So many times, I hear about builders ringing a supplier and pleading to have some item or items delivered the next day because they have forgotten to order it or missed the item when estimating the job (if they estimated it at all) or the client has only just made up their mind about a selection.
I recall doing some consulting work for a builder a couple of years ago when he had asked me to come in and help him sort out his business. I withdrew my services after only two weeks of half days because it was obvious, he was so far gone, nothing could help him. On delving into his business, I found that he was pricing quotes using a square metre rate and adding an estimate of what he thought would cover extraordinary items. He rushed to sign a contract with his clients without doing any proper estimating at all and once the contract was signed, he rushed to start the job only to find that his supervisors had almost nothing to work with.
Each job lurched from one trade to the next as supervisors rang the office to ask for the next stage or trade only to find it hadn’t been quoted and they had to wait until a quote was received and a purchase order was issued. How did the builder know what margins he was achieving on jobs under construction? He didn’t, because nothing was estimated, and he didn’t know until well after the job was completed how much it cost. Invariably he went bankrupt owning considerable money around town and to the government. You could see that coming a mile away.
It seems that the project management skills of builders have been lost and is sadly in need of upskilling if we are to improve the industry. I believe mobile phones have also contributed to the loss of skills but don’t get me started on that one. Ask the largest hardware chain why they have had to create very large call centres to take the massive increase in phone calls from builders and trades.
Builders are project managers, full stop. If you also work on the tools then you are multi skilling, but you are still a project manager.
This article ties in with a previous one I wrote on the “Seven Traits of a Successful Builder”. What follows is a list of 21 principles or strategies that the best builders use or do well at—not always perfectly, but clearly better than their competitors. You can still schedule and build well without meeting some of these principles, but for each one you don’t adhere to, it makes it more and more difficult to run an efficient business.
Pre-Construction
1. Adopt simplification as a daily company mantra
Simplification is not just the domain of the major project builders although I think some of them are complicating things too much these days - it applies equally to large custom homes and everything in between. Whether product or process, eliminating excess steps, paperwork, approvals, materials, or less trips makes scheduling and building far easier. Process mapping is a great way to identify conflicts and duplication in your business.
2. Value-engineer all plans based on ‘Lean’ design principles prior to start.
Look at the ‘buildability’ of the design and sort out any complicated detailing or construction issues. Every additional complication in a design makes it harder to estimate and build. The goal is to have as close to the exact material requirements delivered to the house as possible, with no excess supply or shortages—little excess concrete to be sent to landfill, no full pallets of brick left over, no sheets of bracing ply for a hot-shot run. Every single shortage or oversupply leads to the supervisor having to make additional trips.
3. Use manufactured components whenever available and cost-effective, including panels and off-site sub-assemblies.
Manufactured components are quicker to install, saving program days that can most often make up for any additional cost (if all the factors are calculated). In addition, on-site waste is reduced. Finally, having less material to climb over, work around, and pick up saves time. Off-site construction is taking much longer to be adopted here in Australia however, there are still many ways to use manufactured components in the construction. Talk to your suppliers and trades about ways to speed the process up. You never know where this discussion will lead you.
4. Offer only the number of plans and elevations you can keep 100-percent current, and purge annually.
Most project builders have way too many standard plans than they need and seldom keep them current. That means continual phone calls, calculations, variations, shortages, overages, trips, and rework. Apply the 80/20 rule every year and throw out whatever is not selling. The sales team will always throw their hands up and plead for any design to be kept ‘just in case’. The reality is that there are usually a number of similar designs and the most ‘value/m2’ will always be the winner and get ‘customised’ anyway. Think about all the extra time for marketing, estimating and design to maintain these extra plans and documentation, websites, brochures, BOQs and price files.
5. Provide only the number of options customers will pay for and can be kept 100-percent current—purge annually.
Options is another area where project builders routinely offer far more than is needed. Again, application of the 80/20 rule is in order. The true cost of an option includes phone calls, mistakes, rework, and warranty. Builders seldom calculate this accurately.
