Rome was not built in a day. However, what can be done in a day on a home site in the United States is either one of two quantities that reflect productive capacity: 100% or less than 100%. 100% is what can be completed on a house in a single work-day on the site; and, all too often, less than 100% is what is done during that particular duration.
What San Antonio legend and innovator Ray Ellison figured out in the 1950s and made a discipline of, that many other home builders never seem to solve, was how to get 100% of a day's work done--or close to it--on his home sites. Ellison sold his company, Rayco, to Kaufman and Broad Home Corp. in 1996, and the Rayco model was the industry standard at the time for how to give customers both a modicum of choice about what was in their home and a price tag they could manage within their means.
Now, by some estimates, there are 210 days of a year, give or take, in prime home building markets that you can drive a nail or put up a form. Not surprisingly, maybe 20% or more of what could happen on every one of those days on a home site fails to happen for some reason or other, or maybe no reason at all.
So, for every 210 actual workdays, building superintendents, project managers, and executives are only getting 168 days of work actually done. They're paying at a rate of 100% to get work processes completed, when in reality, just 80% of the work gets done.
20% waste is not unusual in home building, and 20% waste is not confined only to home building. Here's a Harvard Business Review essay from Bain & Company consultant Eric Garton that suggests that wasted time afflicts everybody everywhere.
Companies wind up in trouble and squander the time, talent, and energy of their workforce when they lose focus, spend money on things that don’t make a difference to employees or the future of the business, and use operating models that are out of whack.
One of the "fixes" Garton focuses on to reduce waste involved redesigning the operating model to "eliminate any unnecessary work or dysfunctional processes that bog things down."
Now, how does a home building company executive, a project manager, a super approach that challenge of reducing waste, of getting 100% done in a day, as opposed to 80%, or less?
Smith Douglas Homes, an Atlanta-based, six-market southeastern builder, operates in Atlanta, Birmingham, Charlotte, Nashville, and Raleigh, and last year, delivered 665 home closings (up 26% y-o-y) and $225 million in home building revenue (up 106% y-o-y). Their pedigree dates back to 1975, when Tom Bradbury founded Colony Homes.
Now, one thing Tom Bradbury did early on was to go to school on what Ray Ellison was doing down in San Antonio, and then he worked with pioneer data-operations information technology geeks Mike Goldsberry, Mike Johnson, and Kenny Norton to commit their thinking, visualizations, construction, engineering, product spec, and work-flows to code, so that every task, process, product SKU, and system was mapped into an integrated workflow tool.
At that time, the late 1990s, an endeavor like that was practically insane, but what it allowed Tom Bradbury and his team--including a young, up-and-coming operations superstar named Greg Bennett--to do was to build houses virtually before they built them on site. Imagine, taking a Rayco-like construction management discipline and then connecting the entire ecosystem of construction--manufacturers, materials suppliers, trades--to a single operations plan. This is what evolved into the SMART system Smith Douglas uses today, and it allows teams in their respective communities in their six markets to execute on a true evenflow building model--one start, one completion, one sale per community per day--and average 3-and-a-half to four inventory turns per year, a best of breed productivity measure.
"What you usually see at the site is a super yelling and screaming at the trade crew, and they work for the day, and get about 80% of the job done," Bennett observed. "That last 20%? You couldn't get them back to finish that up, and that would hold up the rest of the job."
What Bradbury and Bennett--and the Smith Douglas culture--have gotten down is this. Get 100% of a day's work done in a day. If a trade crew is 100% finished with its task(s) in its scheduled day's work, the next crew can come in and do its part. This way, Smith Douglas can build an additional house every week of the year, and it can get each house done in 60 days or less, which means three things that are vitally important to a builder whose No. 1 customer is an FHA buyer in its six markets.
Its buyers can have choice in options and personalization, as well as a low price because of the efficiency in the executional model. What's more, they can move into their new home about two months from the time they pick one of Smith Douglas' 40 models, specify their options, and get their financing in order.
Choice and a low price are not mutually exclusive if you can execute.
