Project managers are so often the foundation of what makes a great construction company. To many of us, that may sound obvious. 

However, what may not be so obvious (and even concerning) is the growing list of common project management skills which seem to have been forgotten. 

Project managers are the key link between your company's office staff (think finance, accounting, etc.) and the onsite operations team. Therefore, your project managers should be some of the most versatile and well-rounded employees the company has.  

Even still, I talk to so many construction companies who tell me how they aren't getting enough return from their project managers. Across all of these companies, I believe these challenges often fall back to a few underlying skills which project managers are simply simply falling short in. 

I sat down with Jack from our marketing team to discuss some of these skills which I believe are essential to becoming a successful construction project manager. 

Please enjoy the episode and don't forget to share your thoughts with us in the comment section down below!

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Podcast Transcript:

Jack Austin:

So, Jeff, um, one of the things that we talked about, with Greg last time he and I sat down, we started from, you know, kind of his point of view, working with current and past clients. What were some current maybe trends that stood out or some kind of recurring maybe problems or situations that clients kind of were getting

themselves in? we ended up focusing on, you know, project financials with his, you know, specialty and background, and, talked about the differences between some different specific financial statements that, you know, a company is going to want to understand the difference. between, same type of thing for you. I was curious whether it be, you know, project financials or other topics. I'm curious, are there any current, you

know, trends that you're seeing with your current or past projects, or are there any kind of recurring problems that companies are running into, which is kind of curious what you're, you know, what you're seeing that really stands out to you right now as far as problems that companies are coming to you with, hoping that you can offer advice on.

Jeff Robertson:

Kind of spinning off the, you know, the financial side of it from Greg’s perspective, looking at it from a company standpoint, a very common thing we see is that project managers have a low financial IQ. That’s very common in the industry. That shows up in a few different ways. Anywhere from the project manager not being made profit-loss responsible for the project, which is a best practice, that’s what you want. That kind of looks like, you know, treating your project like a little mini business, right? Running it, taking responsibility for the costs against the budget of the project. Surprisingly, a lot of construction companies these days don’t set their projects up that way. They just don’t see project managers … they just don’t see them in that way. Some of that could be a recognition of incompetency. Like I said, ‘their financial IQ is low, therefore, we can’t make them responsible for it’. It could be … It’s sort of … a chicken and the egg sort of thing, which is it? Is it that they don’t know, or you don’t want to give it to them [financial responsibility] because they don’t know, so there’s always something to tease out of that. Overall, I can say that project managers lack financial IQ, financial competency, as a general rule.

Jack Austin:

So, kind of staying big picture, what would be some other areas where that could kind of creep up and rear its head to being a problem, throughout their operations, other than, of course, you know, project management being one of the major ones?

Jeff Robertson:

It could crop up in pay applications, billing your client often doesn’t happen regularly, monthly. You should bill monthly. We come across clients who don’t do that. Or … another spin on that would be not turning in your pay applications on time, which … if your client enforces the contract, will delay your payment. So, it can show up that way. That’s a fundamental lack of understanding of contract management, but it’s tied to financials, to a certain degree. Sometimes that shows up because responsibilities aren’t clearly defined, who is responsible for getting that out the door.

One way that a challenge shows up there is because it’s money, people make accounting responsible for it. The problem with that, and this is another common thing we see, is accounting receives a bill, Accounts Payable, they receive an invoice for something. We just sat through a demo for a piece of software that could solve this, just yesterday … An invoice comes in, AP sees it, maybe they create commitments on their projects, maybe they don’t. But somehow, one way or another, the project accountant pairs that up, matches that up with the project and pays it.

And commonly, you’ll hear accountants complain about that, because they’re like, ‘I don’t know whether that invoice is valid or not. I know that we buy stuff from that lumber company, but I don’t know if what was delivered, what was on that invoice was actually delivered, I have no idea.’ And it doesn’t occur to people to ask the field, ‘Hey, do you want to turn a delivery ticket in to so that we can match up with that invoice. That feels like a very basic function to me, because we did it as far back in my career as I can remember, but we see clients not doing that now. The why, I don’t know the why, but that happens. Another way that could show up is … And the consequences of that I should say, are that you pay for things that didn’t get delivered, or got delivered damaged, or you got short ordered, you know? You ordered 100 2x4’s and only got 50 of them, accounting has no way of knowing that. I literally actually talked to a potential client yesterday that said that that’s how they do things. I talked to the CFO of a company that hopefully we’re going to work with, and he said that ‘Our accountants just pay the bills, there’s no connection to operations.’ He’s new, so he’s going to fix that, he recognizes it as a problem, but it happens. So, I don’t know if that’s a … I don’t know if that a symptom of project managers having lack of financial education, or competency. Again, I’m not sure which side is that? Is that a cart or a horse issue, I don’t know. It’s probably circumstantial-specific.