6. Establish all pricing up front, whether unit pricing or base model plus options.
Whichever approach you use, know the prices you must charge customers up front so there are no construction delays during production. This starts with a thorough understanding of cost, based on detailed take-offs and advance negotiation with suppliers and trades. You can do this with the right construction software such as Hyphen Homefront.
7. Establish cut-off stages with sales/customer service for all selections and changes and manage customers (and your staff) to those dates.
It can be done. It takes skilled salespeople, a focused management team, and a company wide commitment. You simply cannot maintain a tight schedule without firm cut-off dates. Educate your customers about the effects of late changes. Once you have signed a contract, make sure you prompt the customer form all the changes upfront so they can be included in the approved plans. Any change made once construction starts, simply slows down the process and costs money. Some things are unavoidable like unforeseen site conditions buy have a process in place to deal with these so it can be resolved quickly.
8. Release starts evenly and maintain a construction program for each job.
The goal is even-flow. Yes, true even-flow requires a backlog, which is difficult in a booming market. But simply not starting multiple homes on the same day is a helpful step. Once a house is released to construction, however, there is no excuse for not doing everything possible to maintain the published program throughout. This will create a tension between the operations side of the business that wants to get all the jobs processed as soon as possible and the construction side that wants an even flow. I discussed the concept of ‘even flow’ in my previous article about the ‘7 Traits of a Successful Builder’.
9. Provide the site supervisors with a complete site file for each job with all details and options.
The site supervisor should have all the details for building the house at least one week before a site start is required, in an organised, systematic package (paper or online). If there are any cosmetic changes and colours to be finalised, make sure they are followed up and ready well before the supervisor needs to call it up. Breaking the builder habits of playing catch up and making it work on the fly greatly enables maintaining the construction program.
Being a construction supervisor is a really hard job – many people underestimate the stress that it brings trying to manage multiple jobs, trades, suppliers at once. The construction industry has one of the highest rates of suicide and a psychiatrist once told me that most of his clients were from the construction industry. Mental health is a real issue, so let’s try to make it as easy as possible for the construction guys. Let’s face it, construction is when the money is made and it’s all down to the site supervisors to get it right. Get behind them and support them as much as you can.
Construction
10. Develop a thorough “Pre-start requirements” checklist for each project and follow it religiously.
This covers everything that must be done at a project site before you dig so the house has a fighting chance to stay on schedule — undergrounds, lot/pad prep, services, safety plan, etc. It’s too hard to go back if something is missed at this stage.
11. Include “Meet the customer” days in the schedule, including pre-start, frame stage, pre tiling and of course handover.
Don’t pretend that these critical activities don’t take time or can simply be scheduled on the fly. Careful management of the customer relationship and what goes into their home avoids changes that can upset the schedule. Don’t wait for the customer to dictate the site visits. Show them you will have times set aside at critical points in the construction program to let them see what is happening to their new home and the progess.
12. Establish clear scopes of work for each trade and some suppliers with job-ready and job-complete definitions.
Every single item and how it is done should show up on someone’s scope, as should a clear definition of “job complete.” If not, things get missed and the chain of phone calls, extra trips, and trades on top of other trades begins. The program suffers.
Scopes of work are also a bonus for the estimators and the procurement guys as it makes it easier to compare quotes, ensure the quote covers all the work required and sets out the standards expected.
13. Develop your construction programs with input from each supplier and trade, with realistic allowances for weather, holidays, etc.
If you’re building in a known surfing location, allow for some early finishes each week to allow for the boys chasing the waves or in the colder regions the sun doesn’t rise until much later and creates a shorter day. Never schedule beyond the capacity of the workforce, and you must build a relationship where your trades are completely honest with you. Getting them involved gets buy-in and can also highlight some ways to improve your construction programming.
14. Recruit suppliers and trades that understand that a tight, consistent schedule is in their best interest.
Sure, some won’t get it, but most can understand that a predictable schedule with longer lead times makes everything they do easier and allows them to stay on time for you. But you must show that you can achieve this – actions speak louder than words. The prospect of getting paid more quickly is usually enough motivation.
