In a recent study rework costs (including labor, materials, equipment and subcontractors) can run from 2% to 20% of a project's total contract amount according to the Construction Industry Institute. These costs are of course eventually passed on to the customer as profitability shrinks.
The questions raised by this are:
What is your cost of rework?
and
What quality tools are you using to reduce those costs?
Some things to consider when evaluating your trade partners and creating a scorecard include the following:
Some of this data will already be available in other data tracking records (such as defects per home) others would have to be scored annually for example the...
In a recent study the following quality tools were found to be the most commonly and successfully used:
Of course using and linking all of these together in a coordinated manner creates the greatest leverage.
This study provides further evidence that that integrating quality tools and methods into green building creates greater leverage! In this study they found specifically that using the Baldrige Criteria helped to manage the LEED projects better. The...
In a new study on Six Sigma the savings to cost ratio ranged from 2.6 : 1 through to 2 : 1. As for cost savings as a percentage of revenues, the average was 1.7%. This study showed clearly the impact of Six Sigma and its ROI.
As a rule of thumb a company with $100 million in sales could expect $1.5 million of direct savings per year of implementation.
(Costs and Savings of Six Sigma Programs: An Empirical Study, Quality Management Journal,...
Where to start with trying to address improvement. Here is a high level approach.
Richard Dugas, the CEO of PulteGroup, did not want to throw cold water on the party, but he deserves credit for at least pointing out that housing still faces a number of regulatory and financial obstacles as the market recovery begins to get traction. Such was the tidal wave of positive energy and good news at a recent housing investor conference that even a slight note of caution, from Dugas (whose firm just delivered very positive quarterly results), stood in sharp contrast to other...
We all know that teamwork is an important ingredient in building great homes and great relationships with our customers. This importance is substantiated by Woodland, O'Brien & Scott studies showing that a builder's teamwork rating is a good predictor of future referral sales. Given the importance of teamwork, particularly as we head into a busier year end construction and closing season, the following teamwork fable may be helpful.
In the days before civilization, out on the...
For the last several years Scott Sedam and I have been spreading the word about Lean design. Lean design is based on creating home designs that maximize marketability and profit while reducing construction waste. This is done through a collaborative design approach that involves the builder and the building team (including sales) as well as the builder’s trades and suppliers. It is a design approach that focuses on cost reduction while increasing aesthetics and overall amenities.
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It is amazing how quickly we can create a negative impression in the most of simple ways. The danger can be not having perspective, doing what has always been done or falling into the act of ‘processing a customer’ especially if we are busy or running out of time.
Here are some things to avoid, yet are so common and make the customer feel you are not prepared or professional and therefore equate the experience to that they will encounter if they build a home with your...
