Tag Archives: Production Homebuilding

Bounty Towels & Building Homes

What can we learn from the retail industry and apply to building homes?

What’s in a bar code?

We may not wonder any more why bar codes are on packaging as we shop at a store, but in reality this way of information tracking is relatively new. ¬†In June of 1974, the first U.P.C. scanner was installed at a Marsh’s supermarket in Troy, Ohio. The first product to have a bar code included was a packet of Wrigley’s gum.

The process is relatively simple, in that an optical reader device scans an item and the associative data is then pass onto the logistical parties in order to keep the store shelves filled. However, having proper formatting of data and agreed upon industry standards took some 20+ years. What retailers soon discovered, is that the more integrated their supply chains were with information, the less errors were experienced, quicker fulfillment times of orders occurred, and less man-hours incurred per dollar of revenue was achieved. In other words, they developed a very highly efficient supply chain model with a single pull-through triggering mechanism, that being the bar code.

 

Single Trigger Event Pull-Through Model for Retailers

Consolidation of Retailers In The 1980′s

As we entered the second decade of bar code scanning and single trigger envent tracking, Walmart had revenues of 1 billion, and 276 outlets in 11 states. Today, Walmart has sales of $421 billion and 8,970 locations worldwide. This type of unprecidented growth came from geographical expansion, and at the expense of smaller retailers that were not able to track their sales as efficiently. Mass retailers such as Walgreens and Target, realized the power of information tracking and automating their processes with Electronic Data Exchanges (EDI) in order to conduct more transactions with less resources. ¬†In fact, the reality is that we are able to sustain a standard of living much higher than pre-1980′s due to a highly mechanized means of¬†delivering¬†products to market.

Measuring Productivity of the Construction Industry*

The productivity of the construction industry, as measured by constant contract dollars of new construction work per hourly work hour, has gradually declined (with some modest exceptions) over the past 40 years at an average compound rate of -0.59%/year (see Figure 1). This is particularly alarming when compared to the increasing labor productivity in all non-farm industries, which have experienced an increasing productivity of 1.77%/year over the same time period. Over the past decade, this trend has slightly improved but the decline in construction labor productivity relative to the rest of the industry has continued.

This is a serious problem which indicates that over the past 40 years, construction projects have required significantly more field work hours per dollar of contract. In other words, the¬†construction industry seriously lags other industries in developing and applying labor saving ideas and in finding ways to substitute equipment for labor. While there are a number of construction tasks that have been made more productive through the use of labor saving equipment, it is clear that, looking at the whole industry, there is a significant productivity problem. Why is this the case and what can be done about it? First, let’s review the productivity data shown in Figure 1. ¬† (read more)

Figure 1. Labor productivity index for US construction industry and all non-farm industries from 1964 through 2003.

*From: Labor Productivity Declines in the Construction Industry: Causes and Remedies, Paul Teicholz, Ph.D. Professor (Research) Emeritus, Dept. of Civil and Environmental Engineering, Stanford University

Where is The Single Trigger Event (Bar Codes) for Home Building?

Now, the next question is where is my bar code for building the home? If that’s your question, then we’re beginning to make great strides into the next evolution of building homes. This would not have been possible if it were not for the advent of just a few key ingrediants:

  • Internet
  • Building Information Modeling (BIM)
  • Application Programming Interface (API)
  • Web Based Store Front

The model is relatively simple, in that all information for building the home must be linked to any and all retail areas for a home builder. This means that data that is incurred in the design process must be associated with the builder’s marketing materials on the web (ie store front). Think of it if you will, the home builder’s web site is their retail store and that any purchasing activities will need to be done in their store. Once a customer buys the product, then the needed data is then exported through API’s into the appropriate areas to fulfill the transaction.

