Incentives for project managers

Recently, Canadian Contractor solicited the opinions of our RenoFocus alum from 2015 and 2016 to find out what they paid their project managers. Here’s one of the responses, albeit an anonymous opinion.

Our model is that our project managers (the actual name we use is Project Developer (PD)) are actually part of the design development team and as such are responsible for estimating the project as it develops to construction-ready. They download the production team on the final construction version and then manage the project through construction with one of our field lead hands who is assigned to the job and on site all day on the tools. The PD might be on site one or two times a week unless more frequent visits are necessary.

Our standard base salary is between $55-60k and goes against a base $750k gross revenue, beyond which they receive commission based on finished Gross Profit (GP). Commission is sliding scale starting at three per cent at 32 per cent GP and rises to eight per cent at 42 per cent GP with onus on them to help maintain respectable GP.

An average performer can do $1.2-1.5 million at 35 per cent GP and can make $80-100k, with a high performer producing $1.5-2.5 million Gross Revenue and pulling as much as $150-180k in salary and bonus. Because they play a role in sales as part of the design development squad they help sell the work. We dole out commission based on who sold the initial concept design agreement, construction design agreement and actual contract.

Also included is who did the estimating and project management. It’s a flexible way to let people participate where they shine brightest and still be rewarded, regardless whether they were all in, part in, or shared the load. If the sales guys and the PD shared the load on a specific component of the design development then they split that piece 50/50. We’ve implemented this system over the last six years with very little friction or arguments, and the final GP is agreed upon 45 days after contract is closed and reconciled. We track all this on our WIP (Work in Progress Report).

Hope that helps. Keep doing what you do, it’s appreciated!

Name withheld