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Invoice of for Engineering

what is the difference between pm training and pm development when it comes to really developing project managers in this episode we're going to talk to mike lozenoff an engineer by background who now focuses on developing project managers and mike's going to get into things like invoicing why it's important write-offs and how they can really hurt a company and why measuring profitability on your projects matters and really ultimately why you need to build a better pm culture this week's episode is sponsored by ppi a leader in fe and pe exam prep before we dive in we'd like to recognize our sponsor for this episode ppi a leader in engineering exam prep for the fe and pe exams ppi provides expert prep courses and study resources designed to help you pass the fe and pe exams the first time ppi's live online courses include hours of lectures problem solving demonstrations exam strategy sessions office hours and a passing guarantee check out ppi today at ppi2pass.com to see all the options available for fe and pe exam prep now let's dive into today's episode now i'd like to welcome our guest onto the show for today mike lozenoff is a licensed professional engineer and owner of low's and off consulting services mike welcome to the civil engineering podcast thanks anthony it's great to be with you so mike in your own words why don't you start off by telling our listeners a little bit about yourself your career journey and how you got to where you are today sure um so i've been in the aac industry for i'd say 25 probably going closer to 30 years now in that time i had the unique opportunity to work for some small businesses when i mean small i'm talking about 10 to 15 person firms to mid-size couple hundred folks maybe spread out over multiple different states as well as a large national and international firm you know thousands plus of people um all over and in that time i had a lot of great experiences and i got to learn a lot all along the way um as most in as a professional engineer i started out as a designer and i started in one of those very small firms so as a design technician i was in charge of actually doing all of my own design which was pretty interesting and unique especially from coming right out of college and being able to kind of sink my teeth right into it but i also had an opportunity to work with our survey group where i went out actually and was an instrument man and we did a lot of construction stakeout of the design that i had done so i got to see firsthand what that design that i was doing how that was being built and honestly i became a better designer because of those experiences and something that i wished our younger engineers had more experience and are given more of an opportunity to do today but you know even though i enjoyed design it was something that i really liked to do there was always something else that i was i was always interested in more aspects more challenges and you know how i kind of got into project management was i remember being you know sitting there i had just got done with the design something i hadn't really done in the past and um i spent about a month working on this design very proud of what i did i you know as an engineer would do i designed it redesigned it over thought it did as much as i could to make sure that it was perfect and so one day my business you know owner came who was my manager of course at the time um and i've been with the firm probably two to three years at this point and he said mike how did that project go and i said well it was i thought it went really well i said you know he checks the design to design meet the requirements he said no i thought it was great but i'm wondering why it took you so long to do and i'm like i'm looking at him like what do you mean and he said well you know i had budgeted only three weeks and it took you almost a month to get it done and we blown the budget and i looked at him with like three heads like i i don't even know what you're talking about like what do you mean budget what does that mean and he's like well i budgeted how many hours it would take you to do and i said you know internally i'm like we i didn't know that i didn't know that there was an internal budget i didn't even know how we made money at this look you know we're design provi you know i didn't learn any of that in college i just came i thought my whole job was to design and spend as much time as i could to make the most perfect thing and at that point i started really piqued my interest of wow how does how do we make money at this so i enjoy design but i was really curious like how do we make money at this and so i wanted to become a project manager and learn those aspects and so i left that company ultimately and then went into a very very large company and you know trial by fire i didn't i didn't have any experience as a project manager um but they gave me an opportunity to learn and quickly i became a project manager willing to take on some of the harder projects we had some very difficult clients but i was i wanted to learn and absorb it and figure it out and i think some of that tenacity gave me those opportunities to to learn and grow um and from there i just kept taking on bigger and bigger challenges you know from there growing into senior project manager i got to manage a lot of different types of things program manager where you know in that term you know taking one client who's developing sites all over the place hundreds of different sites at the same time from concept through construction um learning to manage different people and different offices and not just your own team you know what does it mean to manage the work instead of doing the work you know again i came from just doing it myself i had to learn all those different things but that was the side of the business that kind of piqued my interest and through that time i eventually worked my way through you know director group manager you know and even serving on our board of directors at my last company for a period of time so all those experiences really gave me a well-rounded kind of understanding of what it took to grow a business not just be a technical person not just be a project manager or a group manager really i was really curious about how all of these things fit together to grow a business especially in the engineering world you know i got ingrained in business development um not just repeat client business like how do you go and get new work from an engineer that's pretty you know to me it was terrifying like going into a setting where i had to learn those aspects you know understanding what it took to grow an office to open a new office new region new business line territory all those things were very interesting to me and kind of built me to take on what i'm going to say is probably my biggest challenge to date which is i opened my own business management and strategic advisor consultant business in this business you mentioned it losing off consulting services it's got