By Diane Kittower. Despite its ancient origins and basic nature, paper remains the most common medium for modern-day home builders. From sale through closing, data on each home aggregate to form an expanding package of dog-eared sheets handed off again and again and again.
Builders aren't alone in their dependence on an operational paper trail. Despite the advance of computerization, the amount of office paper shipped in the United States increased every year during the past decade -- going from 3.4 million tons in 1991 to 4.9 million tons in 2000, according to the American Forest and Paper Association.
Among its other drawbacks, the tie to paper documents is a drag on productivity. And more builders are trying to break free. At Beazer, that has meant integrating the electronic scheduling system with the accounting and purchasing system. In a paper-based process, explains Jonathan Smoke, Beazer's chief technology officer, construction superintendents and project managers are forced to spend as much as 25 percent of their time in trailers and offices reviewing contracts and signing off on paperwork.
Now that Beazer ties every purchase order to a cost code in the accounting system, when the super signs off that the task is done, accounting automatically knows it's time to pay the vendor. The integration has been rolled out in five regions, and Smoke expects nationwide operation by the end of the year. "The key thing," he says, "is to look at where paper is being used as a panacea for a broken process."
Another Atlanta-based builder, John Wieland Homes and Neighborhoods, now makes critical information available electronically that once existed only on paper. "All job starts are online," says Terry Russell, Wieland's president. "Plans are online, we write contracts online, the design center selections are online. We also send that information to the estimating department online. And the construction and sales offices are all linked to the main office."
Even scheduling no longer requires the exchange of paper. Wieland builders update schedules online daily, and those changes are quickly incorporated into the scheduling for the rest of the week.
Likewise, Drees Co. credits its online scheduling system with eliminating bottlenecks and keeping construction managers up-to-the-minute on schedule status. By anticipating the need for each trade and all supplies at each project, the company cut construction cycle time by at least three days.
The Cincinnati-based builder is also piloting a project that focuses on suppliers. The company got AutoCAD and Adobe Acrobat to talk to each other and is shipping electronic drawings to suppliers and to field personnel. The result is faster, more accurate communication. Truss shops, for instance, can more efficiently set up machinery, says Michael Rulli, Drees' director of information systems.
At the same time, Drees is trying out a system that inputs design center data. Instead of using multi-part paper forms, customers make choices electronically, and that information immediately becomes available to the builder, to purchasing, and to suppliers. Lack of legibility and poor communication of changes had caused problems, Rulli says, but now "there's a decrease in phone calls and the time to get things to the jobsite, plus a decrease in rework."
Colony Homes in Woodstock, Ga., has focused its paper-cutting efforts on what it calls the high-payback processes of communications between the corporation and trade partners. Every partner has its own secured Web site, explains Mike Goldsberry, vice president of information systems. On each one is all the formerly paper-borne information relevant to each partner, such as schedules, purchase orders, and warranties.
Colony has taken several other steps toward the paperless office -- which Goldsberry believes is a realistic goal. For instance, a customer Web site has cut down on both paper and phone calls to keep home buyers updated. Customers can click and access where their homes are in the building process, key dates, and all their contract information. In addition, salespeople go online to get the information they need to follow up on prospects.
Even the purchase order process has been streamlined: As at most companies, field builders used to have to sign off on each purchase order. Now, if the field group doesn't report electronically that work hasn't been done, Colony automatically pays trades based on when the work was scheduled to be completed. In the field, Colony has adopted hand-held devices, hoping to eliminate the need for builders to print out and carry paper if they want field access to information on each house under construction.
At Shea Homes, the paper cut is evident in how the monthly financials are shared. Now they're posted on the company intranet -- with security, of course. Other trims have happened at the divisional level of the Walnut, Calif.-based builder, including popping vacation request forms and new-employee checklists onto the intranet.
