5 Fundamental Finance Tasks for PMs

Your project managers are key players in ensuring that the financial performance goals of the firm are met. PMs are responsible for managing projects, but to be truly effective, they must also understand the firm’s monthly financial reporting cycles and have the ability to plan, track, and evaluate each project’s fiscal performance.

Go over this list with your PMs. This is what they ought to know and be able to do:

1. Prepare the project budget and monitor its status. The project manager must prepare the project budget and monitor its financial status. This includes ensuring that the information in the firm’s management information system (MIS) is accurate and up to date. In large firms, a project administrator may prepare the various input forms, but the accuracy of this information remains the sole responsibility of the PM.

2. Monitor the work done. The PM must monitor the work done or to be done. This should ensure that it is included in the authorized scope of services.

3. Seek additional fees for extra work. When work is required outside the contract scope of services, the PM must seek additional fees from the client. When extra work is proposed, the project schedule must be reviewed to determine the effect the additional work will have on it. A request for an increase in fees must identify any required work that’s outside the contracted scope of services.

4. Get authorization for extra work. This extra work must be identified promptly when it occurs, and the PM must notify the client in writing. Most clients won’t pay for extra work performed before it is authorized. The project manager is responsible for ensuring that no unauthorized work is performed on his/her project.

5. Invoice clients promptly. The PM is responsible for ensuring that clients are invoiced promptly and for following up on the payment of outstanding invoices.

As you can see, the most effective and successful project managers hold a keen understanding of the financial implications of their every move. Whether you and your project management team just need a refresher of the key concepts or are ready to drink from the ‘financial fire hose', PSMJ’s popular A/E/C Successful Financial Management Seminar is a must-attend program. You’ll leave with the tools and confidence you need to succeed - register today!

5 Marketing Responsibilities for Every Project Manager

Marketing and business development skills are as essential in project managers as is the ability to adhere to schedules, oversee a team, and execute project delivery. Below are five marketing responsibilities that every project manager should take on.

1. Manage Proposals: Proposals are mini-projects, with a schedule, a team, coordinated pieces, and a “client.” Your PMs should be able to not only manage proposals like a project, but should be an integral part of the development of the project teams, scopes of work, and proposed fees, since they’ll be responsible for executing them

2. Participate in Sales Presentations: Because PMs are going to be the main point-of-contact for a project, potential clients should meet them during the presentation/interview. It’s your PM’s opportunity to shine, and to build the client’s confidence in your firm and team. It’s the first introduction of what should be a long, fruitful relationship.

3. Negotiate Good Fees: Just as your PMs should take on developing the initial work plan and proposed fee, once selected (and for future changes to the scope), project managers should understand the scope of work and the firm’s finances in great enough detail that they can negotiate a solid fee, and then manage to meet or exceed the planned profits.

4. Negotiate Satisfactory Contract Terms: A good PM should be able to understand the legalese well enough to navigate through contract negotiations, ensuring that advantageous and protective clauses are included, in the unlikely event of problems and disagreements during the project.

5. Bring in Work from Current/Past Clients: As the main face and point-of-contact to your clients, your project manager has a unique opportunity (and responsibility) to foster a strong relationship, which can lead to more work. But it goes beyond relationship-building, and your PMs should be “following” current and past clients as strongly as any lead.

The five responsibilities listed above are taken from PSMJ’s Project Management Performance Scorecard, which highlights 18 skills that every effective project manager must fulfill.

As you can see, the most successful and effective project managers are as good at “selling” as they are at “doing”. How do your business development skills stack up?

For more strategies and tactics that WILL get you winning more work, join us this summer for our popular Business Development for A/E/C Firms seminar (June 7-8 in Seattle, WA). Get the tools and confidence you need to succeed in bringing in more work for the firm – register today!

Keep Your Clients on Track

Ignored clients left to their own devices may manage your project in disruptive ways. Keep them on track and build team cohesion with weekly status reports. Short, simple, and to the point reports are difficult to ignore.

1. Make status reports an integral part of the agreed upon project scope and fee. This emphasizes the value of effective communication.

2. Email or fax status reports. Timeliness is imperative. Set a specific reporting time that is convenient and helpful to both parties, e.g. Friday afternoon so you will have a full view of last week and in time for the client’s Monday morning staff meeting.

3. Keep the report short and simple. Clearly describe actions taken last week, plans for this week, and issues that need attention. Provide context by relating actions to contract goals, scope, fee, and schedule; and perspective by showing how this week’s actions related to the plan from last week. Anticipate issues and identify preventive measures before they become problems.

4. Distribute reports to the client representative and key team members. Consider including other stakeholders when appropriate.

5. Be transparent. Require input from key team members and expose them to unfiltered client feedback. Team members need to understand the project and the client.

6. Include client actions as well as your own. Timely decisions and complete information are essential for a smooth running project.

7. Explain what you did in terms that are meaningful to both the client and project team. Use jargon-free English.

8. Avoid discussing personal performance matters. Reserve these issues for private or small group discussion.

9. Use status reports as a real time journal to document anomalies and support change orders.

Success is impossible to recognize without public goals. Use status reports to enable your client to recognize progress every week and in the process hold everyone accountable for team success. Also, information contained in regular status reports will be invaluable during your post project review or autopsy.

