Welcome to the first issue of Supply Side News
, the only newsletter focused solely on providing critical information for lowering costs in homebuilding.
In this issue, Builder Sourcing Corporation (BSC) introduces our commodity trackers to help builders work smarter. The BSC Lumber Cost Tracker monitors an average house pack's lumber cost by region, providing insight into how changes in the lumber market impact the actual cost of a home. We also monitor concrete and drywall.
In future issues, other commodities such as steel will be tracked. We provide cost management ideas and information on new or improved products - all with the goal of improving quality and reducing costs.
Please forward this newsletter to your colleagues who are also interested in buying smarter.
|In the News|
Construction Costs Expected To Rise In 2010
|Drywall Costs Lower By 8.7% From A Year Ago|
Cost dropped 4 months ago, now steady
Construction Costs Back On The Rise
Costs that had declined 7.5% in the 12 months ending 8/09 are on the rise
Lumber Production Set To Increase In 2010
The Engineered Wood Association is forecasting a production increase
Kwikset Smart Key Lockset Lowers Costs- Video
A lockset that builders can re-key in seconds lowers field costs & provides greater homeowner value
Delta Faucet Uses Pex - Video
Eliminates need for feed lines, zero lead, faster to install
Lumber Costs Rise In Dec., Up 11.2% & 23.8%
All markets were up, most change in the West
Concrete Cost Rose .1% In Dec., 3.2% For The Year
Cost of the aggregate drives up the costs
|BSC Drywall Cost TrackerDrywall cost dropped 4 months ago and now steady, down 8.7% vs. a year ago
|The price of a sheet of 4' x 12' x 1/2" drywall is now $9.39, down from $10.28. For an average house that uses 122 sheets, that is a current material cost of $1,150, down $105.|
Action: Should have received cost reductions in drywall, and if you have not received them, ask for one. Don't accept any increases.
|BSC Lumber Cost Tracker|
Lumber prices are considerably higher, industry capacity is lower
|Lumber prices rose in December, most significantly in the West. However, permanent reductions in capacity will create sourcing problems as markets improve.|
Source: Random Lengths, local market pricing, & BSC analysis for December, 2009, from a sample house pack of dimensional, OSB & stud lumber for a two-story, 2,030 sq/ft home
Lumber prices are experiencing a run up as low inventories clash with improving demand. This scenario will likely continue into 2010 as dealers remain cautious to increase inventories too quickly.
The lumber producers are concerned that the recovery is fragile and the overall economy too weak to justify a significant increase in production and inventory. Lack of credit is limiting dealers from buying as much as they would like. Thus, low inventory levels are to be expected.
The West experienced a higher than average price run-up because of severe cold weather, impacting production for an extended period of time.
Lumber Futures pricing would indicate price increases are to be expected.
Action: Consider longer-term locks on lumber purchases
If you would like a custom Lumber Index created and tracked for your specific product mix, contact us.
|BSC Ready-Mix Concrete Cost TrackerPrices continue to rise, 3.2% higher vs. a year ago
|The price of 3,000 psi Ready-Mix was up 0.1% in December and 3.2% over a year ago. A slab on grade, 4" pad for an average size 2 1/2 story home and driveway costs $9,300, and is up $300 over the prior year.|
Action: Continue to look for labor discounts from foundation contractors to offset the cost increase of the materials.
|Cost-Saving Tip - Benchmarking, a Precursor to Unbundling|
Unbundling costs leads to lower costs, but it takes time. Where should you start?
|A good starting point is to obtain cost benchmarks that can be used to compare the costs on the various house plans that you build. Then, focus attention on those trades whose costs come in higher than the benchmark.|
Benchmarks can be created by looking at costs on a $/square foot basis for some categories and on a modeled basis for others. Challenge all costs above the benchmark. Determine the value of bringing all costs down to the benchmark average and to the lowest cost available.
This analysis can be one of the fastest ways to lay out an unbundling game plan of which categories should come first.
|From The Supply Side - Engineered LumberLonger, stronger, straighter, stiffer, economical
|Engineered lumber is often compared to dimensional lumber and depending on the market, can cost more or less per linear foot. However, engineered lumber can allow spans to be longer without any sacrifice to strength. They also allow for a smoother surface with much less likelihood for squeaky or non-flat floors.|
For more information on exploring the cost and performance advantages of engineered wood I-Joists, contact us.
Nation's Largest Cost Management Group For Builders
Builder Sourcing is a professional services firm that works with builders to lower costs, including understanding and removing costs from the supply chain, establishing long-term lumber purchase agreements, creating strategic supplier relationships, streamlining and increasing value from manufacturers rebate and incentive programs, and lowering general and administrative, and systems costs.
For more information, visit www.buildersourcing.com.