Maybe we should have printed this month's cover with a label--Warning: This month's trade secrets may be dangerous to your company's health. Do not try to implement all these ideas at once. Your company may explode!!!
We've collected a veritable powder keg of great ideas for our annual trade secrets issue. Sifting through dozens of ideas for running a home building company, we elected to focus on the 20 that could make the biggest difference.
These aren't mere tweaks to your sales strategy or small changes in the methods you use to build homes. Most require a complete rethinking of your fundamental operating systems. If you were to start a home building company from scratch, today, you probably would want to implement many of these practices.
Making the switch within an established company can be much harder, especially if you try to do several things at once. No company could all at once convert to automated invoicing, evenflow production, modular construction, zero defects at closing, or an extensive in-house training program.
As the story makes clear, implementing change within the best companies is often incremental. Crosswinds Communities in Detroit believes in an automated pay system because of the obvious savings in paperwork, both in the back office and on the jobsite. But because subcontractors are wary of going paperless, the company is rolling out the practice one job at a time.
Similarly, no company moves right to zero defects at closing. It's a goal to work toward. And one of the prime motivators for getting there is creating a system of financial incentives. Once Classic Homes in Colorado Springs, Colo., gave a cash bonus to supers who could get all punch-listed items completed prior to closing, its after-sale service calls dropped precipitously, and customer satisfaction soared.
Moving to per-unit pricing--getting subs to break out labor and material pricing--may be one of the toughest nuts for builders to crack, but it's arguably one of the most important. It's the only way to get a true handle on your costs. Subs, however, may balk at showing all their cards. To help overcome objections, Snyder Cos. in Essex, Vt., allows subs to take their case to the company's purchasing committee if they experience rising costs due to a change in insurance or material costs.
Incorporating accurate scopes of work in subcontracts is another worthy goal. One of the keys to making this work, however, is accurate monitoring. Subs need to double-check their work against contracts. Don Simon Homes of Madison, Wis., monitors variances that show up as part of the inspection process. The builder works them into the next round of contracts.
Several companies we feature this month were winners in our America's Best Builder program. Rapt attention to superior processes, coupled with high profits, sets these companies apart. If you think your company does a great job and deserves this honor, contact Loretta Williams at 202-736-3455 or by e-mail at firstname.lastname@example.org. The deadline for entries is August 30.