Sattler Homes builds custom estate homes the same way, every time. By Alison Rice
Each year, Tom Sattler of Sattler Homes builds a handful of custom houses for Denver buyers seeking unique residences: Old World-style mansions, spacious golf course homes, a mountainside retreat split into three sections connected by bridges.
But while the homes may be one-of-a-kind, Sattler's approach to building each one remains remarkably constant. That's because of well-developed organizational systems that allow the Greenwood Village, Colo.-based builder to deliver a consistent product, whatever the size, elevation, or finish. Those systems also netted the 20-year-old company an America's Best Builder award in a home building niche often known more for design innovation than results replication.
"The difference between custom guys and the production guys is that custom builders don't think about systems because every time they build a house, they throw the mold away. Every house is one-of-a-kind," says Sattler. "Custom guys think, therefore, they can't [take a systems approach to building homes]. Yes, you can. It's the way you function as a business, how you take the customer through the process. ... It makes a huge difference in how successful you are."
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Close watch Sattler Homes, founded in 1983, didn't create its systems overnight. It's taken years for the custom builder to develop the processes that allow the company, which closed four homes and generated $8.63 million in revenue in 2001, to handle the details involved in building million-dollar estate homes.
Among the builder's most intriguing management systems is "kaizen," a Japanese concept whose name means "continual improvement." Sattler, who was introduced to the concept by his Pella distributor, first experimented with the idea in 1999, tackling the preconstruction design/build process. "We mapped out the whole process with stickies on the wall," giving each step its own sticky-backed note, Sattler remembers. "It gave us insight into our daily functions. We saw that if we did one thing differently up front in the process, it affected the whole process."
For Sattler Homes, that one thing that needed to be done differently was the selection process, where later-than-necessary decisions were causing delays down the schedule. Now buyers must choose all their selections by drywall. "We just didn't see the connection" before the kaizen workshop, Sattler says.
These connections are now displayed clearly within a Microsoft Project document that lists each task with the time required, start and finish dates, time variances, employees involved, and response needed from the customer, which is brought up during regular client meetings.
It sounds like all these systems make life more complicated at Sattler, but Ed Rogers, vice president of operations, says the opposite is true. "By having tracking systems in place within the schedule, it creates a more relaxed atmosphere for the client, the tradespeople, and for us as the builder."
The foundation for the kaizen-inspired schedule is Sattler Homes' design/build approach, which brings together the builder, an architect, an interior designer, and the buyer from the beginning. "The essence of a custom builder is to take a guy off the street, with no plan and no budget--just a wish list," Sattler says.
"We allow for their needs and their budget, and we tell them the cost up front."
The company determines that cost through a four-point process in which the builder and architect develop a "conceptual price" that provides clients with the basic outline of the home they want at a price they can afford. From there, the builder does a preliminary estimate at 1/8-inch scale, narrowing the pricing and the design. Then, the firm analyzes the costs, refines the specs, and determines selection allowances. The last step finalizes the specs, allowances, and price.
Photo: Courtesy Sattler Homes
Boulder, Colo., who's worked with Sattler for 15 years. "Some people get by on their bedside manner, and then there are surprises at the end.""When you sit down with Tom, you're told what the budget is, the level of finish, and the square footage," says Jerry Gloss, of Knudson Gloss Architects and Planners in
That doesn't happen at Sattler Homes, which knows its own costs as well as it knows its clients' budgets. The builder generally comes within 1 percent of budget for items under its control: foundation, framing, roofing, and mechanicals.
And Sattler himself will remind clients to keep watch on their own multimillion-dollar budgets. "If this is the budget, [Tom]is quick to counsel someone, 'You can't let a house get away from you,'" says Gloss. "But I've also seen him manage projects that have grown. He's a good problem solver with a tremendous appreciation for design. There's not much that Tom couldn't build."
Sattler Homes extends these same principles of problem solving and management systems to one of the hottest issues in home building today: product and business liability. "We've seen competitors legally undressed because of unreasonable consumers and attorneys," Sattler says, and he's not eager for the same experience.
The builder took a two-pronged approach to the challenge, applying both legal and home building tools. Legally, he separated Sattler Homes into individual businesses, each handling separate aspects of the business and contracting with each other to build a client's home.
While the move hasn't affected the premiums for the builder's liability insurance, it does limit Sattler Homes' exposure in a worst-case-scenario lawsuit over Denver's most common building problem: bad soils.
"If you put everything into one entity, you're going to get wiped out if you are so unfortunate as to have someone come after you for a soils problem," says Kelly Reiman, of Greenwood Village-based law firm Engel Reiman & Lockwood, which helped Sattler revise its business structure.
Sattler Homes has addressed the construction side of the issue as well. The builder does additional soils testing because of the size of its homes--often 4,500 square feet and up. It requires the window company to install exterior windows and doors with ice and water shields to protect against moisture.
The company also asks the structural engineer who participated in the home's design to inspect the home after framing and mechanicals. It's a smart step "when you get into the size and complexity of the houses we're building," says Rogers. "We want to make sure we're maintaining the structural integrity."
The company is similarly take-charge with its warranty policy. "We don't sit back and wait for the client to contact us," Rogers says. "We are very proactive with our warranty approach." Buyers are contacted at 60 days and 11 months, but the company also has a protocol in place for dealing with customers after the one-year mark.
Structural concerns, significant drainage problems, or other "latent defects" that emerge after the warranty period ends receive a full investigation, of course, but the builder tries to provide guidance or referrals on other concerns as well.
Why bother with such trivia? Sattler cites a study that found indifference carried hefty costs: The patients who sued their doctors did so because they felt their concerns were ignored. "We want to avoid a legal situation," the third-generation builder says. "We want to be a resource [for our customers]."
Of course, anticipating problems before they arise takes time and thought, two things that fall to the bottom of the to-do list for many small builders. "If you take time to do it, you're put in peril of getting behind," Sattler says. "If you don't do it, [your business falls behind] ... it's a vicious circle."
But builders who care about their companies must make that time. "You need to spend one hour every day on your business, not in your business," Sattler advises. "You need to do strategic work to build your business, not tactical work to run your business."
Greenwood Village, Colo.
President and owner: Tom Sattler
Vice president of operations: Ed Rogers
Focus: Custom builder doing million-dollar estate homes in Denver area
Web site: www.sattlerhomescolorado.com
Notable: In 1993, the company established Show Home for Hope, a fundraising program that has raised nearly $500,000 for local charities.
At Sattler Homes, nothing falls through the cracks. This Colorado builder:
Captures information discussed during field meetings and then shares it in a fast and easy way by taking notes on a handheld device with a thumb keyboard attachment; the file is sync'ed with the office and distributed to appropriate parties.
Sends employees to continuing-education seminars on mold and other hot topics.
Emphasizes quality to laborers and workers through on-site motivational signs. "Every job is a self-portrait of the person who did it. Autograph your work with quality!" reads one.
Strives to perform financially in the top 20 percent of home builders, as defined by the NAHB's cost of doing business survey.
Serves past buyers and generates hundreds of thousands of dollars in additional revenue by operating a basement-finishing business.
Focuses warranty requests by requiring customers to mail, e-mail, or fax their list of concerns.
Recommends that builders wanting to develop their own organizational systems start with the obvious. "What's your biggest frustration?" Tom Sattler asks. "Try to address that. Pick one item that is costing you the most financially or the most time out of your day, and figure out what system is missing."