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Roles and Responsibilities of the Construction Financial Manager

This information will assist in understanding the roles and responsibilities of construction financial managers. Specifically, this information is designed to assist:

  1. Financial managers who are new to the construction industry
  2. Newly-promoted construction financial managers
  3. Existing construction financial managers who seek to broaden their influence on the success of the organization
  4. Construction company owners who are considering the skills, attributes, and sophistication needed in the financial manager position

Roles and Responsibilities of the Financial Manager

This information will assist in understanding the roles and responsibilities of construction financial managers. Specifically, this information is designed to assist:

(1) financial managers who are new to the construction industry;

(2) newly-promoted construction financial managers;

(3) existing construction financial managers who seek to broaden their influence on the success of the organization; and

(4) construction company owners who are considering the skills, attributes, and sophistication needed in the financial manager position.

Construction financial managers sometimes wonder how their duties, responsibilities and relations with others within the organization compare to other construction financial managers. Similarly, construction company owners sometimes wonder what skills are needed and what expectations should be held of their construction financial manager. This information will help provide the answers to such questions. We will review how a construction financial manager works with the senior management team to accomplish financial goals while helping other managers accomplish their goals, how financial managers administer the finance department, their responsibilities to the company’s owners and creditors, their administrative responsibilities and the related ethical considerations.

In today’s environment, the role of the financial manager in a construction organization is essential to organizational success, and more importantly, is vital to avoiding failure. That may sound extreme, but in many circumstances, competition is so fierce and margins are so thin, reliable financial information and analysis certainly can make the difference between success and failure.

The construction financial manager’s role may vary from company to company, partly because different financial managers have different skills and personalities. The role also varies depending on the size of the company. A construction financial manager’s background often indicates the areas in which the manager will concentrate. For example, a construction financial manager whose background is in construction operations (estimating and project management) initially will concentrate on the proper recording of job costs. A construction financial manager whose background is in public accounting probably will initially emphasize financial reporting and income tax planning. The financial manager should recognize these influencing factors and make efforts to compensate for any deficiencies.

The skills and personalities of the other members of the management team also affect the role of the construction financial manager. The majority of a company’s administrative work can be performed in any department and will be allocated among departments partly based on the skills and personalities of the respective department managers. For example, most construction financial managers feel that cash management is their responsibility. If the other management team members share this feeling, responsibility for cash management probably will be assigned to the finance department. However, if another management team member feels that responsibility for cash management should be shared, some compromise will be made. To a great extent, sharing of responsibilities depends on the skills and personalities of the management team members. Successful financial managers respect the need for compromise in sharing responsibilities.

As already mentioned, the size of the company frequently affects the role of the financial manager, because roles and responsibilities are more specialized in larger companies than in smaller companies. In small companies, responsibilities are assigned to a smaller group of managers and, accordingly, each manager must handle a wider range of responsibilities. For example, the financial manager in a small company with three senior managers (owner, operations manager and finance manager) will typically be responsible for all administrative and financial tasks. The other two senior managers will typically concentrate on marketing, estimating and project management. In larger companies, with responsibilities assigned to a larger group of managers, each manager will be assigned more specialized responsibilities. For example, the financial manager of a large company with several senior managers often has limited responsibility for administrative tasks involving contact with customers and subcontractors. The department with primary responsibility for customer and subcontractor relations (usually the construction operations department) will prefer to be the primary contact in order to minimize the possibility of misunderstandings between the parties. Because there is no one standard set of construction financial manager responsibilities, each financial manager should be alert for areas of responsibility that are not clearly defined in the organization. The financial manager should take the initiative in assuring that all significant responsibilities are assigned.