This model does not mean that builders are  going to do away with sales agents, models, and other traditional areas of home building. What is does mean, is that the information that is developed from Building Information Modeling (BIM), can now be linked to web-based interfaces such as floor plan options, Sales CRM, builders suppliers, and others. The single trigger event pull-through strategy (ie bar code), allows for all transactions to be interconnected with each other only if the event occurs. So in doing so, information flows according to Figure 2.

ÔĽŅFigure 2 – Purchase of a home and affiliated options triggered by customer, allows for pulling through of labor and materials with information created up stream in the design stage with BIM through the supply chain network.

In summary, we are in the midst of the most exciting times for home building in the ¬†history of the United States. We are being confronted with razor thin¬†profit margins in a time that productivity is at rock bottom. In order to deal with single digit profit margins and high Sales General and Administration (S G & A) costs, we must automate our processes. This can be done with coordination of both design and material specifications through BIM. Once the data is formatted, it can then be passed to a builder’s admin system for both material and labor pricing and scheduling to construct a home. Of course, this transaction gets triggered by the online selection process by a home owner either with a designer and/or sales agent. Once we begin to emulate other industry’s ways to improve productivity, then we’ll see better profit margins in the future of home building. The future is bright!

 

 

 

 

 

 

 

Life, Home Building, A Cup of Coffee

In last few months, I have had a few friends pass away at very early ages. Nothing like having someone close to you or a good friend pass away to put perspective in our lives.

Enjoy The Coffee

¬†As we all grind away in the Home Building Industry, it’s easy to have pity parties and talk about the “good ol’e days”. To be stuck in the past will only delay the reform that must take place in our industry. For these are the by-products of tough times:
  • Innovation
  • New Products & Services
  • Steamlining of Processes
  • Efficiencies

After the space race and world wars, we as a nation had developed many new products that we use today due the pressures in those eras.

So, let us all look upon these trying times as a source to grow and appreciate the day, our work, our friends, our family, and this GREAT country.

This clip is beneficial for all of us. Enjoy!

Perfection vs. Excellence

Learning About The Process Of Integration – Witnessing Perfection

‚ÄúStriving for excellence motivates you; striving for perfection is demoralizing‚ÄĚ – Harriet Beryl Braiker

jordan final shot

Jordan's Final Shot

Do you remember Michael Jordan’s last shot against the Utah Jazz in 1998 that clinched the championship? Certainly, this was a brief moment of perfection in the making.

As we are continuing our efforts to integrate a very fragmented construction process with our task force, we are reminded about our end goal. That is to achieve a process that aligns all party’s interests, that will enable the¬†dissemination of information to trades, builders, manufacturers, distributors, and the market in such a manner that has these three key areas realized:

  • Velocity – speed to market in such a fashion that unit pricing coincides with energy rating and market demand
  • Accuracy – that the market research through online analytics supports justification of new floor plans to go to market and to have¬†accurate construction documents that reduces material waste and field errors
  • Results – that key performance metrics are met.

This reminds me of what it takes for the likes of a Michael Jordan to achieve such greatness as an athlete. For he certainly needed to be fast, accurate, and score points for his team to be victorious. However, I don’t believe there was a day in his career that he felt he had reached perfection. As should we all be constantly willing to pay the price of practice, work, research, risk, or any other element to push the envelop of constant improvement in our lives.

For me, I believe we can witness and/or attain perfection but for a moment. This is what I believe the difference is between excellence and perfection. It is the love of our trade, craft, profession, sport, relationships, and any other areas in our lives that allows us to endure the pain associated with the attainment of goals. These goals are often associated with excellence as defined by constant improvement and the disdain for mediocrity.

On that note, here’s a great clip that shows Brad Pit catching a fish in a near impossible situation. His (character’s)¬†love and dedication of the sport allowed him to be in that very brief moment of perfection:

Is It Really Time to Buy A New Home Again?

So what is real right now? Is the waiting over?