my name on it because it's you know predominantly me who try to go in and work with business owners and sometimes their leadership teams of really understanding their business understanding the challenges that they're going through taking all my years of experience and kind of helping them grow their own business or maybe enhancing in some aspect so honestly every client that i work for is a little bit different i've done everything from working with them to look at their operations and assess things that are going on you know help create better systems to enhance their profitability um setting up project management uh systems and processes um training project managers on how to do projects within their firms there's been a decent amount of time doing that could be strategic planning you know what are we doing in the next five years maybe it's a business line plan business growth on opportunity organizational development so it's it's a myriad of things i guess that basically what i try to do is take again all of those experiences and help these businesses in our industry grow i mean even though it's our industry none of the businesses are the same everybody's got different challenges they're similar but how they attack them are different and i really enjoy kind of getting in and figuring out how people how to help people manage and kind of grow their business and make it more profitable in the end to be honest that's great it's good to hear your story because we do a lot of pm development and training work at emi as well and i think we hear a lot of what you said in your story example story that you gave which is you know i found out from my supervisor that our project went over budget number one i don't know what over budget means right no and also you know we talk a lot about scope creep where you know yeah stuff that you're not getting paid for and a lot of times people do stuff that they're not getting paid for because they don't know what their company is getting paid for right the supervisor never maybe explained it to them so definitely some of the things that you know we're both hearing about and the work that we do and that's one of the reasons that we have mike on and that's one of the reasons that we're going to talk about invoicing and write-offs today because it is one of those areas of project management business in the ae world that is just a struggle a lot of times for project managers and so we're going to dive into that a little bit today so mike like in any business i mean invoicing plays a really huge role and you know most engineering companies are invoicing customers on a daily basis or you know depending on their cycles and things of that nature so in your opinion why do you think that this necessity of doing business is often really loathed by project managers even though it's one of the most critical aspects of their jobs well i mean when you think about it we come from a technical background again you know we were taught in college or school to understand our craft and design and make put out the best design we possibly can as project managers what i've seen in most firms is you know similar to me in my experience trial by fire you know i didn't go through project management training i learned as an engineer and how to work through teams and a number of different things to become what you know they call it a project manager which was i was in charge of that project um so you learn all of those aspects but you know little is again taught on on the project management side and you know there's so much technical training that's out there and think about our profession right as a professional or a licensed engineer we have to depending on the state that we're practicing in we have to get continuing education credits they're usually on technical aspects from a project management standpoint it's usually a lot trial by fire and so what do we do well we came from a technical background we learned that now we're overseeing that we're checking it and our biggest thought at that time is to serve my clients best i need to get the project out the door on time and served with quality i think that's the biggest thing as a project manager that i need to do well oftentimes what i find is we're not reminding project managers enough that really they're business managers not just project managers and just because you had great skills as an engineering or a technical manager doesn't necessarily mean it's going to translate automatically into becoming a good project manager you know at the end of the day you know a e firms make money doing what projects and and the better those projects are managed the more profitable that company is going to be right but we still need to get money through the door um and i think you know understanding and linking those two aspects of what what does that mean getting money through the door because again as a project manager i'm less focused on that i'm more focused on the product itself but teaching them you know as a project manager you make money for the firm like we're we're sometimes afraid to tell that to pms i don't know if they maybe they're going to get a big head over that or what but in reality that's what their that's their job is to make money for the firm and how well they do that the better the firm is going to be and the better the firm will be able to help their employees do those things but i can tell you time and time again project manager after project manager i see they're all busy right we're busy as project managers we've got a lot of responsibility and a lot of accountability to do a lot of different things and i tell people all the time unfortunately that comes with the territory that's the price to get in you're gonna be busy um and but you have a greater responsibility and to see the firm get paid um invoices are just a part of that without proper invoices that have been kind of checked by you that are going to your client that you expect to be paid money doesn't come in the door and at the end of the day we can talk about all we want about the great designs and being published in this article or that article but at the core of what we do is business and we're not getting money in the door it's very hard you know it's very hard to make money so you know showing project managers that linkage of their responsibility and how invoices kind of go i think is important and i'll just tell you a quick story one of the things that i do in some of the project management training is i talk to them about okay let's say you're the business owner you have a small business you're the business owner and you have a project manager that's working for you and let's just simplify things let's take day one we get a project in the door and it's a 30-day project so we're going to work on that project for 30 days now as a business owner in order to run a business i have to get capital so how i do that is i go to the bank and they give me a line of credit hopefully right so that's how i'm able to actually get the lights on and get people paid as an employee we