7 Reasons Why PMs Should Do Business Development

Charles Nelson, AIA, LFRAIA
Posted on: 01/16/19
Written by: Charles Nelson, AIA, LFRAIA

photo-1433840496881-cbd845929862-1There are many reasons why Project Managers should be given the responsibility for business development, and provided the training, coaching, and mentoring to know how to do it. 

The top seven of these reasons are:

1. PMs will own the project. All savvy firm principals want their PMs to mentally “own” the projects they manage, because this ownership factor brings commitment, a sense of personal investment, consequent productivity and resultant profitability.

But many principals mistakenly think they can sell the project themselves, and then transfer this sense of ownership through some kind of “handover” process. They may succeed with varying degrees of success—but their best efforts will never be as good as if the PM was involved in the planning, scoping, pricing, proposal preparation and negotiating from the beginning.

At worst, handover won’t “take hold”—the PM will go through the life of the project feeling like they’ve had something thrust on them, and that they have to accept conditions they feel are poor judgment. Performance and productivity will be compromised.

2. PMs will be part of any decision to make the fee more competitive. Competition is a fact of life for design professionals. For many, downward pressure on fees can be relentless, and profit margins are equally pressured. To keep PMs from feeling like they are caught between “a rock and a hard place” for the life of the project, they have to be in a position to accept that constraint, and be ready to live with it, before the project becomes a fait accompli.

3. PMs will know the target profit. Maybe it’s obvious, but it is impossible for PMs to work to a target budget unless they know what it is. It is amazing how few PMs really know. Often that’s due to a firm focus on measuring performance by hours rather than by dollars. In other firms, the profits are buried in chargeout rates and are not obvious. In still others, the practice management software doesn’t provide the level of information PMs need to keep an eye on profit as the project moves along. If they start out knowing, and have some way of tracking it, they have some hope of keeping the project on target—or of even growing the return.

4. PMs will know the size of the contingency built into the fee. Knowing this is critically important to successful project management. Most scope changes can’t be turned into change orders, they have to come out of inbuilt contingencies if profits levels are to be maintained. The PM has to monitor the absorption of scope change against the contingency in order to successfully manage fee growth.

5. No internal handover expense. Besides the inherent difficulty of achieving handover success noted in point 1, the handover process costs money, but contributes nothing to getting the work done—it is a pure overhead cost to the project, or to the firm, depending on how the time is charged.

6. No external handover is required. External handover is a much more critical issue than internal handover—its objective must be to make the client feel comfortable with the PM—in terms of the PM’s knowledge, experience, style, and personality. To be a success, the client must walk out of the handover meeting fully satisfied with handing over the responsibility for this investment to the PM. This includes being comfortable with the PM’s knowledge of scope, risks, budgets, schedules, and everything else of importance to the  client. If the PM wrote the scope, developed the project strategy, and “made the sale” in the interview, this transfer problem simply goes away.

7. The primary PM—client relationship is established at interview. This point is the consequence of point 6. Quite apart from the more pragmatic issues of budget, schedule, etc., the client’s “comfort zone” requires a subjective, emotional feeling by the client that he can trust this person. That can only be
established by those ancient processes embedded in our DNA: The glue in trust is eyeball-to-eyeball contact. This is when the client says quietly to himself: “I trust this person, and I feel good about starting the project with her.”

About the Author: Charles Nelson is an Instructor, Project Management & Consultant, M&A and Strategic Planning at PSMJ Resources.  He has been involved with the architecture/engineering design and construction industry for more than 40 years, including a decade as the owner/manager of a Boston-based design/build firm.

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