It’s not easy to find back-office employees with construction experience in Bismarck, N.D., yet as the housing market began its rebound there, Verity Homes needed to hire five new workers.
So as the Red Door Homes licensee ramped up from 127 single-family starts in 2011 to 154 in 2012, Verity Group CEO Arthur Goldammer set out to figure out how to scale up the 22-employee, semi-custom home building business by 20 percent without the help of new hires in purchasing, estimating, and other back-office functions.
His solution: link multiple computer software systems to omit duplicated effort and substantially speed up processes like options management, contract generation, bidding, estimating, purchasing, and invoicing. This isn’t so different from what big, national home builders do, Goldammer says, “but for where we’re at, it’s unique and a first. Homebuilding is antiquated here. The market hasn’t forced builders to start using best-practice methods.”
His result: A $300,000 increase in net profit, even though “we’re running five resources short of where we would be if we were doing it more the manual way,” says the builder, who forecasts a bump up to 175 homes—including a 30-unit multifamily building—for 2013.
That will help pay off a six-figure investment in computer systems, licensing, and consulting fees that, Goldammer figures, can estimate five homes in the time it typically takes a trained estimator to do one.
It also lightens the load on the front end for the sales reps who record their clients’ requests for options and upgrades from a catalog of more than 5 million possible combinations, including structural changes, among the builder’s 38 base home plans.
Five Programs Share Data and Save Time and Staff
Verity Homes has combined CAD, CRM, workflow, accounting, and BIM software from five sources: Sales Simplicity, BuilderMT, Sage, CG Visions and Vertex, in an arrangement that allows each one to share information with the others. That omits the need for a sales rep, for instance, to search for and key in a price for each option because the correct prices are already in a product database that the rep has access to.
It saves the purchasing agent, drafter, superintendent, and accountant from re-keying that information during the design, bidding, scheduling, production, and invoicing stages of the project.
“The amount of time it saves just to produce a contract is immeasurable because you just click, click, click,” says Barry Forbes, president of Chandler, Ariz.-based Sales Simplicity Software, who notes the system also cuts down on pricing errors. “And that’s just on the sales side.”
Tom Gebes, president of Lakewood-Colo.-based BuilderMT, says his firm’s WMS (workflow management system) offers core applications for bidding, purchasing, and scheduling, and also acts as a portal through which software from different vendors for CAD, estimating, BIM, sales and other functions can communicate with each other.
Such an “enterprise system,” he says, can allow firms like Verity to double or triple in size without adding any back-office staff. And he estimates that most builders can see their net margins increase by at least 2 percent within a year to 18 months.
The system could allow Verity to expand beyond its Bismarck and Minot, N.D., markets and into the eastern part of the state. “We have the capacity to be scalable that we couldn’t have had without it,” says Goldammer, who notes it took his company a year and a half to make the system fully operational.
He advises builders: “Stick with it because it will pay off.”