probably will pay you bi-weekly so in 30 days i'm going to paid you two times and you deserve it you've done a great job but at the end of the day i've not collected a dime right i've borrowed that money to pay you oh and by the way the bank's charging me interest which i can't charge to you but forget about that aspect so now when the invoice comes and if it's a dreaded subject and you're not kind of treating that with the same kind of care that you did on your project maybe you just have too many different things going on and we delay that for let's say it's just two weeks you know that's not that long it's two weeks you know it's it's you know how bad could that be well in two weeks i've paid you yet again now for the third time um and i've got no money coming in now we send that invoice out probably another week or two later till it gets through accounting or whatever we got to do so now we're 60 days in after doing the work of which i paid you four times and i've not been paid then when i send the invoice to the client i don't know about you anthony i've never had a client just waiting for my invoice they just can't wait till it gets there because they want to pay me instantly so they probably have 30-day cycle to pay so now we're at you know 60 to 90 days and i paid you all of those times yet not gotten paid and when i think i would i tell them you would never if you were the business owner and responsible for all of this you would never run your business this way you'd be scared to death because you're constantly drawing money from the bank and that's your responsibility we can do anything that we want to but if we don't have money coming in the door we can't keep the lights on you don't have a job and they're the ones that are responsible for doing that and i think when we start to break things down for people that way they get to see it versus too often i say why don't you have your invoices done you know or somebody from accounting calling you and it's like i'm to i've got don't you see i have so much to do they haven't really kind of linked those why are invoices that important them prior they're just as important as anything else that we do yeah no and you're right and i think you know the bottom line is is people are really focused on getting their projects out because of course they want to make their clients happy but you can get all the projects out in the world but if you don't get paid projects in a timely manner you know they may be the last projects that you're getting out or that the company's able to delight because it is a business and and you know one of the things that we often do with companies that we're working with is even as a primer to pm training doing some kind of intro to consulting or business one-on-one where you can really learn about the importance of time sheets what happens if you don't do them on a time right invoices don't go out and it is important because technical professionals are in the trenches and that's part of a big part of their job right do the work done get the work out and so they don't understand the business impacts of some of the decisions that they make unless they get educated around it and that's why i think it's so important for companies and leadership to educate their professionals around this which is why of course another reason that we had mike come on today to talk about some of these things and i think also what's important from a development standpoint whether you're you know hiring someone to do a pm training or development or you're doing it yourself internally that's a very high leverage investment because if you get people invoicing quicker being more cognizant of business you're going to be more profitable you're going to hopefully need less from that credit line like mike's referring to and so that's why i think it could be a really high return strategy for you you know really developing what we like to say emi is more of a pm culture in your company right opposed to just you know kind of a one and done training so well and they should want to get paid we've worked really hard to put out that product right your team has worked hard you've done a great job as a project manager just because we get a paycheck doesn't mean we're getting paid as a company and and i'm just trying to get them to think of that difference right versus collecting a paycheck versus getting the company paid we deserve that money we did a fantastic job we want to get paid for it as soon as possible yeah i think to your point earlier some people that don't have that experience or that knowledge they know they're getting their paycheck every two weeks and they don't know that it's coming you know it's coming either way they feel like and they may not yeah the business cycle of it so what we want to do here of course mike is trying to make this you know show actionable and kind of help people we're talking about but let's talk about some tips that maybe you can give to help our listeners make that monthly invoicing process go a little bit more smoothly and efficiently what can you offer up to them yeah sure i mean at the end of the day i think it's we got to remind ourselves we're not manufacturers we don't have a product to sell right we sell a service line we're a professional services firm most engineering companies are and with that um it's kind of breaking it down and understanding we all know that we have bill rates right and we all know that we have that time you know we charge hours and and whether you're doing whatever you call it fixed fee lump sum hourly not to exceed time and materials we're all tracking i've not met one engineering firm that doesn't track their time on a timesheet right so if you're going to put your time on a timesheet it's going somewhere and it's really to understand that chargeability to that project that eventually gets translated to your clients so if you think about it that way i o and you mentioned timesheets um it's another one thing that everybody not just pms everybody seems to dread doing a timesheet technical people etc but if you're going to run a business it starts to me it's always started with the timesheet if we're going to track the time we got to get it accurate and what i try to tell project managers is first of all make sure your job is set up accurately if it's one phase two phases 20 phases or phases with tasks etc set that project up correctly from the get go then meet with your folks in your kickoff meeting which you should be having and show them where they should be posting their time write it down for them don't just walk away and tell them where it's to go like write it down for them so they have something to refer to um and have them do it every day and why would we have them do it every day i can barely get them to do it for a week i hear i understand but i don't know about you but i can't remember everything i did yesterday so much has gone on in my world i i just can't remember and i don't care if you're a designer or you're a project manager or you're the ceo everybody's got different things and