What is real is that market conditions truly are beginning to point to a return to new home demand. Here is what we know:

  • Cost to rent is up significantly
  • Home prices are way down
  • Foreclosures are slowing
  • New jobs are being created
  • New build numbers are at levels not seen in a decade

All of these indicators point to an oncoming demand for renters to move across the street to a new home of their own. The time is coming for families and couples to get back into the game. New homes being built will be a large part of that story.

In non distressed markets, jobs creation is showing some good growth. Rents and home prices are rising at about the same pace as apartments are in short supply. As resale home inventory is becomes thinned out, people will realize how few new home builds are available currently, only 78,000 in 41 cities studies by Metrostudy. That is down from 343,00 units at the peak! And is down from a decade ago as well. Construction is ripe to take off!

Even in distressed foreclosure markets like Phoenix, the outlook is indeed looking better. Investors have been an important part of buying through distressed properties. Families that have been displaced are moving into homes as renters, further reducing the number of homes on the resale market. Most importanly, foreclosures are slowing. We will hit some bumps, but the overarching story is that the health of the resale market is beginning to return. New construction will follow suit!

For several years the fundamental of cost to own vs. cost to rent along with new build levels has given a number that indicates an unhealthy market but for the first time in a long time, it would appear that that number is going in the opposite direction. One where confidence returns, home valuations rise, the American Dream becomes attainable once again.

To read a full article explaining why new home demand is on the near horizon, please read this informative article.

Market Watch - Sales of new homes up

Additional news from Builder Pulse,  Market Watch and Arizona Republic.

Who is your Most Profitable Home Buyer in 2011!

Who are they? What are they buying? How are they buying?

Finding a home buyer in this market can make grown men and women cry. It ľs OK, we don ľt judge… But now it ľs time to put away the Kleenex. After doing some digging, we have the news you want to hear. Are you ready? There are customers out there, it ľs true, that can bring you optimal profit this year!

We heard your cries and we wanted to take them as a challenge to find out just who these buyers are; what they look like, their wish lists, and what homes you should offer to draw them to your table. Turns out these customers are very knowable indeed. Furthermore, the home they are looking to buy is very specific.¬†In this post we will take a look at the characteristics of the buyer, characteristics of the home, and the process of buying a home to learn more about the current market‚Äôs potential ‚Äúoptimal profit‚ÄĚ customer.

Click the “more” link below to see for yourself YOUR most profitable home buyer in 2011 (Kleenex not required).
read more »

How Do We Sell More Homes Together in 2011?

Selling More Homes in 2011

With a warm and heartfelt Happy New Year, we at The Contrado Group, look forward to serving the Home Building industry in 2011, starting with a campaign in Dialog Marketing. The concept of Dialog Marketing is all about connecting on a personal level with customers who will purchase because your company resonates with them enabling you to differentiate yourself and stand out as a leader in the marketplace.

  • What Dialog Marketing is:
  • Relationship driven
  • Bi-Directional Communication
  • Engaging in relevant conversations
  • Permission based
  • What Dialog Marketing is not:
  • Shotgun messaging in traditional media formats
  • Push Marketing
  • Lack of research about the client or prospect
  • Expensive

See Wikipedia’s dialog marketing definition for yourself.

The topics that we  explore will be chosen by you!

Dialog Marketing invites your customers to connect, foster ongoing relationships and forge new ones.¬†The purpose of this message is exactly that.¬†¬†I‚Äôm inviting you to be part of this discussion, contribute¬†at your discretion and learn from others in your industry.¬† Let’s work together!

The topics covered will be chosen by you.  We plan to research and blend comments of previously blogged topics that will be made available after each topic is introduced. So, to get started, please vote on the suggested topics below that are most critical for your business this year and feel free to suggest additional topics:

Which topics are most important to you?










You will be able to log onto our website (www.thecontradogroup.com) to view our blogs and survey results of each topic. Our goal is grow our businesses together for 2011!!!

Built in Wordpress — Fueled by The Contrado Group