In its active adult division and in Phoenix and San Diego, the builder is rolling out a Web-based sales application that permits customers to select a lot on the lot map and click on options they want. "All of that stuff used to be very paper-intensive," says CIO Blair Jockers.
Village Green, a Michigan company whose main business is apartments, has gotten rid of all its paper manuals and company forms. Instead, they reside on the company intranet. With 100 locations, plus one corporate office and three regional ones, that immensely simplifies the updating process.
Neumann Homes, based in Warrenville, Ill., has trimmed its paper usage, too, especially for reports and training.
Because the lure of technology often ends up costing, rather than saving, money, execs at Drees, Village Green, and Wieland took a hard-nosed approach to cutting paper. They measured going paperless in a variety of ways, including increased productivity and reduced cycle time. Drees built more than 2,800 homes last year, and taking several days less on each meant saving millions of dollars in carrying costs alone, says Rulli.
Tracy Jenish, Village Green's IT director, remembers that when she approached her CIO about putting manuals and forms online, he told her to sit down and take a look at the numbers. "I had to show him the efficiencies and the money savings." Printing, sending, and updating the manuals cost about $100,000 annually. The initial cost of the intranet was about $30,000, and upkeep of the electronic manuals doesn't add much to that, Jenish says. She puts the annual savings at about $80,000.
While Wieland's Russell is reluctant to be specific, he says he's certain about the savings from cutting paper. He points to decreased cycle time and lower overhead. "It's paid back over 10 times the investment," he says. And he adds an important point: Customers appreciate the speed with which you can answer questions when you're online. "That sells more homes at the end of the day."
Cut It Out
If less paper is good, even less paper should be better. And so builders are hatching plans to cut the paper flow with trade partners, have customers sign contracts online, and make all project documentation electronic. "We want not only to reduce paper internally but to reduce the volume of paper coming into the company," Rulli says. "It is a strategic goal for us."
Both Shea Homes and Village Green would like to move the information flow with trade partners from paper to online. They're examining electronic billing and marking up CAD drawings electronically. Shea also is experimenting with electronic schedule distribution in its Southern California division.
Within a year or so, Neumann plans to put schedules online, make electronic payments, put a design center online, and have customers sign agreements and pay online. Colony, meanwhile, is looking at electronic document management systems to permit scanning in, electronic storage of, and easy access to documents.
Wieland hopes to eventually use handhelds to check off on a job done in a home and automatically send notice to accounts payable. The company is also planning to more fully tap a record-keeping software it already has to improve research and deal with less paper. "The next two years will offer lots of technology opportunities for home builders," Russell predicts. Likewise, Jockers sees improved wireless bandwidths bringing a tidal wave of change.
In the long term, though, Jockers says, the biggest thing to happen will be that people will come to prefer electronic versions to paper. Companies that don't anticipate the coming changes may face an uphill battle. "Some will be left behind," Neumann says.
--Diane Kittower is based in Rockville, Md.
Making the Cut
Builders can expect some initial resistance when replacing paper-driven procedures with electronic ones, says Jean Neumann, chief marketing officer for Neumann Homes in Illinois. But now, she says, employees report they would be lost without the intranet. Some employees at Village Green had a hard time letting go of the big binders full of company policy, recalls Tracy Jenish, the company's director of information technology. The fact that people from all parts of the company were involved in the planning process helped ease the transition, she adds.
The consensus was there would be "a big fight" from suppliers when Colony was getting ready to set up its Web sites for them, recalls Mike Goldsberry, the company's vice president of information systems. "Our own fear of the change was bigger than the impact of the change itself. They were ready." When all was said and done, only a handful had to get computers and do some preparation in order to log in.
Internally, however, was a different story, at least on the sales front. When the contracting process went online (everything up to signing the contract is done electronically), sales associates took a couple of years to get comfortable.
Trades, too, may have a hard time. They don't all have easy access to computers, points out Blair Jockers, Shea Homes'CIO. "And not everyone thinks of a computer as natural and paper as extra work."