The other way that shows up is in Accounts Receivable, so who prepares the payout? A lot of clients see it as ‘Well that’s money, so the accountant should do it.’ But the accountant has no idea how far along the project is. If the project manager isn’t talking to them and saying ‘We’re 50% complete’, the accountant’s looking at their costs to date and saying ‘We’ve spent 30% of the costs, so I’m going to bill 30% .’ But the project manager could say ‘No no no, we’ve installed a bunch of stuff, we’re 50% complete, but you haven’t seen the bills yet, nobody has billed you for that work. It just happened in the last 2 weeks, we did a lot in the last 2 weeks. We’re further along, because the cost is always in arrears. Somebody just hasn’t billed you for it yet.’ By contract, you should bill for work in place, not cost incurred. That’s not how most contracts work. Some are cost-incurred, but for the most part, it’s work in place. So, you just may not have the cost in your system yet.

These are all challenges that … we face these a lot. This is a big topic for me, because I’m an operations guy who understands how a dollar flows from the project through the company. I know a lot of people in the field don’t, and they don’t even see it as their job, it’s not their responsibility at all. But we hear accountants complain. Accountants, finance and operations don’t always speak the same language, so there’s consistently some conflict. There probably should be some healthy conflict there, but often, we see unhealthy conflict, where they don’t see how they’re on the same team at all.

Jack Austin:

And so, the way to solve that, if I am hearing you right, is just to make sure that you’re always trying to align those interests between the project managers and the rest of the employees kind of working on the project? Just to make sure everybody kind of knows … everything is transparent, and everybody knows, kind of, what team we’re working on, that type of thing?

Jeff Robertson:

Yeah sometimes, sure. It could be …I mean, I come from it from a very particular point of view that project managers should have a certain level of accounting competency and take responsibility, that has to be given to them from the president or the top, whoever is running the business. That shows up in a lot of different ways. We’ve got a client right now where the project managers don’t buy out their scopes of work, Pre-Con does that. Buy out, for your sake, means ‘Signing up a subcontractor’. It means looking at their scope of work and writing out their scope of work on a document and issuing them a contract. That’s what ‘buyout’ means. They … Pre-Con does it. That’s not uncommon, it happens, that’s a model that people use. Big companies do it. Project managers that have worked there think ‘Oh okay, somebody else that works here goes and buys it and I manage that from there.’ That wasn’t my experience. We were handed the project from Pre-Con and we went and bought everything out. We cut the deals with our subs because we were going to be the one that managed it. So we developed those relationships, negotiated a deal and managed it from there. I could probably make a case on both of them, but it’s … for me, where that shows up is accountability for that scope of work and ultimately, the cost. You know, being able to manage the deal that was cut and I suppose that some people would argue ‘Well that gives you deniability as the project manager so you can legitimately, plausibly say ‘Oh, I didn’t know that was the deal you cut, so here’s how we’re doing it now’, and get away with it. I’m not so sure that’s the best ethical way to approach that, but I know people set it up that way on purpose. It’s a good cop bad cop kind of a set up.

Jack Austin:

Right,  definitely.  And  so, you  mentioned  some  good  examples  there  as  far  as  with  how  things  can  kind  of  get  lost  maybe,  or  responsibility  can  kind  of  get  taken  away  from  the  project  managers  when  it  comes  to  accounting,  invoicing,  and,  um,  kind  of  things  of  that  nature.  Just  kind  of  hearing that,  are  there  any  other  areas  within,  you  know,  operations  or  that  the  project  managers,  you  know,  are  going  to  or  should  have  their  hands,  I  should  say,  in  kind  of  taking  care  of  day  to  day  that  you  think  this  can  creep  up?  You  know,  like,  how  else  could  you  know  this,  maybe,  this  lack  of  financial acumen,  whichever  way  you  look  at  it,  maybe  kind  of  rear  its  head  to  being  an  issue?

Jeff Robertson:

So, it runs the gambit of how project managers don’t have that financial acumen. A more advanced example would be … just not understanding the basic profit calculation. Knowing that, you know, your total contract is the total revenue that you’re going to bill for, that a customer bills for, over a period of the course of a project, and not understanding how to manage costs. Think about, ‘Well what’s my labor cost against this project’, and how much … ‘do I have enough labor, how do you forecast labor, material forecasts’, if you’re not connected to the costs coming into the system as it’s being produced, and you’re not keeping track of that in any way, then you can’t possibly know where you’re going to end up at the end. So, it’s all connected, but we see this type of … we see these examples all the time.

