Analysis



There is nothing in homebuilding that makes less sense than purchasing by the square foot and it is a big obstacle in Lean implementation. Other than the fact that it makes things easy I suppose, there is very little to be said for it. It damn sure makes purchasing inaccurate and confusing, at best. Not much of a tradeoff. Imagine, for a moment, buying an automobile by the pound. Do you think you could do any meaningful price/value comparisons?

In my blog two weeks ago, I launched into a tirade about how so many residential architects are not doing their job. Each week, I link this blog back to the LeanBuilding Group on www.linkedin.com. Many members posted responses with good points on how to remedy the problem. Here are some excerpts from them. I thought I’d let them do the talking this week. (Note: if you are not a member, go to www.linkedin.com and search “Lean Building.” The group will come up, and join! There are some excellent discussions going on.)

With the February edition of Professional Builder, I begin a series on the evolution of quality management. Here is a more detailed version of an excerpt from that article to come. Be sure to read that.

In the past year, during our LeanPlan Workout process, we had the dubious honor of “working on” plans from 3 of the biggest name, most expensive architectural firms in the country (among others.)

Michael J. Fox and I have something in common (besides the obvious – talent, good looks, irreverence, witty repartee, etc.)  We both have an incurable “condition.” Fox has Parkinson’s disease, a well-known affliction that continues to ravage his body despite an astounding amount of medical research dedicated to discovering a cure.  My condition is a rare one called Alport’s Syndrome, a genetic fluke that resulted in total kidney failure nearly 12 years ago.

Last weekend was the annual Christmas sojourn to my wife’s relatives in Chicago. On the obligatory trip downtown to Marshall Field’s to see the Christmas decorations, visions of credit card slips danced in my head as my wife and daughter pursued something precious that surely could not be found elsewhere. As they searched, my mind naturally turned to thoughts of Lean, rather how much waste I could find in the store’s products and processes. Yes, it is an obsession. Then my eyes fell upon this plaque, something that Marshall Field himself wrote in the 1800’s.  I took this snapshot.

December is often the time of year that many home building companies finalize their 2012 goals and budgets.   Management meticulously reviews past sales performances, hard costs, personnel budgets, etc., and set both goals and budgets for 2012.   Once each line item is discussed and approved, these bugeteers ask managers to sign off on this plan as their commitment to 2012 excellence.  Seldom do we see customer satisfaction goals handled with this same degree of foresight and commitment.  Why is this?

One of the requirements in Lean Operations is harnessing the “Voice of the Process.” Your processes can teach you so much and hence save you a lot of cash … IF you know how to get them to talk to you. How do you do that? Metrics, of course, but usually not the old tired ones that don’t provide much illumination. You have to dig a little deeper. Here is a great example. How many of you have ever looked at the ratio of how much business you do under VPO (Variance Purchase Order) vs.

When we look into our car’s rearview mirror we see where we have been, as well as the distant horizon; the vanishing point of times past.  In the home building industry’s rear view mirror, I gladly see the depths of home building’s bottom slipping over the horizon.  What makes me think so? 


First, many sectors of the economy and their metrics are undeniably improving - employment, consumer spending, household formations, and most importantly, consumer sentiment.  A long time ago, I remember doing a detailed study which plotted numerous economy and industry data p

Yesterday after presenting an orientation for our LeanPlan Workout process to a group of suppliers & trades in Texas, a contractor named Mike walked up to me and two of the senior managers from the builder. Strong-looking guy, with very alert eyes, about 50 years old with that kind of rugged Texas good looks from a life spent working outdoors that you see a lot down there. He had been very attentive during the presentation, and took a lot of notes.

I am frequently asked, what is the right way to buy labor and materials? Should you use turnkey suppliers and trades or should you purchase and negotiate labor and material separately. Let me be 100% clear about this. I have the answer. I am now into my third decade of looking hard at this issue and have watched more than 200 builders up close and personal and unequivocally conclude based on the evidence that the clear answer is to buy labor and materials separately – except when the best way to purchase is turnkey. Got it?

The 2011 “Black Friday” sales numbers are in and show a pleasantly surprising 16% gain in year-over-year retail sales!  Some economists, pollsters, and industry “experts” expected consumerism to be flat or even down this year; proving once again that rational surveys do not accurately capture consumer emotions.


Here are two Black Friday observations – first, asking consumers a rational rating question, i.e.

The Lean Perspective is by no means limited to sticks and bricks issues on the construction site. When we talk Lean building we are really talking Lean operations: providing value & eliminating waste in product and process wherever it is found. Many seemingly mundane issues can have significant implications in both cost and value. A great example came up last week while having dinner with builders from several companies at the Bob Schultz “Serious Management Workshop,” a twice-annual event that attracts senior managers from across North America.

To home builders, speed is a highly valued commodity.  It is not unusual to hear home builders boast about fast build cycles, lightening fast product development, near real-time custom pricing quotes, etc., right?  Yes, it seems we are laser focused on, and maybe even addicted to speed in developing land, designing plans, and quoting homes, but is this speed really important to the customer?  That is a tough question that I can't answer, but here's a speed question I can.

Last year PB received an official complaint letter from a high level staffer at the AIA, basically saying that I was being unfair to Architects. I confessed to being guilty of describing the reality of continuing problems in the field that result from Architects taking a rather limited view of their job responsibilities.

If asked, I would be hard-pressed to pick a favorite author, but if forced to choose just one I would go with Antoine St. Exupery.

The idea of running a 100 mile race ten years ago was as inconceivable and foreign to me as the possibility of a 6 year real estate crash.  As it turned out, last month I got to experience both of these.

One of the greatest misconceptions about Lean process and methods is that they cheapen the product. Lean is first and always about value, and the customer perception of value at each price point is a critical component. It may surprise you that on a fairly regular basis I have to advise a client to put something back in a house rather than take it out.

The accompanying picture was used recently with what was an otherwise good article on how to create profitable design. That article is much bigger in scope than simply the design of the house itself but still, the irony is palpable. What’s your first impression? Give it a good examination before you go on, in fact, gather some of your people around the monitor or print it out and ask if this is an intelligent, cost-effective design? Looks pretty good? Not if you have spent the past 5 years or perhaps just the past 5 weeks really dissecting plans and elevations from a Lean perspective.

Recently I was asked to present to a group of purchasing managers for a Top 20 builder, led by a Corporate VP who truly gets it when it comes to Lean. That is encouraging in itself, because what I see from so many of the Top 20 is either more of the same old “beat the snot out of the suppliers and trades” or misguided strategies under the name of Supply Chain Management and regrettably, even Lean. This VP and the Directors of Purchasing had no stars in their eyes, but were resolved to keep an open mind and find good ideas whatever the source.

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