different draws pulling at them at different times and so if you're waiting until the end of the week to do your time sheet like again i can't remember what i did yesterday how am i going to remember what i did last week and you know worse yet you know i'm sure there's inefficiencies i don't remember how long i spent on that but i'll just write down eight hours right so we're not really getting good information to do that so part one is make sure you know set your job up right communicate where that time should be posted make them do the time sheets and then you got to check if they're doing that and how do i mean by check well it could be a number of different things it all depends on the size of the group or size of the business that you have but i'm sure there's in your accounting system somewhere ability to look at work and process and where people are charging their time and if you don't have that set up in your business maybe it's time to talk to your manager about how can i see that i guarantee your businesses are tracking it they they see this information because you need to know that folks are putting it in the right area at the right time um you know i can tell you how many instances where people just continue to post even though you've told them post it to the wrong time so if they're waiting a week to put it in the right time and you don't check and you wait a month because that's when my invoice comes out or my draft invoice it's really hard to fix and i found the people who dread invoicing the most spend no time with what i've just said they hope that it gets done they don't verify and at the end it's a mess and i have to fix that and i've already had no time to do it so i know it's difficult i know it's painful but and what i mean by checking i don't mean checking every time sheet i mean mostly i don't know how many projects each people are managing but you know think about the most active in that week and you can quickly kind of scan to see if people are putting their time in the right areas are they spending a little bit too much time etc and the last thing i would say about the timesheet linkage is not just because you want to have a good invoice when i get to there and they say well i usually just do it at the end of the month and fix it i ask them this question how on earth do you know where your budget is during the month because if people are posting time to the wrong places um you have no idea where your budgets are do you know that you're over budget under budget i mean you you really can't tell me and that's usually where you get what we call the surprise ending at the month and it's usually never a good surprise um when you shake all the time out and put it in the right spaces and everything oh now we found out that we're over budget and let's go back to my beginning scenario so if i've waited two weeks to start my invoicing i'm now six weeks behind that process like how hard is it to fix something that's six weeks in the past it's like impossible right and i don't care how long your project is that's a long time to recover whether you've got a one year one month two month project it's it's can be irrecoverable if you don't you know kind of keep tabs on things and get your people set up and hold them accountable to do so you might just one thing i want to jump in on here which is really important and you know this is something you know some of our listeners you might be the person who's filling out the time sheets and your pm has to review them on a regular basis and get those budget updates or you might be the pm when you have multiple people filling out time sheets and then you've got to run reports right and so i think in in both instances here just to think about this to kind of frame out some of what mike said there because i think it's really valuable if you're doing your timesheets later than you're supposed to and your pm is not getting accurate and up-to-date information that could really cause issues in terms of business decisions that they're making on their projects and of course invoicing right and things of that nature so that's really important but then on the flip side as the manager if you don't set those phases up correctly from the beginning and have your team members charging to the right phases you're also going to be in trouble when it comes time to do your invoicing and and one thing i'll say in general that i think is a really important aspect of project management which is kind of capturing everything we're talking about is is how often you're running project reports how you how often you're keeping tabs on your budgets and how often you're able to flag where you have these variances because what happens with a lot of project managers that we've discovered through doing pm training is the way that they track their projects is they get a monthly pre-bill from their accounting department and at that point time they look at everything and they say oh wow geez we're five thousand dollars over i didn't realize that right however the really successful project managers that we work with are running either weekly or every other week reports or they're asking their team members to run those reports keeping them accountable and then they're able to see these things and catch these things ahead of time as opposed to just when they do their monthly bill so these are just some things that i want to throw out there while mike is talking about how to improve your invoicing steps because if you're making any of his improvements you're likely going to improve the overall billing and collection cycle well yeah absolutely and i can give you a real life example of how i saw that all play out you know when i went to that big firm i didn't know what i didn't know and i but i knew that i was responsible for this and i would spend at the end of every week reviewing everybody so everybody went home on friday i'm not advocating i wasn't there till midnight right i took maybe a half an hour to understand where my team was putting their on their timesheets before i signed off on them right and because i did that at the end i knew i was almost doing like a mini invoice every month i knew how this was affecting everything along the way so yes it took me an extra half an hour at the end of every friday not you know you know so i was a little late to happy hour but at the end of the day i understood that when it came to the end of the month i was one of the first person people don with my invoicing and and it wasn't a contest with me i had just done them all the way so by the time i got to that fourth week i already knew where everything i didn't have to worry about this person charged to the wrong place and this budget i knew where we were and those other project managers i saw around me they would just it would be a stack on their desk and they would get to it when they could get to it and it was weeks and you know because it was a mess they didn't feel they didn't put the priority on doing that so it's going to be you know where do you want to take the pain do you want to take