Making The Jump - Construction Manager to Development

Hi All,

I'm coming from a fairly technical background with about 3 years of experience; 1.5 years at a major GC and 1.5 as a CM in CapX for a multifamily and healthcare developer. I'm curious about approximately what % of my work overlaps with most DM scopes would be.

I've got a pretty strong project management background and significant understanding of the technical side. However, my financial knowledge ends at processing pay apps, rudimentary gain/loss, and bid coordination.

What would I need to brush up on to swing into a dev role? From my lurkings on this forums it seems like the role is fairly fluid in actual responsibilities and knowledge. Currently looking into a MSRED and MBA as well. Input appreciated.

Comments (26)

Jan 24, 2019

You already have most of the skills necessary. It's much, much harder to learn the construction side than it is the financial analysis part. I'd suggest looking around for one of those weekend underwriting boot camps to get yourself familiar with modeling out deals. That honestly should be enough - the vast vast majority of the risk and difficulty in the development process comes in executing on construction and coordinating that aspect of it with lenders, investors, contractors, etc.

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Jan 25, 2019

While I agree the financial side is no doubt easier to learn than construction - a 2 day bootcamp for someone in the construction world to learn about financial modeling? LOL, that is misleading.

If planning to be in the industry long term, pair the construction experience with an MBA / MRED. Or try to wade through some RE finance text books / online courses and learn on the job from someone who will teach you. Learn more than just the basics and understand the nuances of what are the key variables that drive the numbers. If you spend significant time learning the financial side of the business, you will bring huge value.

Jan 24, 2019

Yeah not trying to make the case that a 2 day bootcamp is going to turn you into a real estate finance wizard, but it definitely will give someone a good basis on which to go forward. You can learn the finance side of things in a couple of months, instead of the years it takes to understand the nuance of the construction process.

Jan 24, 2019

MRED and a MBA wouldn't be a bad idea. With your background and that education, you would come out as the most qualified you can be. I wish I had your construction background at times.

All that said, as a CM you need to learn the financial side of deals (genuinely not difficult to learn) and all of the nuances of politics/design/people skills to transition to a DM role. Often I get frustrated with my CMs because they act like the construction process is the only part of the deal - ignoring all of the entitlements, finances, operations, etc. that also go into it.

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Jan 24, 2019

With that, i'm curious to see why more people in construction don't make the jump to development. Most of the smaller shops i've worked with have backgrounds in construction while the heavy hitters in my area (JBG, Douglas, AvalonBay, Etc) seem to source more analyst/associate level employees from finance/private school backgrounds.

Would you consider that more anecdotal? From my experience it's been more like a 20/80 split of non-technical/technical background, technical being construction, engineering, architecture, etc. It seems like everyone I talk to under 30 in the GC world is trying to go to the dev/owner's side and obviously not everyone makes it.

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Jan 24, 2019

It depends on what you mean by "the jump to development." Going to a CM position at a development shop is a natural progression for a smart super / PM. Plus they get good pay, get the benefits of being the owner rep, and don't have to be at work in the cold at 5am every day. Transitioning to a DM role is definitely possible too, but it would require the right person - a skill set expansion would certainly be needed, as would a mentality shift - going from a blue collar job to a white collar job.

As far as analyst/associate sourcing is concerned, there is definitely a trend at major firms to hire finance kids from Ivys. Hell, I got dinged at Hines because I wasn't one. I argued that I had real estate and development experience and the MD gave me a "No, son, WE teach you development. We expect pedigree and exceptional financial skills. I, for instance, went to MIT."

eye roll

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Jan 24, 2019

I had the same experience with Hines. They either want you to have family in high places in real estate/anywhere or come from an ivy background. It is ironic, because I am arguably at a better place.

Jan 24, 2019

@CRE @REPESailor2020 the whole "pedigree" argument is a bit nerve wracking; state school grad with a civil engineering degree and a dogshit GPA to match. I'm assuming most boutique shops are more forgiving in that aspect? It's a little refreshing to see an eyeroll with all of the prestige that's thrown around.

