The executives at C.P. Morgan wanted to see just how much change orders added to cycle time, so they started to write down the time costs of each one on a giant whiteboard. Before long, the whiteboard was filled with 300 instances where change orders cut into time and costs.
"We were scandalized," said the Indianapolis, Ind.-based builder's CEO Tom Eggleston. "The new guru in town was efficiency."
Since then, the company has gotten a handle on its cycle time, cutting its average time to build a house and close it to between 41 and 48 days, Eggleston told a group that gathered for the Cycle Time 2.0 session of Big Builder '07 Tuesday Nov. 27.
"It [cycle time] is the single most important metric," Eggleston said, "because of all the capital tied up."
Eggleston told how the company's subcontractors now prefer to do business with C.P. Morgan because they can count on the builder sticking to its rigid schedule of building seven foundations and framing seven houses per day.
"Once they get it, they can't operate any other way," said Eggleston. The system not only worked for the company in Indianapolis, but it has also been transplanted successfully to the company's Charlotte, N.C., operations and is being carried into its new growth initiatives in the North Carolina Triad area.
C.P. Morgan, which builds primarily starter homes, had to work harder to add closing seven houses per day to its cycle time goals. That meant not beginning framing until it was clear that the buyer could qualify for the loan. And it meant educating buyers about their credit, helping them fix their credit, and keeping in constant communication with lenders to make sure the homes are on target to close on time.
David Cohen, a principal of Denver, Colo.-based Cohen Brothers Homes,
the second speaker at Cycle Time 2.0, took the notion of cycle time improvement to a whole new level when he talked about the company' s whole-house construction system that can build a house in a factory, complete from the flooring to the ceiling fixtures, in 9 to 10 working days.
By working on various parts of the house simultaneously, such as the flooring at the same time as the roof and the off-site basement foundations, Cohen Brothers' cycle time can be significantly reduced, according to Cohen. "Find ways to get things going in serially," he said.
Also, by building in a factory environment with the same labor every day trained to do repetitive tasks with tools that are always at hand, a lot more time can also be whittled out of the process. Cohen Brothers can build a house from contract to closing in 5 weeks, Cohen said.