MY WIFE AND I FINALLY BROKE DOWN AND bought a van the year before last. The need for a practical way to carpool teenagers to far-flung soccer and baseball venues finally outweighed our reservations about appearing too “suburban.” The shopping process was easy. After a few test-drives, we agreed that we wanted a Honda Odyssey. The only other choice to make, aside from color, was whether we wanted the good, better, or best model. There wasn't much difference in performance or safety, so we chose the better model, which came with leather seats. We were satisfied.
The Tide Turns Many production builders these days are taking cues from carmakers—and the makers of nearly every other hard good we buy today—to limit options, upgrades, floor plans, and designs. After 10 years of pursuing a goal of offering mass customization, the pendulum seems to be moving subtly in the opposite direction.
Why? Too much choice can be debilitating for customers. Also, with so many plans, takeoffs, and vendors to deal with in the back office, it becomes impossible to create operational efficiencies. Several builders are now prepackaging options, especially for the kitchen. Buyers can choose between three or four packages that include cabinets, appliances, plumbing, and sometimes flooring. Then the builders can buy those items in bulk. And when the same products are installed in home after home, communication with installers improves. Builders who have done this say that's where the real money is saved.
Other builders have pared their plans. Pulte, for instance, hopes by year-end to cut in half the 2,200 plans it offered at the beginning of 2004. Beazer Homes curbed the development of new plans after discovering that half its sales in each of its 33 divisions were coming from just 10 plans.
Operation: Control These are just two of several operational controls that builders are putting in place this year to try to get a handle on rising costs. Our exclusive survey found that 75 percent of BUILDER readers will make cutting operational costs a greater priority this year. They can't pass on the rising costs of land, material, and labor forever, especially not in a rising interest-rate environment.
Where are they looking? Well, the top response is a familiar one. More than 60 percent of readers said they would be exploring new-material technology to reduce costs. Savings in direct construction costs, of course, drop magnificently to the bottom line.
The next most popular items involve streamlining work by dealing with fewer people in the back office and on the job, another initiative carmakers have tackled successfully. Forty percent of builders said they would look to consolidate suppliers, and 26 percent said they would try to consolidate trade crews.
Technology is another big source of savings. The Web has proven to be an effective and inexpensive way to market new homes, calling into question the millions builders spend each year on print advertising. And some builders are aggressively implementing much-needed back-office software.
Buying or building a home may never be as simple as buying or manufacturing a car. But even closing the gap somewhat could produce big savings.
Boyce Thompson, Editorial Director