Most Helpful
Jan 24, 2019
Dumpster Fire Yuppie:

the whole "pedigree" argument is a bit nerve wracking; state school grad with a civil engineering degree and a dogshit GPA to match. I'm assuming most boutique shops are more forgiving in that aspect? It's a little refreshing to see an eyeroll with all of the prestige that's thrown around.

It matters and it doesn't, you know? I'm a state school grad with a dogshit undergraduate GPA too. I did grad school at a state school as well, although I graduated with a great GPA from that. To douchebags, it will always matter. To companies that pride themselves on being high achievers who hire only high achievers, it'll matter more than not. To companies that get thousands of resumes for every one opening, which I'm sure Hines does, it's an easy way to trim the herd.

In general, people in this industry tend to hire what they value, and often as a reflection of themselves. If that's a finance degree from an Ivy League school, because they have a finance degree from an Ivy League school, then that's what they're going to look for. I did my graduate internship at a place in which I was one of two interns who weren't from Wharton or UNC Kenan Flagler. Why Wharton and UNC and not Duke or Harvard? Who knows for sure, but there are a lot of Wharton and UNC grads who work there full time...

In my current role, I work for two graduates of a school known for super smart kids with zero social skills. These two graduates however have social skills and very much did not want to hire "nerds." I laugh thinking about my interviews because for the first time in my life I could talk about my GPA with a sense of pride and not try to hide it, but they 100% took it as a negative, or at least something to be cautious about. For once in my life, being a dickhead in undergrad and partying my way into a sub 3.0 GPA not only saved me from that awkwardness but helped me get the job. Life is weird.

I don't mean to discount pedigree - it's impressive as all hell and I wish I had a name like that on my resume - but real estate isn't banking or consulting. If some company wants to jerk off to their collective ability to do homework as a 19 year old, no worries - move on to the next.

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Jan 28, 2019

"Pedigree"... what an ass clown... You should be thankful you didn't get a job under him and have to agree that his farts smell wonderful all day.

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Jan 24, 2019

100% achievable now. IMO a CM background is one of the most valuable/transferable skill sets to a pure play development role.

I think the overlap depends on the shop type. At a public REIT, minimal, as there is more siloing of responsibilities. Most of those firms have separate construction teams responsible for bidding, negotiating GMPs, schedule, means and methods. At a private developer, very significant overlap.

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Jan 24, 2019

Our CM's have had MBA's as well ... it is a deadly combination, one is leading regional development for a major multifamily developer now. It sometimes kinda sucks coming from a finance background because I feel like an MBA or an MRED will just teach me the same stuff I learned in school or on the job. If you have a CM background, the MBA or MRED have significance and put you in a unique position.

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Jan 24, 2019

Like others have said, MBA or MRED route would put you in a great place. Very few people come out of top MBA programs with sophisticated construction experience in their back pocket, so I have to assume that developers will snap you up. You might be best off at a top boutique where they give you room to run and work your way up faster.

Either way, if you have the intellectual horsepower to get into a good program then you're in a great position. From there, it's a matter of getting some experience on the other side of the fence, after which you'll be highly valuable to any team or be able to start your own business.

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Jan 25, 2019

You have a great background for a transition to DM. Sure, you could get another degree. Sure, you could study RE finance. Either would maybe give you an extra edge. But your experience, as others have already said, is already much rarer and more valuable. We look for people like you when hiring DMs, moreso than people with a finance background.

Now, the bad news...

You can definitely hit the ground running, but it's a big mental transition. Again, others here have pointed this out. Development is much more about soft skills, and being a good leader. I've seen people transition from an arts background and absolutely crush it. I've seen finance guys flail miserably and die a slow development career death. Why? The good ones are fantastic listeners, are intellectually curious and hungry for constant learning, genuinely like to help others succeed, and don't have massive egos. If this sounds like you, then with your background you're already better prepared than 80% of DMs out there!

Best of luck.