15. Recruit trades that have various capacities.
A 200 sq metre single storey home might take a three-man framing gang five days to erect the frame. To frame a 300 sq metre two-storey home, you may need a crew of eight to meet that same five-day schedule window. Find trades who can adapt and give them steady business.
16. Build in a system for weather events and other contingencies into your programming.
The goal is to keep the entire system working in harmony, maintaining flow and predictability throughout the process. If a weather event occurs, you can move all houses being built in the same area back a day (or whatever is required). By doing so, you have just eliminated overlaps and trade conflict.
17. Maintain a comprehensive, strategic process of incoming quality control of materials.
For each new project, check deliveries daily or have a system for the trade to check the delivery, log the results, and provide feedback to suppliers, including concrete, timber, bricks, mouldings and tiles. Once suppliers know you care, (that is, you will monitor) you can back off to random checks. Delivery checks ensure both quantity and quality are correct from the start, avoiding rework, extra trips, and schedule delays. The 3C Mentor Builders Resource Centre has a ‘Late and Short Report’ available for this very purpose.
18. Make sure each building site is clean and orderly with a site plan for placement of materials.
This takes vigilance, but once suppliers and trades see it, they help you, because it helps them. Having a plan for each lot where materials are dropped can make a significant difference. Each house should be left broom-clean, each day, allowing each trade easy access and full accountability. You will most likely have to jump all over your trades to achieve this but once they know you are serious, the jobs will flow better. Any job gets dramatically easier to control and is better maintained with a clean worksite. An out-of-control site means an out-of-control construction program.
19. The gold standard for the site supervisor is “be in each house, each day.”
Until the schedule runs like clockwork, daily monitoring of each site is essential. Defining what ‘adequate supervision’ is depends on the implementation and success of all these principles and the ability of the site supervisor. Don’t frustrate or limit the capacity of your site supervisors by not giving them everything they need to do their job and deliver the homes on time. Remember, a builder only makes money from the construction, so it makes sense to give this as much opportunity to succeed and deliver profits, not losses.
20. Always pay on time, consistent with the program.
Only pay for work completed 100 percent to scope. The definition of a completed job is “100 percent to scope, on time, with no rework and no waste.” When trades know that within the agreed days of meeting that standard and receiving their invoice, they get their money, you will get their full commitment and their best gangs.
21. Find the best suppliers and trade contractors using total cost, not quoted price alone, and negotiate for the best gangs.
These days, the cost of every item in a home is critical. But if you use the quoted price alone you may forgo profit. Not all gangs are the same. The builder who consistently gets the best gangs will run the best construction programming and produce the best house at the greatest profit. But you must earn it. Becoming the best project manager in town will get you there in a hurry.
Running a great building business requires so much more than what many builders typically think of at first consideration. Thus, the list above is really a list of “best operating practices.” However, never forget that increased variation in a process has an exponential impact and you need to understand the systems implication and the consequences, especially for the site supervisors. Double your options and you do not double complexity—you quadruple it.
If you have more principles or strategies that contribute to the efficiency of the building operations, I’d love to hear your comments.
The 3C Mentor and Alpha Edge can help your business with process mapping, ‘Lean Design’ reviews, construction software, pre-start checklists, construction programs, late and short reports, scopes of work, QA checklists, labour allocation sheets, construction management plans, project delivery plans, supplier and trade contractor evaluation audits and numerous other systems and documents that are used by the best builders.
The whole purpose of The 3C Mentor and Alpha Edge is to help create really great businesses in the residential building industry and delivered by our unique ‘Four Pillars to Your Success’ – Business Coaching, Business Consulting, Business Resources and Construction Software.
For an overview of these four pillars go to Alpha Edge here. To find out more about our Business Coaching go to The 3C Mentor here, for further information about the services Alpha Edge can provide go directly to Alpha Edge here and to access the many documents and resources you need as a residential builder, go to our Builder’s Business Resource Centre here. For more information on the construction software and how to ‘Be a Better Builder’, click here
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