The PM hire decision isn't just a financial model — it's a capacity model. The question isn't whether you can afford the PM. It's whether the owner's freed-up time generates enough incremental revenue to justify the overhead increase — and whether the cash position can absorb the 3–6 month lag before that revenue materializes.
SPM runs this analysis before clients make significant hires. We model the loaded cost, the break-even revenue, the cash flow impact during the transition, and the overhead rate change. If the hire is justified, you go in with a plan. If the timing is wrong, you know when it will be right.
A PM for a commercial subcontractor typically costs $80K–$120K in base salary plus $20K–$35K in burden and overhead — a total loaded cost of $100K–$155K per year. That's a 2–3% overhead rate increase for a $5M subcontractor. The cost is immediate; the revenue benefit takes 3–6 months.
When the owner is managing more than $3M–$4M in work personally and can't pursue new contracts because they're buried in project management. The key is modeling the revenue lift vs. the overhead increase before making the decision — not after.
If a PM costs $130K loaded and your gross margin is 22%, the PM needs to enable $590K in additional revenue to break even on overhead. The break-even timeline is typically 6–12 months — meaning the cash position needs to absorb the overhead increase for up to a year.
A PM hire changes the overhead allocation model — project management labor that was previously owner time becomes a direct overhead cost that should be allocated to jobs. SPM reconfigures the job costing overhead rate after significant hires to keep job margins accurate.
One call. We'll model the full financial impact of a PM hire for your revenue level and current margin.
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