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Jan 27, 2019

I did exactly this, so my response is coming from someone who has been in your shoes. Developers require a strong financial acumen for investment-related gigs, so you're likely going to hear that when talking to groups. There a ton of construction folks who want to be developers--there NOT a ton who can get a 700+ GMAT get into a top MRED/MBA and learn to grasp finance and accounting as well. This is an incredibly unique skillset to have and will make you incredibly valuable to a development firm. There are a lot of guys I work with who can run the numbers in their sleep, but when it comes to project management (and coordinating various consultants / managing budget, etc.) they find it very challenging. The reality is your ability to manage projects (and people) against tight deadlines will give you an advantage. You will be able to speak the language when bidding GC's to build your project, and ultimately once you're under construction and are working to deliver the project at the price point you have to for the numbers to work. What will be new for you--sourcing deals, financial feasibility, due diligence, capital raising (debt and equity), leasing your project, marketing, and asset management. These are all things you can learn on the job, but again your background will serve you will because development really is a project management exercise. I quit my GC gig and went to b-school and it personally worked out for the best; it is a very personal decision though that comes with obvious risks. The full time MBA is great because you can rebrand yourself from the construction guy, to well-rounded real estate guy who can run numbers and manage projects (and knows accounting, and the other coursework you'll gain from an MBA). Key though, is that you'll have a full summer to intern somewhere (and realistically you could intern during Spring of your 1st year and Fall of your 2nd year too (at a shop in same city as your school). I looked at MRED programs but found most to be very short (11 months straight, then out) and felt that an internship before graduating was key to pivoting from CM to investing/development. Others on here can provide more color on pros/cons of grad programs, but in your case I would try to get into the best program you can and go for it. Make sure you want to ultimately work in that city/region because RE development is a local game, and you'll find more jobs in that area than if you try to move across the country etc..

Jan 24, 2019

Curious on the pivot, when did you make the transition experience-wise? Should I wait for the PM title for B-school or would an APM title be sufficient? I know the terms are incredibly fluid, I've had both titles with the exact same responsibilities. Not sure how it looks on paper though.

Jan 31, 2019

I wouldn't worry about it too much. Focus on the experience you are getting at the GC. I was lucky to get fantastic experience managing my own projects, starting small obviously. I also learned that an APM with firm X can easily be wayyy ahead of an APM at firm Y. I learned this by moving around to get experience.

Jan 31, 2019

APM role is much different from firm to firm.

I've seen APMs who are basically glorified admins and don't know anything about construction and rarely get out in the field. And I've also seen APMs who know more than their PMs.

Jan 27, 2019

I was a senior project engineer or APM at most other GCs. I had a ton of responsibility and worked in-house for a developer on a massive build to suit deal for an insurance company. I had learned all I really wanted to on the construction side, and felt that 3 years in in the industry was a sufficient primer. Would still agree today looking back.

Jan 28, 2019

Construction experience is invaluable. Requires actual experience on the field as opposed to modeling courses anyone can take online. I wish I was on job sites more often.

Jan 28, 2019

If you want to be on a job site, go buy a hard hat at Home Depot and walk on to a site to talk to the superintendent. These GC's need smart young guys on site. Get an internship working labor. I did this for two summers. Cleaning up the site and hauling around materials in the mud really sucked, but the experience was invaluable.

I'm the only person I know in REPE that has actual knowledge of ground-level construction. It makes it easy to sniff through developer's bullshit and ask the hard questions about timeline, labor costs, and contingency.

Jan 24, 2019
InVinoVeritas:

sniff through developer's bullshit

This is true; we do this.

The bank got us the other day. On an 18-month build we tried to give ourselves a lot of cushion and make it a 24-month build. The bank had no problem with it, but then stretched our CM and development fees over 24 months instead of 18.

Foiled again. 18 months it is.

Feb 1, 2019

To OP, and anyone, I would say the sooner you make the effort to get to the dev side the better. I'm a bit later in the game working on the transition myself via an MSRE and wish I would have done it sooner. Do whatever degree you chose part-time if you can. Fortunately I'm in a great place doing consulting work, solid base salary, and have great project experience throughout my career. However, I do wish I would have been making this transition 5-6 years go instead of 10+yrs into my career. My path has been architecture > small design+build > consulting > hopefully development.

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