construction vs finance for development career
Construction management for large homebuilder vs entry level development analyst to start career in development. Which would be a better place to start?
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If you want to work in development, I would work for a developer
everyone here, including me GENERALLY, will say dev analyst. HOWEVER, there coudl be exceptions:
- can you move up fast in the proj mgr role for a homebuilder, would you love the job/have fun etc
- big picture, over the next 15 years, do you think you could crush it in single-family or something immediately connected to the PM role?
most guys on here are sheep and that is why the dev analyst/dev mgr path is crowded. there might be a contrarian route you can take. i remember reading about an HBS grad becoming a homebuilder because nobody else wanted to do that (can't remember who it was), and he ended up absolutely dominating.
but you're unlikely to move from construction manager at Pulte to development manager at Wood Partners. just very different stuff.
probably not the answer you were looking for, but the answer you need. reminds me of at least one Paul graham essay, but there are a couple: http://www.paulgraham.com/conformism.html
I think construction management is only useful if it's related to the development you want to do later on, but it is very difficult to move from construction to development. I did concrete construction for multifamily and office for several years before getting my MBA and moving over to a multifamily developer. The construction knowledge is mostly for background (I'm not digging through the drawings to find answers or coordinate trades) but it's definitely helpful, plus employers seem to like it. The biggest takeaway, though, is everyone I spoke to in development who started off at a GC needed a masters to make the switch. No developer will take you seriously for the development side unless you know the finance aspect, and you just don't model project, put together capital stacks, etc. as a GC.
If you want to develop SFH, working construction for a home builder could be very helpful (I don't know much about that market so take this with a grain of salt), but it won't set you up for a career in development like straight up starting at a developer would. You would most likely still need an intermediate step to get you to the ownership side (even if that step is as in-house CM work for a developer and then doing your best to lateral internally, though I will say this is fairly rare to my knowledge).
EDIT: Already replied elsewhere, old thread my bad.
Maybe I'm on my own, but I'd value the construction side of things. Learning to build a model is easy, and learning to use an in-house model is easier still. Those are things you pick up at a new job. But the kind of eye for detail, the time management, the ability to coordinate trades... that's a lot harder to learn and you'll get all that on the construction side.
As others have alluded to, there is no shortage of finance-types looking to break into development. Finding qualified people from the construction side of things is a great deal more difficult. Even if you want to go into acquisitions, there is real value in someone who can walk an asset and eyeball the needs and costs in a building.
All else being equal, the easier path is certainly to be a development analyst at a development shop. Why reinvent the wheel. But a bit longer term, if you're thinking about how you provide a unique skillset that will get you paid/promoted faster than your peers... well, the construction background will be helpful. As always, my direct knowledge is limited to the NYC market, but a lot of the very successful developers here either have a construction background (even a high level one) or have a partner in the business who knows it. It's just too easy to get taken advantage of by a GC or your subs to not have someone with a working knowledge of that space.
While I don't disagree with anything you said, I question how easy it is to make the transition from construction to development. I made that exact transition and got my MBA to do it. I know several others who did the same and all had to get a masters of some sort, developers just wouldn't look at a construction guy as a potential hire.
Don't go into homebuilding to start, the product is way different and the schedules are much shorter. The processes are somewhat similar between commercial and homebuilding but not close enough. That being said, if you want to make PM in a year and rise up super quick, it's honestly not a bad option. From what I've heard, the bonuses are actually pretty dope and the knowledge needed to rise up is super shallow.
Construction's great for learning to manage and beat people up while learning the pieces that go into a building but the transition is much harder. I really believe the skill set translates almost perfectly and has you directly managing earlier, however the branding matters a ton.
If you want to be a top tier Development Manager, you need real building experience. You can be a good DM without it, but you simply will be better by actually knowing how to building something. When I get into a tough situation with a GC that I hire to build an industrial building, I dont have to worry if they are taking advantage of me with a change order or a delay of schedule or anything else. I know as much about the shit as they do (or more). I know when there is a serious issue on the project that is just a bad situation (like differing site conditions, truly inclement weather, force majeure events, etc.) versus the contractor not doing their job correctly. Being able to navigate the gray areas is crucial and a GC will run all over you (even the good ones; even if not done intentionally) if you don't know as much as he does about the project.
