

If your project managers are constantly talking about how slammed they are, there’s a good chance this is a missing piece.

What are some of the building blocks of solid construction project management?

If you Google “project management fundamentals,” you’ll see a bunch of complex language and explanations. While there’s a lot of good information out there, most contractors want the systems with the highest return on investment and lowest headache to implement. If we look at what you absolutely need as a builder or renovator, it comes down to four main things:

1. A dialed-in project plan

Building a project plan starts with an accurate and thorough estimate in which all the details are exact. Within this plan, you’ll also want to include outlines for material management, risk management, budget line items and job site safety.

The upfront work on these creates an efficiency multiplier through the life cycle of a project.

2. Complete financial control

When it comes to the numbers, good project managers need to be able to answer: How are each of my line items performing? What is my projected gross profit on this job? How are my over/under billings for fixed-cost projects? If forecasted gross profit isn’t where it needs to be, can they look at their budget and find places to make up ground?

It’s also vital they’re able to articulate how change orders from the client will affect the overall cost in a diplomatic way. This reduces surprises and those awful “but I thought this was included!?” conversations everyone hates.

3. Efficient scheduling with a critical path

When most contractors want to make more, they charge more. But, if you look at exceedingly profitable companies – those with net profits of 18% to 22% – the unique ability they have that others don’t is their ability to hammer through projects fast.

Their schedules follow a critical path with frequent milestones they can drive toward. They’ll do a million-dollar job in 10 months when another contractor would take the full year. These overhead efficiency gains are what trickle down to your bottom line.

4. Structured communication plans

In construction, communication is key. It needs to be cleaner, more structured and to the point. You’ve got houses to build and not a minute to waste.

The first thing a great project manager does is lay out all the people who could theoretically come in and affect a build in a positive or negative way. Outline what meetings need to take place and with whom. The clients. Architects. Designers. The city. Trade partners. Who else is in the mix here for this project? When do we need to be speaking with them? What should we be talking about?

Pre-booked and agenda-driven meetings deliver higher quality communication with fewer phone calls. When you free up time, the results always follow.

The personality profile of good construction project managers

There are certain characteristics all excellent construction project managers have.

First off, they’re instrumental. This is someone who comes across as confident and competent to others. It’s all about how they show up and communicate with the world. They are articulate and use their vocabulary well to empathize, persuade and lead those around them. With so many people taking cues from project managers, they need to be self-assured.

Secondly, they possess natural problem-solving skills. They independently think through issues in a solution-focused way before bringing the mess to business owners. You need project managers to solve challenges by themselves because your role as a leader keeps expanding. The day-to-day stuff just needs to get handled at some point.

Here’s a quick coaching tip. When team members come to you with problems, ask them to answer three questions on their own first.

  1. What’s the issue? Sometimes they don’t even understand the root problem.
  2. In my professional opinion, what are the three ways to solve the issue?
  3. If I couldn’t talk to the owner, what path would I take to solve the problem?

By putting the critical thinking back on them, you stimulate the problem-solving part of the brain.

Third and finally, all great project managers need to score high in tenacity. They need to be bulldogs who can dig deep and get it done. They are the driver of a project, pushing things forward always. They’re willing to go late and hold people accountable when they need to. It’s these key leaders who set the tempo for the rest. A laid-back approach just won’t work.

For a fully developed interviewing system that gives you easy-to-follow steps on how to interview for these traits, check out Breakthrough Academy’s Contractor Quick Tools Guide.

A builders guide to project manager interviewing

Get the right tech for your construction project managers

Project management is hard, and construction is vastly more complex than most people realize. Just remember, your competition might not even be putting any processes like this into place. If you get going now, significant gains are possible.

One way to set your project managers up for success is by giving them the right tools for their trade. While the crew builds dream homes, they’re building out schedules and plans. Nails and hammers won’t help them get their job done.

Instead, they need construction software like Buildertrend. This platform helps project managers put into place the solid infrastructure we discussed above.

Tech goes beyond spreadsheets or pen and paper. It’s fully mobile, communicates changes in real-time and centralizes all details for any given job. Consider Buildertrend your managers’ single source of truth – and one that saves them hours of work. Try it risk free today.

Our series on scaling to eight figures continues. In our next blog, we’ll take you through the steps on how to hire construction workers in a labor shortage. We’ll provide your tools and direction to elevate your recruitment processes and grow your business.

About The Author

Benji Carlson

Benji Carlson Benji is host of Breakthrough Academy’s “The Contractor Evolution Show.” Before hosting this, he assessed over 1,000 contracting companies to get them on track to scale. Breakthrough Academy systemizes contracting companies for growth. If you’re a quickly growing contractor who wants help implementing better project management infrastructure, contact us here.

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