THE WAY THAT THE COSTS OF LAND, MATERIALS, and labor have been going up is practically criminal. But in recent years, with record-low interest rates, not only could home buyers absorb the costs, builders could scarcely keep up with the demand for their product. In that environment, keeping an eye on expenses wasn't a particularly high priority.
To a certain extent, it's still that way. In a recent survey of Builder readers, to which more than 350 home builders replied, more than 66 percent of the respondents said they didn't think the housing market had reached a point at which they could no longer pass on rising costs to buyers. But even as they expect the current housing boom to continue through 2005—86 percent said they thought the new-home market would stay the same or improve this year—they are feeling the pressure to run their businesses more efficiently. Nearly three-fourths of respondents said cutting operating costs would be more of a priority this year than in 2004.
This special field report, “CSI: Cost Saving Initiatives,” combs through six aspects of business operations—products, benefits, construction, technology, marketing, and design—to make an arresting case for strategies that can help both large and small builders get their operating costs down. We interviewed expert witnesses, builders who watched their profits grow through such strategic business practices as simplifying rooflines and increasing jobsite quality control. Overall, the evidence is convincing.
Here is what our investigators turned up: