The other day I was reading an article from a Builder lamenting about his Homeowner who refused to play by the rules that were stated in the Building Contract.  It was obvious from the tone of the piece that the Homeowner was ‘one of those clients’ – we have all seen them before.  But what if we could ensure the Homeowner did play by the rules and be part of our system and part of our team instead of an adversary?  Maybe the Homeowner was not following the rules because we never clearly defined those rules.

Looking back on that problem client, what could we have done better?  As a professional Homebuilder we know what it takes to successfully build a home, but why do we assume the Homeowner understands?  They are not a Builder.  Homes are not their business.  That’s why they hired you.

Most Builders have clear procedures spelled out in the Building Contract.  They have probably added paragraphs and addendums over time to address specific problems that have arisen in the past.  But once that contract is signed, how many Homeowners (or Builders for that matter) have a copy of that contract available for quick reference?  The contract is usually filed away and rarely referred to once the ink is dry.  Under the best of circumstances, ‘quick reference’ is probably an oxymoron because the contract is written in the language of legalese.

So what is the solution?  As experienced professionals we owe it to our Homeowners to define the actual PROCESS that is followed to collect information about the home and execute a finished product.  Our obligation is to pull the thoughts and dreams of our client out of their heads and help them articulate their hopes for the finished project.  It is up to us to make sure that that Process is clear and easy for the Homeowner to follow.

Yes, the Building Contract defines the rules of the legal relationship, but don’t we owe it to our Homeowners to have a clear written checklist to back it up? Don’t we owe it to our Homeowners to explain their responsibilities?  Isn’t that what good communication is all about?

The Homeowner is looking for guidance and direction; we fail the Homeowner if we have not defined a clear roadmap to success.  Most Builders don’t have a roadmap.  Most Builders don’t have a Process.  If you think you have a Process, ask yourself if that Process clearly defined and written down – if it is not, then you don’t have a process.

Step one: build your Process and write it down.  It is not enough to give the Homeowner a Selection Schedule for making decisions for their home.  Answer the questions: How do they make that decision?  Who does the Homeowner talk to? Where do they shop?  Who is the contact at that vendor? Which employee on our staff is responsible for assuring a complete decision is made?  What constitutes a complete decision? What other decisions have to be coordinated with that initial selection?

A Homeowner’s Guide or Homeowner’s Manual given at the beginning of the project is an easy first step to creating a black and white process for the Homeowner to follow.  Explain what happens during the entire construction cycle, explain when decisions have to be made, explain why the decisions need to be made at that time, explain what constitutes a complete decision, explain what the Builder does with the decision and how your team executes that decision.  Make the Homeowner part of the system, part of the team.

Define and build a written Process.  Give it to your Homeowner in a simple narrative or checklist format. Assign a specific individual on your staff to ensure the Homeowner understands the Process and follows the System.  Hold the Homeowner’s hand if necessary, provide professional guidance and an understanding shoulder, but always make sure the Process is followed.  That is your responsibility as the leader of your company.

At the end of the day, your Process roadmap (or lack thereof) will define your success as a Custom Builder.  The additional benefit – the written Process can be shown to potential clients and the Process in and of itself becomes a sales tool.  Ultimately you will sell your Process instead of your Product and you will attract clients who understand the importance of ‘the rules’ and will be much more likely to follow them.

The Information Revolution is quickly changing the way the construction industry does business.  If you are not taking advantage of the tools that will allow you to process information quickly and more accurately, you risk being left behind – especially in the tight market most Builders currently find themselves in.

Technology will solve all your problems, right?  More sales, fewer mistakes, better margins – technology is the magic pill – but only if you have solid business practices in place.  Investing $1000, $10,000 or $100,000 in the ‘state of the art’ will not automatically eliminate sleepless nights, and without some basic systems in place that technology purchase may actually multiply those sleepless nights tenfold.

Take the example of a calculator.  In many ways the earliest ‘personal’ computer was a desktop calculator which came on scene some 40 years ago.  That simple tool has revolutionized the way mankind performs math. It increased speed and accuracy and, in the right hands, has allowed calculations to be performed in seconds that used to take weeks or months with abaci and slide rules (and before that sticks and fingers).  But in the uneducated hand, that same tool becomes a simple paperweight.

If an individual is handed a mathematical problem, a calculator is useless unless that person understands basic arithmetic, algebra and geometry.  In the same way a purchase of technology is not going to make Homeowners happier or a business more efficient UNLESS there are good management practices, systems, and repeatable standard operating procedures in place.  Technology allows you to perform your daily functions quicker and more accurately.  Technology allows you to store more data and access it quickly and easily.  But, if you don’t have a PROCESS in place the most cutting edge technology will simply end up being that same paperweight.

So, here are some suggestions to analyze your needs prior to investing in that next piece of technology:

1. Write an outline or draw a simple flowchart that illustrates the process and sequence of events that you have identified has to become more efficient and/or accurate in your business cycle.
2. Define which employee or subcontractor is currently responsible for executing the steps in the process you just defined.  Don’t forget to identify if, when and/or how the Homeowner is involved.
3. Write out a job description and a ‘standard operating procedure’ that defines how that process should be currently handled.

Armed with this clearly defined manual PROCESS, you can now research and shop for the correct piece of technology to solve your issue; armed with a clear definition of what needs improving you can now find the tool that will make that improvement.

Failure to perform the above analysis before being exposed to all the outstanding technological tools available to your business can result not only a failure to fix the original problem; but may actually produce new headaches and heartaches as your company gets bogged down with a tool that is trying to fix something that may not be broken.  Make sure your next technology purchase is made to make your current process more efficient and accurate.

You’ve finally invested the dollars (and the time) to create a computerized construction schedule using an exciting new piece of software; the schedule is templated with all your supporting tasks; it’s arranged using the critical path method.  THIS technology is going to make the difference – it is definitely going to help you sleep a little easier at night.

Now the next project has started and the schedule is in place and the computer is tracking it.  But as is all too common in construction, you have begun to pull permits and ALREADY that schedule needs adjusting because of an inspector’s question about the foundation engineering.

No problem, you think.  When I was sold this scheduling software they showed me how the entire schedule will re-calculate and update with the touch of a button.  Your project manager reviews the new timeline with you, it is approved and the data is entered in the scheduling software.  The schedule is updated.  You’re on top of it!  This scheduling software really is great!

But two weeks later, you have a hole but no footers and no sign of the foundation crew.  They were originally scheduled to start 10 days ago, but they showed up and the excavation had not started because of the engineering delay.  No one had alerted them originally AND no one assigned them a new start date – they are now busy on your competitor’s home across town.

What went wrong?  Your project manager updated the schedule, you approved it and your customer care manager alerted the Homeowners.  Problem is someone forgot to tell the foundation crew that the schedule had been adjusted.  That investment in ‘the greatest scheduling program in the world’ is for naught because no one alerted the affected parties to the schedule changes.

Ask yourself the old question: if a tree falls in the woods, does it make a sound?  Or in our homebuilding case, if your construction schedule adjusts and updates does anyone notice? Not if, but when your schedule changes and adjusts, are all impacted parties updated?  Is the actual work progress related to that schedule reported to all your employees, your subcontractors and your Homeowners?

Ask yourself these questions to make sure your scheduling technology is working for you and is not simply ‘busy work’ for someone in your office:

1. Who is in charge of creating the initial schedule?
2. Who is in charge of updating that schedule?
3. When scheduling changes occur, does your technology automatically contact (via email, etc.) the affected parties or do you need to make phone calls?  If it is automatic, is the contact information uploaded correctly so the program can send out the alerts?
4. Is there a process in place to produce a ‘Work Progress Report’ or summary of what ACTUALLY happened and is that summary getting to everyone in your company, your Homeowners, and your Tradesmen/Vendors?