it a little bit at a time each week or do you want all of the pain at the end when you probably have other deliverables that are due projects are due like it's at the end of the month like a lot of different things are coming at you take it as you can you know be on top of as much of it as you can it all plays together you know budgets invoicing they're not different things it's all the basically ties together yeah it's a great point and for those of you out there thinking you know what some of this stuff is really things that we need to address in our companies what i will say to you is the initial reaction for a lot of people is to say hey we need some pm training i'm not a huge fan of the word training because to me it signifies kind of a one-and-done event right and so what we try to say at emi is what you really need is you need pm development development it happens over time and also what we try to say is you need to build more of a pm culture and you know mike kind of reminded me of that point because essentially his his last couple of comments there are really around building better pm habits and that's really what you need to do like when he went to that company he had good habits around invoicing other people didn't so you'll know what project was probably going to be more successful or which project manager is going to be more successful so you need to start at a very young age with your pms you know early in their careers and get them to build good pm habits and that's a really important part of doing you know everything that we're talking about here and so yeah mike one of the other things i really want to touch on here is is write-offs first of all a lot of people don't understand what write-offs are so i definitely want you to explain what they are um you know some people may call them write-downs you may hear them referred to as write-downs or write-offs so so what are they and why are they not good so i think you know write-offs seem to have a pretty bad connotation in our industry so you know when you're writing something off it means that you've spent more than what you had budgeted for right so i cannot build that to the client i got to do something with that labor so what do we do we don't charge anybody for for it so therefore the company essentially writes that revenue or that lost revenue off right revenue being that the billable out billable rate times the hour generates a revenue that i'd love to be able to build to the client within its budget but when i'm out of budget i need to do something with that labor what do i do with that i essentially write it off or write it down or whatever word that it is that you want to use with that um you know i think we spend so much when we talk about write-offs i mean we spend so much time in and a lot of the different companies that i see that it it is you know it's like a bad word to talk about and and some of the you know the work that i've done with project managers is and and you know group managers etc is that not every write-off that we're going to have is as a bad thing and what i mean by that is there's going to be certain times i'm sure that people out there like what if we wanted to go after a project that's new to us um and we had to submit a competitive fee or we actually had to take it for a lesser fee um it happens all the time in our industry this is a new project that we want to get we're not as experienced we want to take it as a lesser fee well the budget that we created we're probably going to have a hard time meeting that budget and probably at the end we're going to overrun it and so that time is a write-off is it a bad write-off not necessarily it's a planned write-off um or it could be something that we're you know what if a lot of times i hear well i budgeted it with person a and person a has a bill rate of 75 bucks an hour they're not available to me now i have to use somebody who's 125 bucks an hour and i and i will tell them i i get you i mean there's no way even the person with 125 an hour probably has a lot more efficiency in what they do it's probably not twice that of the 75 an hour so we're probably going to be over budget so it's understanding that and kind of managing that through the process um there's a number of different ways that write-offs are always not a bad thing we know what they're going to be we have to plan for them but i also remind project managers this isn't your get out of jail free card this is an excuse just because i took it at a lesser fee i get to spend whatever i want no you actually have to manage it even more closely because we don't want to you know overrun it with it's you know without any oversight etc um and so that's kind of you know when you think about write-offs from that sent but at the end of the day nobody wants to lose money you know we're not in this as a business to lose money and kind of you know i'd like to talk to folks more in terms of understanding how profitable something is versus just focusing in on the write-off because i sometimes think we just focus on that dollar amount versus anything else and we take it as just a loss yeah good point and i want to get into that with you in a minute here profitability but before we do that again i'm going to go back to this again maybe i sound like a broken record in this episode but project tracking again can minimize your write-offs because again if you recognize a variance earlier on a project you can make adjustments whether that means getting someone who's less expensive or you know maybe maybe you ended up working out a scope and that helps you to realize it and then you can recapture some of those costs by getting an extra an ad services request or something along those lines but you can't do any of that unless you're tracking your project on a consistent basis and you flag those variances and you address them so i just want to say write-offs you know they're bad maybe in some cases they're not bad but either way you really want to try to avoid them and the way you can avoid them of course is by recognizing them and maybe either avoiding or minimizing them because i think at the end of the day listen write-offs happen i mean they're going to happen to every every you know project manager at some point in your right maybe on every project in some sense but if you can minimize them catch them early then i think you're going to be you know much better off and again goes back to project tracking but well and just because we have some of the justification i'll just tell you another quick story so i had a project manager come to me and you know in our business we're always trying to bring in young people out of school right they have no they're not experienced and so we want to give them experience on projects and so i had a project manager come to me and say look um you know we're going to use such and such on this project they've never done that before what are you thinking i said that's great i mean they need they they've not gotten this experience we need to we need to get them that experience let them let them work