WHEN TO HIRE YOUR FIRST PROJECT MANAGER: THE FINANCIAL CASE.
The first PM hire is one of the most significant financial decisions a subcontractor makes. It adds 2 to 3 points to overhead immediately, requires a bid rate update before the next project is estimated, and only pays for itself if the capacity it creates generates enough incremental revenue at adequate margin. The contractors who get this right model the overhead impact before signing the offer letter and update their bid rates before the next bid goes out. The ones who get it wrong hire for the wrong reason, leave the overhead rate alone, and wonder why margin compressed after the hire.
SPM models the PM hire decision inside the monthly strategic meeting when the question comes up, because it almost never comes up as a financial question. It comes up as an exhaustion question. The overhead rate impact, the revenue threshold, and the sequencing recommendation all come out of the numbers CFOS already produces, so the answer takes one meeting rather than one quarter. Sometimes the answer is hire now. Often it's hire in twelve months, after a specific revenue target, and the difference between those two is worth six figures.
WHAT IT MEANS.
The first PM hire is an overhead decision before it's a staffing decision, because it adds 2 to 3 points to the overhead rate the day the offer letter gets signed and every bid after that has to carry them.
A first PM hire at $65,000 to $90,000 base salary costs $85,000 to $118,000 fully burdened, meaning salary plus payroll taxes, workers comp, health insurance, and 401k. At $4M in annual revenue a $100,000 fully burdened PM is 2.5% of revenue in overhead, so if the current overhead rate is 13% the hire takes it to 15.5%.
WHERE THE FIRST PM HIRE COSTS MORE THAN IT SHOULD.
The overhead rate never gets updated
A $100,000 fully burdened PM at $4M in revenue raises the overhead rate by 2.5 points, so 13% becomes 15.5%. That increase has to reach the bid rates immediately rather than at year end when the CPA notices it. Every bid submitted after the hire at the old overhead rate is underpriced by 2.5 points, and on a busy quarter of bidding that error gets locked into contracts the company then has to build.
The capacity never turns into the revenue that pays for it
The hire pays for itself only when it produces more revenue than it costs. A PM at $100,000 fully burdened needs $400,000 to $500,000 in incremental revenue at 20 to 25% gross margin to cover itself, which usually means 2 to 3 additional projects a year that wouldn't have been pursued otherwise. If the owner isn't leaving $400K or more of unbid work on the table today, the capacity the PM creates has nothing to fill it with.
The PM gets hired to fix a financial control problem
PMs build projects. They don't run financials. A contractor hiring a PM because the financial picture is unclear, because job costing is failing, or because cash flow is unpredictable is solving the wrong problem with the wrong hire. A PM raises overhead and adds execution capacity. A CFO function adds financial visibility and control. At $3M to $5M revenue the financial control problem is almost always the more urgent one, and it's significantly cheaper to solve.
WHAT IT LOOKS LIKE IN DOLLARS.
A first PM hire at $65,000 to $90,000 base salary costs $85,000 to $118,000 fully burdened once payroll taxes, workers comp, health insurance, and 401k are in it. At $4M in annual revenue a $100,000 fully burdened PM is 2.5% of revenue, so the overhead rate moves by 2.5 points and a 13% rate becomes 15.5%. Every bid that goes out at 13% after that hire is 2.5 points light.
A PM at $100,000 fully burdened cost pays for itself at $400,000 to $500,000 in incremental revenue at 20 to 25% gross margin. That's typically 2 to 3 additional projects per year that wouldn't have been pursued without the PM building the current portfolio. If the owner is leaving $400K or more in unbid work on the table because the portfolio is at capacity, the hire is accretive.
THE QUESTIONS THAT DETERMINE READINESS.
If the owner is personally managing projects a PM should be managing, and new opportunities are being declined because of capacity, the execution capacity shortfall is real and the PM hire addresses it directly. If the owner is busy but nothing is being declined, the hire is buying relief rather than revenue, which is a different decision with a different price.
Model the overhead rate at current revenue with the PM in it. Then model the revenue required to offset that overhead increase and ask whether the added PM capacity makes that revenue reachable. If the answer is yes, the hire is financially justified and the bid rates get updated the same week.
A PM who joins a company with no reliable job costing, no cost-to-complete, and no financial reporting has no financial context for their decisions. That PM makes good execution decisions and bad financial ones, through no fault of their own. Build the financial infrastructure before the PM hire or alongside it rather than after it.
Most SPM clients at $2M to $4M need financial control infrastructure before they need a PM. The clear picture CFOS produces, meaning accurate job margins, a true overhead rate, and a cash forecast, often shows that the PM hire can wait 12 months until a specific revenue target is hit. The owners who hire the PM first and then find the financial problems that were already there wish they had done it the other way around.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
Pricing
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
FREQUENTLY ASKED.
