By Isaac Heimbinder When was the last time you took a subcontractor to lunch? Did you talk about something other than price? Improved communication between a builder and his or her trade partners offers the fastest and best opportunity to improve profits. Many of you instinctively know this, yet few of you practice it. By not taking the time to get to know your trades and solicit their input, you're diminishing your returns.
Though the amount of money paid to electricians, framers, plumbers, and other trades is significant, focusing on price to the exclusion of other substantial issues, like quality construction and cycle time, overlooks a rich opportunity not only to reduce price, but also to develop an effective, efficient, and cooperative production team. Instead of beating down your subcontractors on price, why not take the time to ask them for constructive suggestions on how production can be improved?
Sure, we're talking about the same trades who constantly try to squeeze every price increase they can from you. You know, the ones you can never find when you need them. But the flip side is these are the guys who, with very little supervision from your managers, are building homes for your customers. They're your on-site production force.
If asked, they can share practical observations about the production process. With your effective leadership, the energy your trades spend devising ways to get even can instead be channeled into creating a mutually productive partnership.
Illustration: Rich Lillash
Your focus should be on the total cost of getting work performed. Total cost includes the expense incurred in rework, the cost of warranty calls, and the cost of construction delays. A builder certainly does not want to overpay for services, but focusing on price only misses an important insight about home construction. That is: There usually is more money to be saved in reducing construction time, eliminating waste, and lowering the incidence of errors--than there is in simply trying to renegotiate prices. By engaging your subcontractors on building issues other than price, you provide the opportunity to review construction issues. Taking time to frequently communicate will result in improved profitability for you and your trade partners.
Your outreach initiative can be as simple as getting together each week with your trades to review the status of planned homes and those under construction. At these meetings, take time to review outstanding warranty claims. Talk about how to reduce the incidence of new claims. Make them feel as if they are a vital part of your company. Remember, the most important item you can offer is your willingness to listen and accept their observations. I suggest you discuss the following topics:
* Plan and specification review. Ask your trade partners to review your plans and specifications. Let them suggest changes to improve quality and/or cut costs without compromising the design and standards you are creating for your customers.
Architects sometimes specify construction methods or techniques that increase costs without providing substantial improvements in value. Most often these issues arise in framing, electrical, or mechanical details. You must know if costs can be saved in material or labor if a room or window size was changed or if the length of ductwork was reduced.
Your trades are the experts. By engaging them you will gain more knowledge to make better decisions. By showing genuine interest in your trade partners' ideas, you gain their respect. You then increase your chances of having a successful business discussion of possible price reductions tied to savings in time or material.
* Scheduling. Take a hard look at your planned construction schedule. The differences between planned schedule completion and the actual results, when analyzed, usually have more to do with a lack of continuous construction activity on the jobsite than they do with poorly prepared schedules. If each trade arrived at the site when needed, with the correct number of workers, you would not have a problem meeting planned construction parameters.
Isaac Heimbinder, Housing Industry Consultant
Meeting regularly to review the status of units under construction is good for you both. By doing so, you help ensure your trades do not have crews sitting idle as they wait for their part of the job to be ready. In return, you will find you don't often have a jobsite with no trades ready to work. Better scheduling and honest communication on the status of homes under construction will build trust, improve trade relationships, and decrease construction time. * Warranty claims. Share your warranty logs with the trades. Review past and outstanding warranty claims, and attempt to identify what caused the problems. Discuss actions that can be taken to prevent problems from recurring. Ask your trades for their inspection checklists. Share yours with them. If neither of you has anything to show, you know it's time to develop and implement consistent procedures to inspect homes at critical construction stages. The benefit to you both is fewer warranty calls.
Never lose sight of what you do best, which is building and marketing homes. Success in all businesses is in the details. Success comes about ultimately, not because of a big idea or even a great innovation, but from continual, incremental improvement. Work on being organized, be it at the office or on site. Develop good communication skills. Focus on the fundamentals of managing the workflow of your construction sites. Doing so pours the foundation for building a disciplined, motivated production force.
So take your trade partners to lunch. Engage them in your quest to create satisfied customers. You both have much to gain.
Isaac Heimbinder is a Houston-based housing consultant and former co-CEO of U.S Home.