It takes Olthof Homes six fewer days to close a house now than it did last June. But the St. John, Ind.–based builder didn't find that time in the sticks and bricks of its homes. It shaved the days from its “soft cycle,” the time between when the buyer signs the contract and the builder breaks ground on the house.
One change in particular has made a significant difference. At the contract signing, home buyers now receive coupons to pick up the design center's catalog. The coupons usually draw them into the design center that day, where they can set up their design appointment for about a week later. “Within a couple of hours of having the purchase agreement signed, we have the ball rolling in terms of the selections for the home,” says production manager Fritz Olthof.
Controlling the options selections process is just one way of reining in a builder's soft cycle. Builders who have cut days out of their soft schedules have studied—and tried to improve—everything they do leading up to construction, from setting customer expectations to working with local jurisdictions.
Frequently, builders that are trying to shorten this part of the process will rush through the pre-construction period in an effort to start construction more quickly, says Emma Shinn, vice president of the Lee Evans Group and Shinn Consulting. But in that hurry, they're prone to miss or foul up important steps. “A rush to construction shortens the starting cycle and does nothing but lengthen the construction cycle,” she says. “You need to stop rushing and figure out what you're doing before you can start to improve it.”
Bigelow Homes, based in Aurora, Ill., began examining its soft cycle about 12 years ago when it moved to slot scheduling, which prescribes a specific timetable for starts and closings. Process mapping its soft cycle helped the company make its goal of closing homes within eight months of a signed contract, says Tony Spano, Bigelow's vice president of operations.
The mapping exercise included creating a path through the company for each document in a home's start package, including the sales contract and architectural plans. It was a time-intensive effort—it required interviews with every person who touched a document—but it enabled the company to see where a person was handling one item twice or who didn't need to be included in the path.
Bigelow will be repeating the exercise in the next few months as it considers expanding geographically. “We want to be able to replicate what we're doing outside Chicago, but we won't be able to unless we have the processes streamlined and documented clearly,” he says.
NONBUILDING WEEKS Process mapping also helped Exton, Pa.–based builder Rouse/Chamberlin Homes cut more than a week from its soft cycle, says company president David England. The production builder pre-qualifies each of its buyers and allows little customization, a combination of factors that allowed the company to separate the flow of legal documents—notably, the sales contract—from the data needed to design the home.
Now, at the time of a sale, the salesperson e-mails the lot number and structural options the buyer has chosen to the project manager. The project manager notifies the purchasing department, which in turn starts issuing purchase orders. “If we sell a house on Sunday, we might already be processing the start order by 11 a.m. Monday,” England says. “The permit may already be submitted before I even see the agreement of sale.”
Bigelow Homes has brought its approach toward process mapping to some of the 200-plus municipalities it works with during the permitting process. The towns, cities, and counties can take anywhere from two weeks to six months to issue permits, Spano says.
Learn more about markets featured in this article: Chicago, IL.