While analysts continue to argue about whether or not the dip in housing sales in the first two months of 2014 is weather-related or not, it might be helpful to step back and take a look at the last few years to gain some perspective about where the market may be heading.
Streamline Your Business
As the white-hot housing market cools, builders can maintain a competitive edge by improving construction quality while controlling costs.
Name three things that make your customers cringe — such as mold, escalating prices and construction delays. Factory building helps all three.
You probably know that using pre-engineered roof trusses saves time compared to building trusses on site. But consider saving money by reducing discarded scrap lumber or constructing the roof more quickly so there is less chance of water-related problems. An NAHB Building Systems Council studied a 2,600-square-foot home built with trusses and prefabricated panels and found that it used 26 percent less lumber; was erected in 37 percent of the man hours of a similar, stick-built home; and created 76 percent less waste.
Modules built in factory allow homes to be completed on-site in a month or two.
Fernando Pages-Ruiz, a production builder in Lincoln, Neb., used to stick-build his homes on site. But when a panel factory opened up locally, his company, Brighton Construction, switched to wall panels because of the time and cost savings.
"They are framing the walls at the factory at the same time that we are pouring the foundation," says Pages-Ruiz. "The moment we are done with the foundation the walls arrive, and one week later, it's all framed up and the plumbers are in. And when you are using wall panels, one superintendent can supervise five or six crews. We have an erection crew as opposed to a framing crew, which saves us money."
Modular construction takes these advantages to the next level. Because modular homes are built under a roof in a factory, weather delays are eliminated and time isn't wasted as materials dry out. Because modular homes must be strong enough to transport, they also tend to be sturdier and more airtight than stick-built homes. Best of all, it only takes a few days to assemble a two-story, 2,600-square foot modular home on-site. Modular homes can be finished within a month or two as opposed to twice that long for site-built homes.
Cut costs by managing your supply chain more efficiently. In particular, work on improving purchasing and inventory management.
Imagine no 2×4s sitting out for weeks getting wet, warped or stolen. With just-in-time delivery, you get materials right when you need them, not before or after. Just-in-time delivery requires a fairly firm construction schedule, with buy-in from your subcontractors and an accurate estimate of the resources you will need and when.
The benefits include reduced job site theft, better cash flow — and increased profits — through lower inventories and not having to worry about storing materials and protecting them from the weather.
Although this process has transformed the auto industry, most builders avoid just-in-time delivery because it takes more planning and they're afraid materials won't show up in time. Builders have to be able to trust their suppliers for just-in-time delivery to work. Developing and maintaining a good relationship is key.
Planning and coordination is best achieved with the proper construction management software tools. Don't miss the boat — or the road to higher profits — by failing to take advantage of software that can dramatically improve your building processes.
Dozens of companies sell construction management software that make scheduling, estimating, ordering, billing and management more efficient. These programs can help builders manage the construction process so they can spend more time building a high-quality home.
Consider the Fundamentals
The underlying concept behind streamlining is whole house design, which teaches that a house is a system and that a change in one part of the system will affect other parts. The principles are drawn from the efficiencies of the industrial design and manufacturing process and can be applied to any type of construction.
Consider first how the new home-owners will live in and operate the home. Meet with the architect, HVAC installer, plumber and other contractors to consider each component and how they interact. Builders can incorporate the five basic building science concepts into every decision about the house. By looking at these components together, a builder can refine the design so all systems can be installed as efficiently as possible. This takes a little extra time at the start but ultimately will speed construction and produce a higher quality home.
The Partnership for Advancing Technology in Housing is administered by the U.S. Department of Housing and Urban Development.