HOME BUILDERS LOOK FOR MUCH MORE IN back-office software than simply cutting a salary line or two in the company's accounting and purchasing departments.

Yes, the software reduces data entry and paperwork, but the latest software from companies such as HomeSphere, Constellation HomeBuilder Systems, and Builder MT lets builders deploy cost analysis and Web-based collaboration tools that can help them more effectively balance pricing and staffing.

By tweaking costs and staffing levels, builders can add revenue to the bottom line, keep growing with the same amount of people, and, in some cases, put experienced building industry people in more productive jobs.

Brian Ennis, president of Ennis Homes, a builder in Porterville, Calif., which builds about 400 homes annually, says the Builder 360 construction system the company deployed last year from HomeSphere—the upgrade from BuildSoft enterprise—lets him set up cost codes so he can analyze profits on both the base house and options. In the past, the company only had one budget line for revenue. He says that by having access to this enhanced view of the company's costs, Ennis Homes learned that certain options were being sold at a lower margin than the base house.

“Now, we're looking at revenue separately for the base house and options,” Ennis notes, adding that the company caught at least $200,000 in options that weren't priced properly.

“With Builder 360, all the information is integrated,” Ennis says. “This lets us quickly analyze our costs and make changes and adjust the pricing accordingly.” Ennis Homes has been able to turn the situation around and now prices options at higher margins.

Work The Web

The Web is a proven technology for improving relations between business partners and suppliers, but success stories in the home building industry, particularly among mid-sized builders, are still rare.

Jay York, president of Damascus Homes, a home builder in Loganville, Ga., which builds about 275 homes annually, has had his people do some nifty work converting NewStar data into a format that can be posted on the Web so suppliers can check the production schedule to find out where they need to be from week to week. The supplier extranet was built with Macromedia's ColdFusion software.

“We don't e-mail, fax, or print purchase orders,” says York. “The subs pull the P.O. online,” he says. “They can go on the Web site and pick up directions to the jobsite and map information about the job. They can also bid online and look up checks paid on jobs for up to two years.”

Since one of York's other businesses is a computer company, he has access to an e-mail server. This lets the company easily issue Damascus e-mail addresses to its subs. “We want our subs to have e-mail,” says York. “The basic goal is to touch an item one time and be done with it.” Encouraging its subs to use the Web has cut down on phone calls at Damascus Homes by 75 percent to 80 percent.

Cash flow is also more efficient. York says the company only pays for items that are completed, and the back-office staff always knows where the company stands with its financials. The added efficiencies let Damascus grow without adding people to the accounting staff, says York.

“When we built 100 homes, we had three accountants. Now, we're building 275 and haven't had to add anybody,” York says, explaining that this lets the company put a better number on the bottom line because it has less overhead.

“In operations, we had people who did nothing but deal with contracts and closings. We don't need as many people to do that, and we don't need as many people to write reports. All the reports come out of NewStar.”

Damascas spent about $80,000 for the NewStar system about four or five years ago and another $30,000 to build the subcontractor site.

“We spent a lot of money,” he says. “But the software pays for itself.”

Big Change

For Brookstone Homes, a home builder in Oconomowoc, Wis., which builds roughly 200 homes each year, moving to its Builder MT system a few years ago let the company change the way it sells houses.

Chris Weir, the company's vice president and director of purchasing operations, says in the past, every job was a custom job. He says it used to take one person five to eight man-hours to pick all the pieces and parts from a Microsoft Access database and negotiate prices.

Now, building an estimate takes about an hour. The system lets the company build base models—30 in all—and each model comes with the options pre-priced and pre-estimated.

“In the past, we were building 200 houses and couldn't keep up with four guys,” Weir says. “Now, we're doing the same 200 houses, but with one person. We could add on another 100 houses without adding new people.”

This added efficiency created some staffing flexibility for management. Two of the four estimating people were shifted into land development; one person stayed on as an estimator, and a fourth person was let go.

Weir says it was a big plus to be able to take the industry knowledge of his staff and apply it to some other aspect of the business. The two employees now in land development are doing the legwork and research for land deals to help the company grow.

“We were able to shift two people and put them into more productive work,” says Weir, who adds that the ability to cut one position saved the company a $50,000 annual salary.

Software can always help builders cut heads, but the best way to get employees to really buy in is to show them it can take over time-consuming tasks and free them up for more interesting, rewarding work that helps the company grow. Shifting people around, especially when they can be put in more strategic roles, is one visible way to show that the new software is not the Grim Reaper.

Investigator's Notebook
The Case: Is information technology worth the investment?
The Investigation: Looking for quantifiable business pay-offs from technology.
The Evidence: Back-office software and Web-based collaboration tools that more effectively manage a building company.
The Verdict: Improved gross margins, reduced phone calls, ability to grow with same amount or fewer people, shift experienced staff to more productive jobs.