Modest Revenue Increases Continue Through Spring

The American Institute Architects’ Architecture Billings Index showed modest growth again in March, the fifth consecutive month of gains. With billings steadily increasing, and growth seen across most of the country, this month’s ABI offers more good news after the inconsistent year seen in 2011.

The Architecture Billings Index (ABI) serves as the leading economic indicator of construction activity, and reflects the approximate 9-12 month lag time between architecture billings, and actual construction spending. The monthly ABI scores are centered around 50, with scores above 50 indicating an aggregate increase in billings, and scores below 50 indicating a decline.

The ABI registered a score of 50.4 in March; once again a modest gain over February’s values. Job inquires once again saw steady gain for the month, with the sixth consecutive month with a score above 55. Again, all regions except the west saw business improve, and firms in most areas of specialization saw growth. 

Firms with a residential specialization, as well as those with a commercial/industrial specialization, both reported increasing revenue for the seventh month in a row. Firms with a commercial/industrial specialization have reported growth in 16 out of the last 21 months, a positive sign that the expansion is well established in that sector. However, business conditions remain weak for firms with an institutional specialization, despite two months of minimal growth in late 2011 and early 2012.

Economy rising, employment still lagging

In another positive sign, more work appears to be on the horizon. Architecture firms have reported growth in the value of new design/design-build contracts for the last three months. Although this measure is not seasonally adjusted, and may be partially due to the impact of a warmer-than-average winter across much of the country, it should still be taken as an encouraging sign. The AIA’s quarterly measurements of firm backlogs reveal an average length of 4.6 months, the highest they have been since September 2008.

Residential real estate activity improved in all districts of the country, with the exception of the Cleveland and San Francisco districts. Multifamily housing unit construction increased across the board. In addition, nonresidential construction activity increased in the Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and St. Louis districts, and healthcare construction expanded in the Cleveland and Chicago districts. 

Employment data from the Bureau of Labor Statistics was more sobering, with non-farm payroll employment adding just 120,000 new jobs in March, half the number that had been added in each of the three prior months. One factor leading to lower numbers was a sharp decline in retail employment. Construction employment was essentially flat for the month, adding just 7,000 jobs, but the architectural services sector grew to 153,200 in February (the most recent data available) with the addition of 1,200 jobs from January. However, since this data is not seasonally adjusted, that growth may be partially due to seasonal hiring for the spring.

Statistics

By region, the ABI breaks down as follows from January to February: Midwest is down 54.1 from 56.0, South is down 50.1 from 51.3, Northeast is up 53.9 from 51.0, and West is up 46.6 from 45.6.

By market sector: Residential is down 51.9 from 53.3, Institutional is down 47.9 from 50.3 and Commercial/Industrial is up 56.0 from 55.1.

This month, Work-on-the-Boards participants are saying: 

• [We’re] currently seeing a surge in work. However, there do not appear to be as many projects to chase later in the year.

—Six-person firm in the South, institutional specialization

• For the first time in four years there is a definite increase in contracted workload, and the feeling that this could continue.

—Eight-person firm in the Northeast, commercial/industrial specialization

• One hundred percent of our projects are now remodels—no new construction.

—Two-person firm in the West, residential specialization

• There is a definite increase in activity. Developer work is clearly speculative, but plentiful. Things are improving.

—Three-person firm in the South, residential specialization

 Click here to read more from the AIA.

 

What Jobs Are You Losing and Why?

Let’s face it: we can’t win every time. However, whether it’s one loss or a dwindling client base, it’s the marketing director’s job to find out why. Ask yourself if any of the following points might apply to your firm:

• Fees Too High: Ascertain what the competition is charging and determine if your fees are in line with the marketplace. Be sure to determine if you are providing the same services and/or scope as your competitor when comparing.

• Lack of Differentiation: If clients are regularly going elsewhere, you may not be doing a good job of showing clients the benefits of doing business with your firm. Do they know about the extras you provide at no charge? Do they know about your specialized in-house expertise that the competition doesn’t have?

• Tunnel Vision: If potential clients think you’re only interested in making the sale, you probably won’t win the job. A sense of commitment to the project at hand will help put aside other issues in the client’s mind.

• Wrong Markets: How often does the firm reevaluate marketing strategy? As the market shifts and changes, the wise move with it.

• Perception Problems: How is your firm perceived? What are the reputations of those heading the firm and those who have regular interaction with clients? What is the perception of your firm in the marketplace? What is the perception of your firm with the subconsultant community? 

You must reeducate the client while at the same time reevaluating your pitch. Obviously, in order to educate the client, you’ll have to be in front of them, thus allowing yet another way to further your ongoing relationship.

For more vital information on how to retain clients register now for PSMJ’s 2012 A/E/C Marketing Bootcamp: THE Program On How To Get And Keep Clients. This spring, PSMJ is providing 5 locations all across North America to give your whole firm the tools and confidence you need to succeed in bringing in more work for the firm. Click here for more information.