on this project so you know it was about two weeks into it and they come to me and it's at the end of the billing cycle and we're over budget now i knew that we were probably going to be over budget to some degree because they're not going to be as efficient and we're probably going to have some learning experience there with that person but when they came to me it's not an excuse of why we went over budget and they said well they were new okay well they were new so we how when did we find out that they were over budget well i i just kind of found out now well if we knew that they were new and we knew that they never had this done before why weren't we checking with them every couple of days or asking more important asking them to check in with us because that's the other thing that i think we're afraid to we put so much pressure on the project manager you need to check in with everybody and i always say at least people kind of work for you so they can check in with you as well you know they can come so tell you and show you what you've done it doesn't always have to be you going to them and so when we don't check in on these things on a regular basis we're going to be surprised at the end and that's how kind of write-offs just grow unintentionally but even like i said if we're trying to change the connotation around that and understand maybe why write-offs happen it doesn't mean that it's just a cartilage excuse that hey we just have to accept it because of this that or the other thing um we've got to manage it all the more closely yeah that's great and again mike just gave another i think example of why pm culture is important as opposed to pm training if you have if you do a pm training once or twice a year which a lot of firms do some firms don't even do it that much but some firms do you're right and then you get new employees that come in between those training sessions that they're not getting the training they don't know what right invoicing is they don't know how you do it they don't know what write-ups are they don't know how to track their projects again you need a pm culture that people are doing these things on a regular basis it just becomes second nature and maybe there are some programs or ways to bring people that are new on board them and get them up to speed on your habits and i think really that's kind of becoming a running theme in this episode is that that culture and those habits are so important because you know you can't rely on a new person to come into your company and know all these things unless you've created the company built it in a way that you can easily bring them on board and get they'll teach them the language so to speak is another way that i i like to describe it and so mike you've talked a little bit before about project profitability yeah talk about profitability and how how it is a really good metrics for tracking successful project outcomes well i mean this is just my personal opinion but i think when we look at things of how profitable something is versus how much we're writing off right i think again let me go back to that if i were to give you an example and say okay i thought we did really well on this project but we wrote off ten thousand dollars you might only want to focus on oh my god ten thousand dollars why did we write this off like what happens it becomes such a focus and the amount of money becomes such a focus but if i said to you our normal profitability is we run around eight percent maybe ten percent on a project and this one we ran you know closer to seven percent or maybe even five percent um it has less of a connotation and i feel like we spend more time thinking about okay how did we not reach the seven percent or eight percent versus focused on that kind of dollar amount and it also and the reason i say that it's a good reminder look at five percent we still made money we may not have made the money that we wanted to but we still made money if i only ever tell you that you wrote off ten thousand dollars on a project you have no idea if we've made money or not if you don't look at profitability and when i worked at some firms that all we did is focus on the write-offs at the end of the job it always seemed like a failure because as good as we did and it may only been a five hundred thousand but at the end of the day it still had it stowed a loss it didn't show a game like all of that kind of just it just kind of brought the team down of we did such a great job but we wrote off 500 but if i would have said to them hey our target was 10 we wrote off 500 you know 500 bucks but we still came in you know 9.5 you know we did a good job it's just a different way of kind of looking at things it still doesn't mean that you don't want to focus on you did lose a little bit of money but it doesn't become like the such a punitive way of looking at it like i'm only focusing on this red number and not that we actually what were the some of the good things that we actually did in the job you know uh look if you were to take a new job if i was coming to say anthony we got a great opportunity on a project we've never done before um it's our foot in the door we've been trying to get with this client um and i think we really you know can do this job at the end of the day we're going to write off 20 000 but i just want to let you know that you as the pm or the business owner might go mike that sounds terrible to me like we're going to we're going to take a job we don't know anything about and we're going to lose 20 000 bucks but if i were to say to you you know we're not gonna hit our ten percent but we're still gonna make five percent you might go huh you know we're still gonna make money not as much as but for the first one i'll take five percent you see the difference of what i'm trying to say there you know for sure and let's take it one step further here mike talk about project profitability versus firm profitability are those the same no at the end of the day those two things are are different and i think i can probably explain this with a um another quick story so um let's say we have an engineer going to work on a project and they're a salaried employee so meaning we pay them for 40 hours of work and they get no overtime okay we don't bonus them they're not getting any paid over time so no matter how many hours they work they get paid the same thing so from a firm standpoint i've already paid for their direct labor and their salary for those 40 hours i've paid the lights to keep the lights on the utilities all of those things that's all wrapped together none of that if that person stays one extra hour in my office i don't pay more for electricity i don't pay more for water right i those things are pretty much set um from a project standpoint doesn't work like that and what i mean by that let's go back to another that same scenario let's say we told that young engineer who happened to be paid salary um look you're going to work on this or let's use a different example maybe it's somebody even more senior we want to go after this project and i tell