By Elena Marcheso Moreno. Is there a way to tweak a new house design in order to deliver a good product, maybe even a better product than the competition, and still improve the bottom line? The answer is yes, though production builders take different routes to the destination.
David Florsheim, for example, is no fan of value engineering, but he's all in favor of cutting costs. The co-owner of Florsheim Homes in Stockton, Calif., believes that efficiency is all about design. He's likely to actually add in architectural features that another company would eliminate along the way as potential cost savings on the premise that doing so adds revenue and improves the bottom line. "We can get more for our houses because of the landscaping we do and because we include full corner design and rear yard design ? that is, we include architectural design on all the surfaces that will be seen, not just the front of the house."
Although Florsheim, who builds 450 homes yearly, refuses to let value push design out of the picture, he does seek out opportunities for cost savings. To do so, he works closely with architect William Hezmalhalch, based in Irvine, Calif., who has helped the builder win a number of design awards. The two will make some changes at the design stage that help increase returns. For example, if the architect has included masonry as part of the design concept but the cost is too great, rather than cut it out, Florsheim says he will ask the design team to look for ways to pare it back. Among the more common changes is a square-footage adjustment.
Scale It Down
It's "inevitable," says Florsheim, that every new floor plan is bigger than what was identified as the ideal by market research. "Often, the floor plans need to go on a diet at the early stages of design."
Marketing consultant Debra Bernard agrees that house dimensions often expand unnecessarily, creating extra cost. Avoiding what she calls "design creep" starts with the designers, says Bernard, president of Bernard Marketing Associates in Walnut Creek, Calif. "It is very important to produce a design with the right square footage and not to overbuild for the marketplace." She doesn't mean lots of extra rooms or space. She's talking about the bits of added space throughout the house that creep into the floor plans. "Many house plans are overdesigned in terms of costs and specs. If a market study shows a strong demand for a 2,400-square-foot home with four bedrooms and three baths, and the builder gives them 2,450 square feet, it will cost an additional $2,500 to $7,500 to build," Bernard says. "Buyers don't really need or want this extra space, and they have told us so in our survey." Florsheim backs that up with his own advice to other builders: "Don't use the design process as your own wish list."
Bernard recommends that builders provide size requirements to designers not merely as guidelines but as hard-and-fast criteria ? and well-thought-out criteria at that. Despite builders' drive for cost savings, the design process is still often haphazard. "Some very large builders still do this on a napkin," Bernard says. Instead, a team of three or four people should decide the number of models required for a site, the size of each, and the overall format, such as two-story, master bedroom in the rear, arrangement of rooms, and so on, before the architect gets involved. She contends that there is a fine line between gracious space and wasted space, and that it requires a design development team and an architecture team working together closely to produce the most cost-effective solution.
For some builders, there's no better way to catch waste than through value engineering. One such builder is Ed Gold, Ryland Homes' division vice president in Baltimore. Gold, whose division builds about 750 houses each year, says the process is applied to every house.
|"It is very important to produce a design with the right square footage and not to overbuild for the marketplace." ?Debra Bernard, marketing consultant|
Even with several sets of eyes looking at the blueprints, the drawings "can only help so much," he says. Instead, Gold finds the most benefit from a field review of the first of each house design in a new community when its framing is completed. Often, it is the framing that is likely to create problems. Depending on how they are framed, rooms, stairs, and closets can all make it difficult for subcontractors to do their jobs, says Gold, which means the cost will be higher than might be necessary. Gold and a group of "heavy hitters," including his purchasing manager, architect and marketing manager, and sometimes the major trades, tour the house during the frame walk looking for opportunities for improvements and places to cut costs. Gold says the most important member of the frame-walk team is the superintendent. "The production staff know a lot more than any of us who work in offices all day. And they always find places to make changes on the first house, usually dozens of them."
In one house, the framing contractor pointed out that there were three structural columns holding up two pieces of steel. Right there in the house, and together with the structural engineer and the architect, they decided to substitute a single, longer and heavier beam, eliminating the intermediate structural column, leaving two points of support and realizing a savings. The order of magnitude of savings for an item like this could be in the hundreds of dollars per house when reduced materials costs, faster installations, and other hidden costs are included.
Many of the items Gold and his team identify through value engineering represent only small savings in a single house, but he says that capitalizing on design efficiencies means taking a "nickel-and-dime" approach. "If I can save 25 cents per square foot on a 2,000-square-foot house, that represents a savings of $500. If I build 40 of them, that amounts to $20,000."
It's a strategy that works for Ryland, though Debra Bernard says the approach can be problematic. "I've been in some meetings where the builder will set standards such as five window types or three truss packages, and that is it. Well, that might make sense for entry-level houses, where design is less important, but it is not really the right way to maximize profits." Setting architectural criteria rather than space criteria interferes with design and the overall aesthetics. She points to builders she works with that don't set these types of standards yet "manage to sell their product for $5 to $15 more per square foot than the competition."
Control at the plan-drawing stage has been a cost saver for Wayne Homes, Centex's division in Uniontown, Ohio, and an expert on-your-lot producer. The key, says president and CEO Dave Logsdon, is to use Wayne's own plans, which they've worked and reworked to get out the kinks.
"We have the discipline to sweat the details, and nothing is too small for us to measure or inspect," he says. "Our contractors are often on the site alone, with no superintendent down the street." Documentation has to be accurate for these contractors, so a single set of plans for a customized house could be drawn three times by staff at Wayne, which builds about 1,000 homes yearly. While this is an increase in design time, it saves money on the site.
The builder also controls design-related costs by doing its own takeoffs, rather than relying on lumberyards, and by controlling materials traffic flow. Then, Wayne goes a step further, describing for contractors how the materials will be used in the house. For example, the framer is told how many 16-foot floor joists are required and how many 8-foot headers, so that the cutting on the site is precise, eliminating waste as well as the downtime that occurs when the framer goes to pick up more lumber because someone cut up too many 16-foot lengths.
|"If I can save 25 cents per square foot on a 2,000-square-foot house, that represents a savings of $500. If I build 40 of them, that amounts to $20,000." ?Ed Gold, Ryland Homes|
Wayne also relies on its opportunity-for-improvement committee, which is composed of structural, mechanical, and construction representatives, as well as its own CAD group, estimating and scheduling departments, and trade partners. A carpenter recently suggested that the builder standardize the window sizes used in its houses to achieve construction efficiencies (for example, by using a repetitive module of 3-foot-by-5-foot openings). Larger windows can be accommodated as long as they are multiples of the 3-foot-by-5-foot opening. Then, there's technology. For most builders, software is playing a larger role in helping build efficiency into floor plans. Village Homes in Littleton, Colo., recently started using a new software program that takes rough-concept architectural drawings and generates technically sound architectural and engineering documents that can be used for materials takeoffs. Rather than taking weeks to generate working drawings and then making changes based on input from technical consultants and suppliers, the software, KeyBuild from Keymark Enterprises, reduces the process to a matter of days, according to the builder.
Village materials manager George Smith says automation can eliminate redundant review and input in the supply chain, speeding up engineering and specification time. When used as a collaborative tool by the building team, automation can reduce both design costs and document production time, according to Smith. "Overall, everyone involved in the process of design should reduce their cost and time while increasing their level of accuracy." For production building, that's the future.
?Elena Marcheso Moreno is based in McLean, Va.
Published in BIG BUILDER Magazine, September 2002