Schoppman is a consultant with FMI, management consultants and investment bankers for the construction industry. Schoppman specializes in the areas of productivity and project management. He also leads FMI’s project management consulting practice.
I recently presented a webinar called, “The Project Manager’s MBA, Part I,” in which I discussed methods for implementing MBA concepts in a project setting. During the webinar, we explored a list of topics generated from the core curriculum of the nation’s most prominent MBA programs and provided business principles for project managers to apply on their projects. Click here to watch the video playback of Part I's presentation and learn more about the information we covered. As we prepare for “The Project Manager’s MBA, Part II” to learn more about the importance of understanding methods for applying practical business school practices, it’s important to share some insights from Part I. These insights can help your project leaders gain a deeper focus on awareness and business success.
Most people enter into the construction business because they love building things. In my case, I found that I had an aptitude for math and science. After briefly dabbling in the world of engineering, I realized how enjoyable it was to see a construction project realized in the field. While toiling in the field in Florida, in the summer, might not be considered a pleasure cruise, it was amazing to see a project come to fruition from a stack of drawings and specifications. Chalk it up to naiveté, but with so much happening in the field—complex building systems, integration of multiple trades, strict construction scheduling deadlines, etc.—it was easy to forget that this was just one project within my firm’s complete ongoing portfolio.
Marketing people were continuing to sell, estimators were continuing to estimate, and accountants were still counting. While I thought my project was the center of the construction universe, it was simply one cog in a larger machine—a machine that moved with the efforts of many, many people.
The lines of concrete and steel were often blurred with human flesh and emotion. Egos and personalities often entered the fray, in many cases becoming even more important than the edifice we were building to begin with. And then there was the money. Profit, projections, direct costs, indirect costs, burden, insurance, general conditions, variances, change orders. Wait a second! What happened to all of the youthful exuberance associated with simply building a construction project? Heck, even the best Lego sets never came with a supplemental set of provisions explaining force claim accounts and dispute resolution procedures. It was then that I realized I had entered the business of construction and not simply the construction business.
At first, sitting in MBA classes was a distinct departure from the business of construction. So many classes talked about economic theory, financial statements and products that barely resembled concrete, steel and asphalt. Marketing and value propositions seemed foreign concepts in a world of hard bid construction delivery world. And let’s not get started on any of the information technology classes. In one fell swoop, I had a cathartic moment. For so long, the world of construction has had a “We are different from the rest of the world,” mantra.
It is not that management principles won’t work in construction or that construction is immune to the concepts of a typical business curriculum. Construction has and for the most part will always be a people business. There are also many special considerations when examining any construction business. For one thing, every project is different. Short of home building in tract communities, there are very few similarities project to project right down to the people responsible for building it. However, I got sucked into the mysticism of the construction world, partly because much of the MBA course work looked at every type of business except that of construction, thus perpetuating this belief. Case studies seemed limited to learning about Apple or IBM or Coca Cola, never about ABC Construction or XYZ Mechanical.
In hindsight, it was great to see how the Apple empire was built and how Google’s valuation is determined. In fact, it is this “outside air” that every contractor should experience. An MBA is not for everyone, but seeing how the business of construction operates with all of its intricacies and nuances coupled with a healthy dose of how other industries operate is something every business leader should see.
Project managers and superintendents may rarely see the financial statements of their firm but understanding how their actions at a project level correlate at 30,000 feet, is as important as understanding how a foreman can better motivate his/her crew members. Furthermore, while most MBA programs talk about business to consumer transactions, understanding business to business transactions and how a customer—even that hard bid/low bid customer—appreciates value and makes their own business decisions is something goes a long way in distancing a traditional contractor (read: tired, old model) from the contractor of tomorrow.
Business schools have responded to the demand of the world’s businesspeople by creating a myriad of programs. Online, weekend, traditional, monthly—all new models of business school training to equip today’s young business managers with a new tool box to deal with a volatile and often uncertain business ecosystem.
On the other hand, there are plenty of great businesspeople that have never set foot in a classroom, proving that learning does not always come in a textbook. It is important to realize that regardless of how tomorrow’s project managers and superintendents learn, grow and develop, individuals realize that a more holistic approach to our industry is essential. One doesn’t need an MBA to prove they have the goods, but demonstrating a significant level of business acumen will help young managers grow to be tomorrow’s business leaders.
To learn more about how your company can benefit from MBA-caliber business skills, click here to sign up for The Project Manager’s MBA, Part II February 17 at 1 p.m. EST.