Delivering high quality production homes on schedule and within budget, and following approved plans and specs, can be achieved, but it requires effort and focus by all involved. With thoughtful and detailed policies and processes in place, coupled with a high-level commitment to follow them, the opportunities for construction defects can be greatly reduced. We have seen great progress achieved by selected builder clients across different US markets.
This article explores seven organizational interventions that can help home builders minimize the opportunities for construction defect litigation while meeting scheduling, budgeting and quality goals.
1. Organizational Structure for Quality Assurance vs Production
We recommend the builder’s Quality Assurance/Customer Service team members report up through a different chain of command such as the Warranty Department, or Sales and Marketing Department of the company, not up through the construction chain of command. This eliminates the risk of having the “fox guarding the hen house” effect and empowers an independent senior manager outside the construction circle to stop a project if quality falls below previously agreed upon standards of care. These “go-no go” discussions need to occur between the VP of operations and the VP of the selected department, not just between the superintendent and a direct report holding the title of Quality Assurance/Customer Service. At some point in the process, the building company ownership may also need to participate in these discussions.
2. Responsive Customer Service is a First Defense
We recommend managing customer expectations throughout the process, beginning with the sales process (pre-construction), continuing through the construction process and then through the warranty period and beyond (post-construction). Customer service spans a multi-year life cycle whereas construction schedules for single-family homes can be compressed to six to nine-months. For high-rise towers, the construction cycle can extend up to four years. We have found by direct personal experience that many “touch points” throughout the construction and delivery process can build strong relationships between builders and their customers, and tend to create more satisfied customers by aligning with their expectations. In today’s world where customers demand an immediate response, one unanswered email, hand-written letter or urgent phone call, can paint the builder in a negative light to the customer, which can be a difficult perception to change in the customer’s mind.
3. Selection and Evaluation of Trade Contractors
Rigorous evaluations and careful selections of trade contractors are essential steps to ensure that quality, workmanship and product durability can be achieved. Fundamentally, this is what homebuyers expect. The trade contractors’ experience with specific building types and that of their skilled field staff are vital. Building trades constructing a high-rise building need high-rise experience, not just single-family experience. Fellow contractor and trade references, insurance and safety documentation from other active projects are also important. Financial solvency, as well as the size and scale of their operations are key to avoid becoming overextended. Equally important, these trade contractors must have their own warranty service program with knowledgeable and experienced representatives to respond to homeowner requests as part of their contractual obligations to the builders.
4. Scopes, Specification Manuals and Mock-Ups
Thoroughly detailing the plans, specs, and trade scopes-of-work, tailored to the design and price range for the specific product being constructed are important aspects for a successful construction project. For example, if the plans lack details for acoustical assemblies, the trade contractors may creatively invent their own solutions, resulting in a different level of performance than intended. Specification manuals provide a conceptual “recipe book” for projects to be built. Mock-ups near the project site then provide a laboratory “test-kitchen” experience for installers of new or unfamiliar products and installation sequences. In addition, formal communication tools such as Requests for Information (RFIs) issued by the contractor, Architect’s Supplemental Instructions (ASIs), critical path (master) scheduling, and three-week, look-ahead (interim) schedules, assist in the delivery process. These are necessary and important tools in the toolboxes of larger and more sophisticated contractors.
5. Bonuses for Short Term Production—Incentives for Long Term Quality Assurance
Superintendents and construction managers should be trained and incentivized to look beyond the current house under construction, and even beyond the next phase. They need to think about how this project fits into their career path. They also need to be invested in a longer-term delivery horizon. Successful projects have useful lives spanning decades. How do we motivate builders’ field teams to think long term? Cash bonuses earned and accrued over the life of a phase or project, but not yet paid, are deposited in the superintendents’ bonus pool. These funds held by the company can ultimately be paid out once quality objectives are achieved. These delivery bonuses represent “quality incentives”. If quality issues are discovered, however, reallocations may reduce the bonuses that would otherwise be paid.
6. Balancing Competing Interests—Schedule, Cost and Quality
Schedules, costs and quality are three equally vital factors in the home building industry, but also in any production process. For example, the Toyota Production Improvement Process (“TIP”) is a case in point. “Kaizen” is the word describing the Toyota process of “continuous improvement” which balances schedule, cost and quality. With TIPS, workers on the line can stop production in real time if a flaw or problem is discovered, and then develop the solution right where the problem originated. This is a core value at Toyota. The TIPS program creates thousands of small adjustments in the production process for Toyota, which benefits the company, its employees and its customers. Specific to the homebuilding industry, construction is sequential from one trade to the next. Quality can be improved by establishing “job ready-job complete” standards that require a trade contractor’s sign-off on a prior trade’s workmanship before beginning their own work. This addresses the potential risk for a subsequent trade from covering and being responsible for poor workmanship of the preceding trade.
7. Third-Party Peer Reviews Over the Project Life Cycle
Third-party quality assurance encompasses the full project delivery life cycle. Peer reviews of architectural and engineering plans, spec manuals and trade scopes represent the bulk of pre-construction services. Other important elements can include existing condition documentation at high-density urban in-fill sites, waterproofing consulting during mock-up testing, and property condition assessments when taking over a half-built project. During construction, monitoring then picks up with the observation and documentation of critical litigation generating assemblies. The key is to discover and proactively correct those hidden flaws as early as possible during the construction process before installation of any cover-up components such as roofing or walls, which could create conditions for construction defect litigation in the future. Clearly, the use of “mock-ups” is also critical during this stage for establishing installation protocols when the revolving door of trade contractors are cycling through a given project. Quite simply, mock-ups provide a point of reference for any tradesman or other vendor on the job site. The scopes of work for this vary with the size and complexity of the proposed project, including horizontal infrastructure and vertical building. Finally, post-construction includes preparation of comprehensive maintenance manuals as tools to help the homeowners and associations understand their fiduciary responsibilities from day one through the many years of ownership.
In summary, remember that old saying, “An ounce of prevention is worth a pound of cure.” Fixing a potential problem at the pre-construction stage may cost only $100 of an architect’s or draftsman’s time. Fixing that same problem of unclear or misleading plan details during construction may cost $1,000 plus schedule delays. Ignoring the problem until water intrusion, dry rot or life-threatening fire occurs may cost $10,000 to $100,000 to repair, depending on the extent of damage, not to mention potential injury and/or loss of life. Ignoring building maintenance needs may also inadvertently create building deterioration conditions than can result in life safety hazards and costly construction defect litigation.
It is well documented that the data and metrics you choose to collect and measure, will result in higher quality production due to the feedback they provide. When you change your focus, you can improve your performance.
