Try employing a project management accountant to support the project manager, and watch the work and the cash flow improve.
In supporting many of the firms that we work with, we find varying models of how project managers are either effectively utilized or how they are not.
Project managers have the daunting task of providing the following to the clients, most of the time all at once:
- Communicate and delineate expectations clearly to the client
- Ensure that the team is aware of what the client feels would be success on the project
- Ensure that whatever will keep the client up at night is covered
- Ensure that whatever risk issues the client has illuminated are known to the team
- Manage the internal and external team members
- Resource plan and maintain the team’s contract hours
- Provide leadership and morale to keep the team happy, engaged, and productive
- Drive performance to meet a dynamic landscape when it comes to changes the client makes, issues that the team uncovers, and management of the schedule
- Provide the firm’s senior management with status updates and maintain the project’s financial performance
- Look into the future to see what other services the firm can provide
- Continue to provide the sales team with RFP
response, fee plans, and schedules
- Create an informative point of contact where the clients see the project manager and the firm as more valuable at the end rather than at the beginning of the contract
- Invoice the client in a timely manner
- Collect on the invoices that have been submitted to the client
- All other duties as required
Sheesh – and all this before they’ve had their first cup of coffee!
One of the most successful models that we have seen is the linking of an effective project manager with an equally effective project management accountant. This role is not an overhead position, despite the fact that the expertise that this individual brings to the team is financially oriented. This is nothing new to large firms that have either contract managers supporting the PMs or accountants that gravitate to assisting the PMs. This role is 100 percent chargeable.
Project managers, according to Zweig Group’s Project Management Survey, have a range of billing rates from $136 to $360 per hour. Successful firms recognize that the PM has many tasks that can be managed and executed by the project management accountant. The PMA has a billing rate that, in some cases, is a third of the PM’s. This allows PMs to leverage their time, which in turn allows the PMA to perform tasks that are the PM’s responsibility – but at a third of the cost.
The analogy to this role is found in the dental profession.
Dentists realized that they could accomplish more of what they were trained to do by shifting tasks to the dental hygienist. All of the preliminary tasks that they provide allow the dentist to focus on the higher-level work. The direct result? The dentist can see more clients, charge higher fees for higher skills, and make more money in the process. So what does the PMA do that allows the PM to be optimized?
- Contract review/management. At the commencement of the project, the PMA is involved with the PM on all administrative issues that revolve around the contract. The PMA is introduced to the client, either in person or as an agenda item. The PMA reviews the contract terms, interfaces with the client’s accounting team, and gets a draft invoice to the client to ensure that all the boxes and information requirements are checked.
- Scheduling and resource allocation. Depending on how the firm manages resource allocation in their PM or accounting systems, the PMA transmits the data into the financial system. This impacts labor forecasting, revenue forecasting, cash flow management, and the overall schedule.
- Why would we want highly creative architects and designers, or highly technical engineers, touching the financial management system? Let’s give the financial management team Revit BIM, Civil 3D, or any of the other technical tools, and have them work into those programs. Otherwise, we’re wasting our time by not utilizing everyone to their best and highest purpose.
- A PMA can also assist the PM in maintaining the schedule, ensuring that all pending milestone dates are reviewed in advance, manage charging requirements, and oversee the allocation of resources.
- Financial management team assistance.
- Work with the financial team to ensure that invoice deadlines are met in accordance with the client’s requirements
- Assist the financial team in the post invoice follow-up with the client (five days after invoice is emailed, PMA follows up to ensure invoice was received)
- Assist the financial team in the collection effort and maintain invoices within the terms of the agreement
- Staying on top of the PM during invoice follow up
- Help the team achieve the required project inputs related to time cards and expense reports
PMAs play a valuable role in creating a close relationship between the PMs and the financial management team. By leveraging the PMA to assist the PM, we get closer to achieving what is the best and highest use of personnel.
Ted Maziejka is a Zweig Group financial and management consultant. Contact him at email@example.com.