You can pick this up through years on the job if you start as an analyst though. I'd say out of the many partners I know in development, probably less than 10% have formal construction experience and less than 30-40% if you include architectural backgrounds.
Not saying it isn't important (it's becoming more so with the increased institutional activity in the space - you need to be able to talk the talk earlier), but you can 100% become an amazing top tier developer without direct construction experience.
It depends on what you want to do though. There are several hats one could wear under the 'development' sector. Do you want to be an asset manager? Yes, an analyst is the best place to start. Dev manager? Definitely construction is a better place to start. Deal maker? build a career in brokerage and bring those contacts to the development side.
When I think of development though, I am generally thinking someone means development manger.
Thank you! I'm a bit ignorant on non residential GC's. I'm guessing those would be a better place to get construction experience than a homebuilder if I was aiming to do non-residential development? Do place like Turner/Skanska hire non-engineers out of college for construction kind of like Pulte/Lennar would?
I dont know why, but there is a huge misconception in the construction industry about engineers working for GCs. GC's generally speaking do not have P.E.'s working for them. Also, GC's do not target engineers to hire as superintendents or PMs, though there are plenty of folks who studied engineering in college and end up on the GC side. Coming out of school with a construction management or building science degree is far more attractive to the employers you mentioned.
So to answer your question, you would be fine getting a job at a Turner/Skanska without an engineering degree (especially in today's market; I was told the other day of a GC in a secondary market who is offering $80k starting salary for entry level with zero experience right out of school). And yes, definitely work for a big commercial GC like those ones and not a home builder if you are not specifically wanting to do single family development.
The answer is yes, many jobs at construction firm, even the mega-giants, will not require engineering degrees (but a lot of people with engineering degrees will still pursue them even if not required).
But, I really would not recommend pursuing such jobs for the intent purpose of moving to development. Construction skills do have a lot of value in development, but it is not the easiest transition by far. Only go for a job a big construction firm if that is what you really really want to do. Sure, fine to think of development as a long-term option, but if that is really your goal, I'd really aim for a true real estate job (I am assuming you have more a "business" type background, that is part of why I'm making such a statement).
I guess to sum it up, if you are really interested in construction management, and see that as the avenue you can drive value from, and want to have a legit career doing it, then sure, consider such options. If you are seeking to use it as a pathway for "exit ops" to development, I'd strongly consider other options.
To that end, the pathway of like 4-5 years a project manager/asst. project manager (or superintendent), then MSRE/D, then into development is one I've seen work for many people. But, I really don't think they set out for that path, and the one's I know well did not make it sound like an easy transition due to high levels of competition.
so, the above title is the more common "starting point" for progression up the ranks in many major devcos. Still, not sure what the firm is, its size/scale, asset type, market type, etc. So, the "large homebuilder" may have some advantages vs. generic devco... but still if you want to work in development, work for a developer, hard to really defeat that logic in my mind.
Is construction mngt a good place to start? Sure! So is brokerage, investment mgnt, law, architecture, etc. Development is a multi-disciplinary and people at the top start all over the place, including at development firms directly. Homebuilding is a very unique, niche industry (one very much in demand I'll add), but "residential development" tends to end with a sale to a builder, so managing house construction to me seems almost pointless for even residential land development to be honest. If you want to be a custom, spec developer or move up within a homebuilder... then sure, great place to start.
Personally, I'd take the job in "real estate" over the adjacent one all the time. A lot of people start in construction management and want move into development, and it happens a lot, but I sorta suspect the actual "success" rate of those wanting to jump is low. If you are willing to go back and get a MBA or MSRE/D, then sure, much easier.
For context, my firm has a lot of dev. associates and dev. managers that started in construction mngt, but to suggest that every one from CM will make that jump that wants to is a very big overstep. So, I'd go direct if that is on the table, best route IMHO.
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