As with any technology, you need to have a PROCESS in place to utilize the tool correctly.  Review your procedures and make sure you assign specific responsibilities via your Job Descriptions and Standard Operating Procedures.  Also, remember that the schedule only predicts the future – you want to have a process in place to create a historical record of what really happened on what day on your job.

So next time your project falls off track, first have your Project Manager record the events that caused the disturbance in a ‘work progress report’, and then update your computerized construction schedule.  Once your future timeline is adjusted, make sure someone in your organization is in charge of updating the rest of your Staff, the Homeowner, and your Vendors and Subcontractors.  If you have not purchased that new scheduling software, ask the vendor if their program automates these functions for you and make sure you take advantage if it does by programing the schedule properly in the first place.

Once all the above is functioning properly (and being overseen by responsible management), then your scheduling technology will pay you dividends.  Ensure you start with an accurate and complete schedule; update that schedule on a regular basis; communicate your updates to the appropriate parties in a systematic manner; and record actual work progress on a regular basis for your historical record.

Like many custom builders a few years ago, Scott Jerald was struggling to keep his business, ASJ Development (asjdevelopment.com), afloat. He searched for leads while finding ways to meet payroll each month. In October 2008, business slowed dramatically and three cancellations came within one month’s time. Layoffs soon followed, including the release of Jerald’s colleague who moved from out of state to work with Jerald in Georgia. The staff shrank from five to one.

As a builder averaging three to five homes a year, three cancellations was devastating to Jerald’s business; it was time for action. The military veteran recalled his Ranger days and thought, “A soldier always has a plan, a good soldier has a plan B and a great soldier has plan C,” he says. “So I started developing my course of action. I needed to retool my business.”

Jerald looked at his customer base and realized many of them were entrepreneurs — business owners — so he created an advisory board and asked a few of them to become members. “They told me I needed to invest in software, my processes, and logistical systems and combine them if possible,” he recalls.

Execute solutions

The solution to Jerald’s problem involved many sub-solutions, so he drew up plans for executing them. He invested in his business as suggested by his new advisers, beginning with accounting software, which he realized was not designed for a home builder.

“I looked at the ease of use, what my accounting costs were, and the fact that at year-end I still had to hire someone to go through my books to get them right. It was inefficient.

I put my criteria together and did a search.

A big item on my wish list was the ability for my accountant to spend no more than one hour to do my tax return. We ended up buying new software that accomplished it,” Jerald says.

The local university provided a critical part of the solution to Jerald’s accounting problems — an intern. He asked for a student chasing a CPA or master’s in finance degree. In exchange, he allowed professors to use his company information as material for a class project. “Now I have a bookkeeper who tries harder and comes to the table with no preconceived concept of how accounting software works. This way, the software is used how it’s supposed to be used,” he explains.

For other staff positions, Jerald took a line-item approach to putting people in place. For example, his quality control manager is a former client who retired from corporate America and needed something to do. As a line item on the budget, the part-time quality control manager ensures subcontractors adhere to agreed-upon performance standards. “He came in without much construction experience, which is good because he goes by the book and you can’t get anything by him,” Jerald notes.

The project manager is a former full-time employee who Jerald converted to a per-project line-item employee. Jerald even helped him establish his own business. He says, “This does a few things for me. It gives me arm’s length should there be an immigration issue. It also meets our IRS standards.”

Systemize everything

Most builders think they have a process, but not like the one Jerald established, which brought legitimacy to what he had been doing, he says. After seeing a presentation by Nate Schoen of Custom Builder Management Solutions (cbmssystems.com), Jerald was convinced he needed to implement the CBMS system full-bore. It improved his profits and increased his sales effectiveness.

