This post is aimed primarily at construction financial managers. I’m giving owners and project managers a day off <grin>.
My first construction CFO job was for an underground utility firm. After a few moths on the job, the owner requested that I supervise an out of state project. We discussed what he needed me to do and I agreed to spend a day a week at the site monitoring the progress of the project. My visits were designed to help the owner manage the project without having to regularly visit the site himself. As time went by, I discovered that these visits helped me understand the type of work the company performed, which helped me in my role as the company’s financial manager.
I’ve never been involved in an overstaffed accounting department at a construction company. It is normal to have nine or ten hours of accounting and administrative work a day to accomplish. This is why it is easy for accountants to live in it their own world and not involve themselves with the activities in the field.
When I was a construction CFO, I required that the office staff visit a job site for one-half a day every month with a cooler of soft drinks (or coffee and hot chocolate during the winter). Doing this helped the staff understand the type of work the company performed as well as develop relationships with personnel in the field. It also helped the staff members understand the activities, materials, equipment, etc., that were involved in the work the firm performed. Every person I sent into the field told me that it helped them better understand the documents that crossed their desk. It also assisted in their ability to communication with project managers, superintendents, and field labor.
This is why I believe that financial managers need to understand the work their company performs in order to successfully implement construction project budgeting. This knowledge allows the financial manager to better understand what owners, executive managers, and project managers need for a budget to help improve the profitability of a project.