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 (39)

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 25, 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.

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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

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 30, 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 31, 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 28, 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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May 8, 2019

Digging this back up because I found a lot of value from it.

As someone who is at a GC, do you think developers have a preference for MBA vs MRED? I know this topic is talked about a lot.. but specifically those with the technical work experience.

My understanding is a Hines/ Related/ CIM/ Tishman Speyer recruits out of top MBA programs so that may skew their preference. My only concern about the MBA is the foregone income and huge cost associated with it. MRED seems easier to swallow just because of the time aspect.

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May 9, 2019

Obviously i'm the one who started the thread and haven't made the jump yet, but i've noticed that MSRED programs are super easy to get into in comparison the MBA programs. I know for Georgetown, all you need is a pulse and a wallet. For me it's a big deal since i'm rocking a low 2's GPA from a state school. Cost is for MSRED programs are lower as well.

For reference, MIT's MSRED GMAT is around a 680 average, their MBA program is a 730. I'd imagine Columbia's the similar program.

I've spoken to a couple friends that are in Georgetown's MSRED program, and they mention that their network has expanded immensely with the program. I'm a small town guy with 0 professional connections prior to graduating college so that network is definitely a motivating factor for getting a MSRED.

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May 9, 2019

Same here man. Low 2's GPA and small town guy. Have had a lot of friends go through an MSRE program local to me, all with great jobs post grad. But right now I don't really want to uproot my life and give up a year an half of salary and experience to go through it.

I have just started networking pretty aggressively and have had a couple meetings and interviews already. I had breakfast with a guy who is a VP at a local developer in town this morning and it he will be passing my info along to the rest of his company as well as reaching out to some of his other developer buddies who need some good guys to come be jack of all trades at their shops as well.

I joined ULI and went through their database of all the companies I had an interest in and just emailed like a mad man and then followed up with phone calls. I also used my school's alumni database to do the same and my response rate has been a whole lot better than I thought it would. Pretty much everybody I have met with have commented on how they like the initiative and persistence, that is a lot of what real estate is.

I'm sure I don't have to preach to you about how shitty GC life can be, I know 100% I don't want to do this for the rest of my life so I am using that as motivation to network and grind. Just keep at it.

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May 9, 2019

I think this depends on the quality of the subject programs and your geographic market. if you are getting a top 10-15 MBA, that is a no-brainer preference for any development shop over any of the best MRED programs. Outside of top 10, it depends. For example, in LA, a USC MRED is probably valued higher than a mid-tier MBA because of the value of the USC network. In my personal opinion, the opportunity cost of a non-top 10 MBA requiring another full year of study time (generally speaking), is not really worth it.

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May 9, 2019

Appreciate the insight. My question was more in that grey area you are talking about.. although I know this is subjective.

Top 15-20 MBA vs Top MRED. For example: UCLA MBA or USC MBA vs USC MRED (in Southern CA).

Same question for NYU. I would imagine Columbia MBA would definitely outrank Columbia MSRE, but not sure how feasible Columbia MBA would be for me (low GPA from state school).

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May 9, 2019

I am in the same exact boat. Currently at a GC who does work for Hines/Trammell Crow/etc and I want to make the jump to development. I am strongly considering a part time MBA that way I can continue gaining project management experience/networking while getting the MBA to round myself out. Really not sure which route to take.

May 9, 2019

I'm sure you can read through this thread and figure a lot of it out, but I would definitely recommend looking into working as a CM for a bit to get closer to an owner's skillset. I've worked as a CM for about a year, 6 months as a consultant in healthcare, and 6 months in multifamily. I've found it extremely helpful in understanding business plans and navigating the politics behind it all. It's easy to get gigs as a CM from the GC side, and I work much more closely with the developers themselves.

I spent 2 years doing ground-up construction, and in combination with my civil engineering degree, I really don't feel like I need anymore technical chops to make decisions as an owner. You only need to write scopes, fight change orders, and review submittals so many times to know what's generally wrong or right.

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May 11, 2019

I have a background in civil engineering, worked in construction management and found it was tough to get a development role. You need to learn the financial side of things, 100%. You may be able to get into a development company as a Construction Project Manager and make the move over. In my experience, the field guys stay in the field. Some disagree, but this post is case and point. Every job posting says, "degree in real estate, finance, accounting" because its about how do you make money on this deal, not how do you build it. If you took an analyst position at a brokerage firm or something like that, even for 6 months, it could help you leaps and bounds.

I got into brokerage to get some exposure to underwriting and deal flow. Took a bunch of classes, and I'm now getting solid interviews for development associate, APM roles where I'm touching asset management, acquisitions, and CM. You need to learn underwriting, DCF models, zoning, etc. Its more than monthly roll ups and yelling at subs. Smaller firms may be a better target with a CM background. I'd take a small firm role where I can touch a little bit of everything.

May 15, 2019

I have a structural engineering background (civil eng degree) so I can somewhat relate. If you want to go the typical route and land at a big/decent size firm, MRED or MBA is your best bet based on the experience you get, the network you'll establish, and ....the pedigree. If you want to learn development without tacking on a huge loan, start cold emailing small shops - I'm talking family offices/2-3 people in the front office. Get a subscription to the BizJournal in your local area and jot down the names/firms that come out of it and put it on a spreadsheet.

Read articles on ASotREG or Adventures in CRE. Sign up for emails on Property Metrics (they have decent articles on calcing IRR, Proformas, Budget templates, etc. If you can, join ULI and sign up for their online webinar. Go to the ULI happy hours and just learn how developers talk, the lingo they use - ask them about a deal they're on, it's interesting to hear what they highlight/think is important. And I can't stress this enough - coffee chats and informational interviews! They won't "teach" you something, but you'll hear a word like "loan to value" or "cash on cash" and have to research it later which will take you down a rabbit hole.

I made the transition from the design/construction side to development without going the MBA/MRED route, so it is possible, just a long grueling process. But it was worth it in the end, I'm loving every day of work.

May 15, 2019

Can someone still make the transition with a construction management degree or does it have to be civil?

May 15, 2019
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May 15, 2019