them okay i know you get paid salary so i don't want to see anything over 40 hours i want you to put to a non-billable face whatever overhead phase you got admin promo whatever you call it right so at the end of the day they're only charging 40 hours so that's what i budgeted so as i'm looking at that at the end of the day i'm at the budget fantastic our profitability is great but we really have no idea of anything and what if it took that person 42 hours what if it took them 82 hours if we had 82 hours and our profitability was actually negative or we wrote off more money than we had anticipated either we need to do something differently or we may just decide that we can't go after that job because we just can't be profitable at it the way we're structured right but if i only ever charge 40 hours because as a firm they don't get paid anymore i'm not seeing any of that information so it looks like my project ended up profitable and meantime it really wasn't so from a firm i made the same amount of money right but from that project i really didn't yeah it's an important point because if i'm managing a project let's say and let's say you know mike is working on my project team and i tell him hey i've only budgeted you know 30 hours for you to work on this task you can't charge anything more to that ends up taking him 60. i'm never going to know that unless he tells me that and then i'm going to keep doing what i'm doing and we're going to keep going down that road however if i said listen charge whatever it takes you to the project if it's an overage then we need to figure out why it was an overage and we need to make adjustments on our next project it's going to look bad for that one project of course but in the long term you've got to become better at managing and delivering these projects or else you're just going to keep affecting the bottom line of the company in a very negative way and so that's a really important part of project management having that transparency in those conversations with your team members and making sure that there's continuous improvement and if something goes wrong on one project that's you need to address it have a you know lessons learned at the end of your project to make sure that that doesn't happen again so i'm glad that that you know mike really touched them out there all right so we talked about a lot there we talked about you know invoicing the importance of invoicing write-offs looking at project profitability project profitability versus firm profitability and really a lot of the running theme was developing better pm habits right building that great pm culture in your company as opposed to just thinking about doing a pm training or having some pm conversations once in a while and so what we're going to do now is we're going to take a quick break and then we're going to come back switch it up for a minute just ask mike a couple of last career related questions on the civil engineering hudson we'll be back in just a minute all right we're back with mike lozenoff mike's a licensed professional engineer owner of lows and off consulting services he helps ae firms grow we had a great conversation so far about project management invoicing write-offs profitability but now we're going to put mike on the civil engineering hot seat and wrap up with a couple last career related questions ready mike you bet all right so first question do you have any specific rituals that you practice every day for example do you have a maybe a morning routine or a lunchtime routine or just something that you do consistently on a daily basis that has contributed to your success i don't know that i'd call it a ritual but i guess i would say is you know to be honest with you i'm a list writer i'm a you know uh there's so many different things that go on in my day and in my week and you know it's easy to get distracted in our business especially if you're you know coming from a project or a management project manager or management background um so honestly i try to it's a daily routine so in the morning i look at the list that i have created you know at the beginning of the week i'll create a list for the entire week of things that i know that need to get done and then i'll try to prioritize that for that day in the morning i'll kind of look at that prioritize and then go through it and then what i try to do at the end of the day i just spend a little time to see was i able to get through the things that i was able to you know wanted to etc and it helps me kind of prioritize and think about things for tomorrow inevitably i will never ever get everything done off my list sometimes i do um but usually something pushes for whatever reason or not um sometimes it'll push to the next day but sometimes when i look at it it's now a different priority so you know think about it at the end of the day allows me to come in fresh the next day and think about it and so i don't know that that's a ritual but i find that that kind of helps me get set for the day and kind of almost helps me unwind so by doing that i kind of decompress here versus decompressing at home you know i kind of get to leave it here and i know it's a i'm better prepared for the next day that's great that's awesome all right next question is there a book that has been very helpful for you obviously i'm sure we all read a lot of books throughout our career but sometimes there's one or two that stick out for you that you stuck with you you practice things from them is there a book that has jumped out for you that you might recommend to our listeners you know obviously like you said i've read a lot of different books and when i talk to other folks you know i've never found that there's just one book that's a be all end-all and i think that's a good thing and what i've talked to folks about is you know in these definitely leadership or project manager guides or whatever you're reading periodical on some ceo that did this or that um there's always going to be some element that speaks to you either it's going to allow you to build upon your strength or maybe highlight a weakness that maybe you didn't think about and give you that opportunity and then there's going to be those elements of the book that really just don't speak to you and what i would say is that's fine leave those behind don't try to tailor your management style just because you read this specific book and i've met a number of people that have read a book loved the book and said i'm gonna do all of this in this specific way um but i guess if you were to make me pick one book that kind of just i refer to it a lot um is jim collins good to great i think it's just a very interesting perspective on business and management and leadership um everything from level five leadership which is you know first who then what um versus what i think a lot of firms do is and and i've done myself in my career like try to figure it out what is i want to accomplish and then who do i find to do that i don't know about you but it's very hard like once you've created that picture of especially if it's