“Most of my competition builds 3,000- to 5,000-sq.-ft. homes in eight to 10 months. With my new processes, I tell clients that if they go through my process, including how we make selections, I can guarantee delivery two months ahead of schedule from a construction standpoint,” he says. “I tell clients if the project cost is $800,000, take a look at the last two months of construction interest; I can save you that much money or I’ll pay it for you. A lot of that success comes from providing clients an initial questionnaire. And if the plans are in the design phase or they already have a set of plans, we go through each line, spec it out and put it in the contract,” Jerald explains.

Selection at Jerald’s company is an online process in which the client can drive the bus. Clients can ask a question about products, and vendors can upload information to the site where the client sees it automatically.

Schoen explains: “The homes [Jerald] built were complicated and the homeowners were often overwhelmed in the decision-making process. Even with the best set of construction drawings, there is obviously a ton of options and changes during construction. [Jerald] really didn’t have a way of tracking any of it. As a result, he and his staff were spending a lot of hours simply trying to track down decisions, quotes and other paperwork. Most businesses assume this chaos is just the way the building business is, but [Jerald] knew from his time in the Army that even amidst chaos, some sort of organizational structure and standard operating procedure could and should be implemented.”

The homeowner manual was the most effective tool CBMS provided, Schoen says. The goal of this tool is to provide a job description to the homeowner. In addition, it was intended to make sure ASJ Development’s SOP was clearly defined and in black and white for everyone to follow. “Our homeowner manual outlines the various meetings we would have, what homework was due at those meetings, and what the agenda was for those meetings and walk-throughs. We also made sure [Jerald’s] subcontractors understood the process we created for ASJ and would follow those rules if they wanted to work with ASJ,” Schoen says.

CBMS devised a decision-making schedule that allows homeowners to focus on choices one at a time before moving on to the next selection. By getting the homeowner organized, the entire operation became more efficient, Schoen notes.

Get it online

Web-based residential construction software for selections, scheduling and client communication, Co-Construct (coconstruct.com) is another system Jerald incorporated. “It makes me two hours more efficient in a day,” he insists. “It keeps things centralized in one location and avoids numerous e-mails and back-and-forth between me, subs and clients. Every action is logged and categorized in one spot. Vendors like it because, for example, my hardwood floor lady runs monthly specials and sometimes has leftovers. She can load that information and the client can see it and get access to a vendor early on, and have direct communication with them. It saves me time. I can still quarterback it and take control, however,” he says.

Co-Construct’s clients have been running successful businesses for a decade or more before implementing the software, but much of the operational detail is still in their heads, says Donny Wyatt, founder of Co-Construct. “Getting builders to document their clients’ selections can be a bigger task than they realize, since they never think about just how many details are between their ears and not on paper. Once they have it in the system, it’s obvious why it’s so easy to forget a detail out of what can be 100-plus decisions.”

The Co-Construct system works first through training videos to get started. For 80 percent of clients, the implementation steps work. For the other 20 percent who have different time constraints, different business models or some other extenuating circumstance, Co-Construct helps them create a different game plan. Wyatt then checks in on his customers as they get rolling to catch any little issues before they balloon.

Supporting clients is an open door to field questions from those who might need help. Weekly group webinars are held, Wyatt says, during which best practices are shared and questions are answered. “We help with everything from how to deal with vendor quotes on selections to larger issues about what level of detail to use on a schedule. Ultimately our clients walk away with their questions answered and more ideas to help them run their businesses better,” he adds.

“WITH my new processes, I tell clients that if they go through my process, including how we make selections, I can guarantee delivery two months ahead of schedule from a construction standpoint.”
Scott Jerald, ASJ Development

The result of this restructuring and system implementation is record performance for Jerald in 2010. Margins are better and Jerald’s pricing is less than his competition without sacrificing quality. “In fact it has become better. You only have one chance to lose your word, and that’s it, and we’re constantly getting better from a quality standpoint,” Jerald says. “We have five homes under construction and one about ready to start, and four plans getting ready for 2011.”