Jack Austin:

Okay, and so, one thing I was thinking about too, because … because it sounds like, what I got definitely, I know you mentioned it a couple of time in our conversation the other day, was back when you were in the industry, it seemed more so like you were taking a more active role as you were explaining as a project manager in all these different areas across the financials, the accounting, and the actual operations. You’re kind of wearing a lot of hats, right, it sounds like. So, I was curious, when you speak to a client today for projects more so related to aligning and making sure the incentives and making sure the project managers and everything like that is working cohesively, what are some common traits that you feel like stand out and are essential overall for project managers in construction today to be able to be successful?

Jeff Robertson:

Great question. So, in no particular order cause I’m kind of riffing here … a project manager needs to be organized. So, a big part of project management is you have to keep track of a lot of things. Schedule, people, the owner. You’re managing people, maybe you’re managing … maybe you’re managing a whole team, maybe it’s just you and the superintendent. But you still have to manage your client, you still have to manage your subcontractors … so, having the ability to keep track of a lot of balls in the air, as they say, knowing a lot of things going on at one time. Being organized helps a lot in that. Being a good project manager means that you … well, what they taught us was … the very first thing they taught us was know your contract. Actually, the way they told us was ‘know your deal’. So, that means reading your contract, which surprisingly, a lot of project managers aren’t given access to the prime contract that they’re supposedly administering. So, you know, you don’t have to be a lawyer to read a contract and understand ‘what are our responsibilities here, how are we supposed to bill for this project, what do I do if there’s a delay, what if there’s a change, how do I manage that? All that is in the contract. Every one of those things, there’s something in the contract that will tell you how to handle that. There are notice requirements. If something happens, you’re required by contract to notify your client within a certain amount of time. It’s different for every contract. Commonly, it’s two or three days, but sometimes it’s longer Sometimes, it’s less. So, you have to read that and understand it. So, I’m trying to think what else.

Successful project managers, and this is true about superintendents as well, successful construction project managers have a sense of urgency about them. They push. Time is literally money in construction. You’re … with most construction projects, there’s a guarantee of time. You’ve given the owner a schedule and said you will be complete by a certain date, and there’s consequences when you don’t make that schedule. Maybe it’s liquidated damages, it could be that it’s actual damages. So, a sense of urgency and understanding how to push. Not accepting … again, knowing notice requirements in your contract. If you haven’t heard back from your client for a couple of days for a question you asked, you call them. You don’t just sit back and play victim and say, ‘Well they never got back to me, I guess we’ll just figure it out.’ That’s a bad way to go about it. Having a sense of urgency is really, really important. I find that that’s a really common trait for successful people that manage construction projects. Too much of a good thing is usually a bad thing. So, a sense of urgency alone, it’s a really good starting point but if you don’t couple that with good management skills, good people skills, good leadership skills, understanding how to move people and materials around.

I used to tell young APM’s and project engineers that I trained, they’d come to me and say ‘I want to be a project manager, I want to be a project manager. I think I can be a project manager now.’ You know, I can do all these things, I’ve checked all the boxes. And I used to tell them, ‘Okay, here’s what to me, being a PM means: I’m going to give you a piece of this project to manage. So, let’s pretend there’s a pool to be built, okay? And pools are a pain in the ass to build too, by the way. There’s a whole lot of moving parts to it, it’s a lot of hard than you think it is … assign them an area or a piece of the project and say ‘That’s your responsibility, that little piece right here. You have to go manage all of the subs, the client, the architect, everything about that area, physical piece of this project, is your responsibility.’

And I can measure profit-loss, I can measure schedule, I can measure all these things cause I know the small area that they’re in charge of. I’ll tell them, it’s not about … being able to write an RFI is a good skill to have you need that. Being able to process a Change Order is a skill you have to have. Being able to read, understand and manage a schedule … important. But – those are just incremental things, you have to literally put all those things together in order to be successful.’ So I tell them, ‘When you can imagine a future stake, when you can see that area you’ve got to build, that building or pool or whatever, and you can imagine what it looks like when it’s done … you can look ahead in time and look at a schedule, think about the incremental parts of it, think about what to work on in the middle, what to work on in the end, anticipate things .. I used to call that ‘being able to see around corners’ … anticipate things, when you can imagine that future stake and then bend everybody and everything that has to go into that to your will, then you’re a project manager. Beg, borrow, cheat, steal, lie … I mean not literally, metaphorically, do whatever it takes to get that thing done.

That’s not revolutionary … anybody that’s ever had a goal thinks that way. If you said, ‘I want to go to college’, and you had to do some stuff to get there. Or, you had this idea and said ‘I want to be something.’ Anybody who’s ever had a goal thinks like that, but it’s all of those skills, project management skills, knowing how to build, people skills, hard and soft skills all combined. You bring all that together, bring that to a head against building that thing, and then you’re a PM. That’s my definition.

- End of Episode -

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