strategic it's then very hard to go find that person who fits that and where i've been more successful in my career is find people that are really good at certain things and then plug them in there even you know when i was working with different project managers i've had some that are great at going and finding new business and business development and others that were great project managers but just loathed business development i mean which is funny because they were very good with clients but just hated it and you know this whole thing about you know where he gets into putting the the right people in the right seats on the bus has been important for me and i've taken those life lessons everywhere of just what are they good at and let them go be good at it and i think that whole thing about take your best people and put them on the biggest opportunities too often we take our best people and we put them on our biggest challenges because we know that they're good and they're going to help us figure it out well at the end of the day we're engineers we get paid to figure things out but there's only certain people that can go do certain things that everybody can't not everybody can go open an office not everybody can bring new clients in the door you find somebody that is really good at that help them focus that in and focus your business around that person um versus the other way so it really kind of opened my eyes as a young engineer to seeing different things and just kind of a lot of concepts that i practiced today i mean i still think the book resonates i just saw some things on linkedin about jim collins is still out there doing you know seminars and whatnot so obviously the book's been around a long time and concepts still resonate with people so that's just one um that no matter what i've read i always just kind of that whole you know seats put the rights people in the right seats on the bus that just has stuck with me forever yeah that's great and we get a lot of guests here on the podcast that do mention good to great of course is really you know i think in professional services industry has been yeah picked up really well all right so the next question is thinking back on your managers of the past you don't have to name any names but just generally speaking if you think of your favorite managers you know what was that what was it that made them your favor we're trying to understand here in the aec world what do matt good managers do like what is the common traits between them people that have worked for like managers that i have managed or people people that have managed many people people that i've worked for yeah what were the best managers that you had what made them the best yeah um i think you know just being you know team oriented um understanding their role as a leader of the overall team somebody who's there to guide us and kind of shepherd us through the challenges that we were going to be facing somebody who um not necessarily you know will get in to the trenches all the time because you don't want them to be micromanaging but somebody that you feel had your back all the time that you were not afraid to when you came up a challenge and you're going to have many of them in your career you weren't afraid to go to them and say hey i don't understand something because you weren't worried about the recourse you knew you were going to get some good mentorship from those people they were going to be patient with you and kind of guide you along the way um and then you know we use this phrase all the time not just in our industry but everywhere you know they gotta walk the walk they just can't talk to talk and some of my best managers have kind of exemplified that i've had some managers that will say one thing and totally do another you know trying to guide me is you need to hold your people more accountable okay i don't really know how to do that can you show me that versus you need to hold your people accountable and then you see them as managers not holding anybody accountable right and you're like i don't understand how this works um so again bringing those people in and showing them being that coach and mentor and you know we're all in this together at the end of the day we're successful as a team not one person makes up that team so i think some of those people probably would be the highest um on my list all right last question mike you are in an elevator with a civil engineering professional let's say they're younger in their career you have 30 seconds with them okay what career advice do you give them in 30 seconds i think it all depends on what they really want to do so you know in terms of what i would tell them whether they're an engineer or project manager let's just pick on a project manager at this point you know somebody who wants to become a project manager because i get asked that question a lot right i think i want to become a project manager and i i talk to them about you know things like well if you like being in control of of the process um and control doesn't mean you're telling people what to do control of the process means you know you're understanding your budgets you're understanding schedule you want your deliverables out on time you like team collaboration and building teams um that with you know mentorship and guidance um you are willing to take ownership um and responsibility um the team will enjoy the successes you as the leader have to own you know the failures and understand and take responsibility that you know this is something that i was responsible for and i need to fix um being willing to hold people accountable not in a punitive way um just showing them taking accountability as a guidance of a tool being willing to you know be a good communicator internally and externally and if you like all of those aspects go for it you should be a project manager and god knows we need you in our industry we need good project managers who are supported and will support others and those people again back to the beginning of our conversation before they run our business for us and we need to give them all the tools we can to be as successful and conversely if you hate everything that i just said there and you just like doing technical work do the technical work you will you will not enjoy yourself as a project manager and you will not prioritize anything that i said and therefore you will be miserable and your farm will probably not be better for it at the end of the day there you go all right well mike lozenoff from lozanov consulting services i want to thank you so much for spending some time with us here on the civil engineering podcast absolutely it's been a pleasure thank you i hope you enjoyed this week's episode i know there was a lot there but becoming a great project manager often is a differentiator in one's engineering career and i hope this episode helped you to do that we put out videos like this on a weekly basis to help engineers become better managers and leaders so please subscribe here so you can continue to grow your career and i'll see you next week you