The $100K Mistake You’re Making With Your Construction Project Management Practices

It became a routine. Projects started out smoothly and then halfway in, like clockwork, the schedule or budget – or both – suddenly nosedived off the roof.

So you did what you were supposed to do. You hired a project manager thinking that oughta fix everything, right?

Nope.

Now you’re fielding calls from irate customers left out of the loop, frustrated subcontractors hit by surprises on the job site, and your project manager is burnt out and threatening to quit.

Hiring a Construction PM and expecting them to just TAKE CARE OF EVERYTHING is unrealistic – and guaranteed to end in disaster.

From scope gaps to unclear RFIs, every snag on a project eats away at your profit margins, customer satisfaction and project manager’s morale. 

So what’s the solution?

Tried-and-true PM systems.

This article will walk you through how masterful contractors approach their PM practices to keep their profit margins healthy and their projects running smoothly.

Why you should standardize your project management processes

There are a few clues that can indicate your business may be suffering from substandard PM practices:

• Your net profit margin is low, likely in the range of -2% to 4%.
• You rarely hit your target gross profit margin, and when you do it’s by accident, not intention.
• Your job estimates are usually way off due to delays, errors and poor communication.

If these scenarios feel familiar, it might seem easy to simply blame it all on your project manager – and while they certainly have a role to play – it’s not necessarily entirely their fault.

Without standardized project management systems to follow, whether via tech tools or written instructions, it’s difficult to get the best from your PM. And as you can see from the above list… that can have some pretty major impacts on your business.

How solid PM systems increase profitability

Now look, we get it. Implementing systems or creating standard operating procedures can feel daunting. Maybe you’ve even made the effort previously, only for your carefully crafted SOPs to sit forgotten and unread on a shelf.

We urge you to consider the money that gets left on the table when contractors operate without good project management systems in place.

🤑Streamlined projects that stick to their budget allow you to do better business planning because you can depend on the gross profits to land where expected.

🤑When your project manager knows exactly where their responsibilities begin and end, less work gets duplicated and fewer tasks get missed.

🤑Mistakes and disorganization can be expensive. Eliminate wasteful spending by ensuring things are done right – the first time.

Hear how expert construction contractors have found big wins by implementing proven systems at this Project Management Web Class on June 11. It’ll offer powerhouse advice from both Buildertrend and Breakthrough Academy.

Essential project management systems 

Here are a few key systems you can put in place quickly and easily to start reaping the benefits of better project management practices.

Practical hiring methods

Not all project managers are created equal. Maybe you’ve already learned this lesson the hard way. 

At the core of your project management infrastructure you need a fantastic PM and there are certain traits to hire for. You can learn about the 7 Archetypes of Effective Project Managers in this Contractor Evolution podcast.

First and foremost, it comes down to recognizing the qualities you need in the person filling the role. Create an Ideal Candidate Profile, and write a job posting that resonates with who they are as a person. 

Are you looking for someone meticulous? Don’t post a job ad full of grammar errors, or they’ll keep scrolling right past your post.

Do you want someone good-natured who values collaboration? Use a relatable tone that grabs their attention and makes them want to join your team.

Clear project manager responsibilities 

Outline exactly what is and isn’t part of your project manager’s job in their employment agreement and link their performance to incentive payments.

Offering rewards for achieving their goals not only provides motivation, it keeps everyone singing from the same songbook. Or building from the same blueprint, as it were.

For project managers, it generally makes most sense to use the projects’ gross profit margins as a KPI since it’s an area over which they have direct influence.

Whichever metrics you use, be realistic. “Make me millions or you’re out” is hardly a motivating approach.

It saves a lot of hassle to have job expectations stated and agreed to upfront when they start their position, and a good PM will appreciate having both the clarity and a concrete target to aim for. 

An employment agreement is one system that tends to bring out the best in the right type of individual, and for those it doesn’t… better to know that sooner than later.

You can find more expert tips on How to Retain Top Talent in this episode of Buildertrend’s podcast, The Building Code.

Established accountability  

Once you have set expectations for your PM, you want to help them achieve their goals. You’re not about setting people up to fail, after all.

For this, nothing tops a Goal Setting & Review (GSR) system. Here’s how it works at a high-level:

• You meet with your PM regularly, say once a week.
• These meetings occur NO MATTER WHAT. Same time every week.
• You discuss the progress of the action items since the previous meeting.
• You set the goals for the upcoming week.

There’s more to it, of course, but the big takeaway is that GSRs ensure accountability through their consistency. You maintain visibility over the projects and your PM knows you’re available to provide input on potential issues BEFORE they become real issues.

It increases the likelihood of success all around.

Standardized tools for project planning in construction

Mature builders standardize critical PM processes across all jobs and crews to create predictability and profitability. That’s just the foundation of how they operate.

They utilize carefully chosen tools in their project planning and oversight, but the operative term here is “carefully chosen.” There are all sorts of tools out there, but they’re only worthwhile if they actually fulfill the job they’re meant to do.

Breakthrough Academy and Buildertrend take the guesswork out of this for you by offering operational systems coupled with a multi-purpose platform trusted by the industry’s most elite contractors.

At the Project Management Web Class on June 11, you can get a truckload of templates from Breakthrough Academy and Buildertrend, including a Project Communication Plan and Project Status Report.

We’ll see you there!

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