Late last year, Pulte Homes signed a deal with Leviton Manufacturing Co. to offer integrated structured wiring and a digital entertainment network as an option in 1,600 homes in the Anthem Highlands development in Broomfield, Colo. What is notable about this deal? Its size. The complexity of the system. And that like most deals of its kind in the production home building industry, it was done by a division, not by the parent corporation.
We'll discuss the deal's particulars in a future column. For now, let's focus on why most production home builders leave digital home technology decisions up to individual divisions as opposed to consolidating them at the corporate level.
There are a number of reasons that these decisions are left to folks in the field, but two are paramount. First, demand for a digitally enabled and/or equipped home varies widely from region to region. More important, however, is that beyond simple wiring, digital home systems are more complex than anything else with which a builder may become involved, and that raises the potential for endless warranty claims and service calls to a new home. Moreover, programming a whole-house control system or getting a plasma screen to work with a cable box and a surround-sound system are tasks that are normally beyond the capabilities of your average construction team—or homeowner.
“This has more potential for user error than anything else that is in that house,” explains Bill Carpitella, president and CEO of Associated Builder Solutions, the parent company of the Sharrow Group and Robichaud Financial Services. For that reason, he says, digital home technology “is usually an outsource piece,” and it is likely to remain that way for big builders. That said, Carpitella reports having seen “a real push” into digital technology “from small and mid-sized builders who believe technology is a niche marketing tool for them. It's a sexy marketing scenario.”
Crystal Miller, residential search consultant with Kaye/Bassman in Plano, Texas, offers an opposing view. She says she believes big builders should be recruiting what she calls a corporate “techno guru.” Miller's reasoning traces to this issue: If digital tech work is farmed out to a subcontractor, the subcontractor is responsible for the work. Who farms this out? Does that person know about digital home technology? And what if the subcontractor screws up? It is the builder that is ultimately held responsible, if not legally then certainly from the standpoint of image. “Big builders are going to have to look at this and explore it further,” she says, “if for no other reason than the warranty issues alone.”
Another reason for moving now, she says, is to take advantage of the volume buying that can be put into place. Large consumer electronics companies are eager to do business with production builders. “Volume is everything; the more you buy, the bigger the discount you get.”
Miller advises looking for either a fairly recent college grad with a computer-related degree and membership in the IEEE (Institute of Electrical and Electronics Engineers) or hiring someone who has been operating a custom electronics design and installation firm who wants to move on to bigger things. “You want to find that guy who wakes up in the morning salivating over creating the next smart home; the guy who has his own home wired for everything.”
Such a person can plant a big salary on the balance sheet, but that same person can save the endless headache of hiring the wrong subcontractor or buying the wrong equipment.
It might well be worth the effort.
Note: Both options would also require a metered performance plan, with bonuses ranging from $40,000 to $80,000.