Home builders face the challenge of relying heavily on their team and trade contractors to ensure the delivery of a quality home on time and on budget. With the improvement of the general economic conditions and the housing market, now is the time to establish my Builder of Choice™ principles, practices and systems to become a well run, profit-oriented builder, attracting high-caliber staff, trades and vendors. (Click here to see the principles.)

Here are some basic steps you can take to get started.

Re-Implement strong systems

During the recession and the soft recovery, builders abandoned established systems, procedures, and processes in the battle to obtain sales and keep the doors open. The housing market cratered more than 80%, builders did anything for a sale and to survive. Now, builders need to work on re-establishing sales processes, selection processes, purchasing procedures, construction schedules, variance controls, quality checklists, trade and supplier contracts, scopes of work, and proactive warranty procedures. Since these were abandoned during the downturn, it is important to establish discipline to assure the re-implementation.

Re-Staff

Industry experts offer thoughts, predictions and advice for builders in 2015. 

Despite the anemic growth in single family starts during 2014, the last several months of the year have revealed some strengthening activity. I am forecasting about 16% increase for 2015, improving throughout the year. Labor shortages and material / labor price issues will reappear, as will the lack of qualified employees. There will be a dire need to train both existing and new staff as you strive to improve operations and become a profit oriented builder. To be successful, it will become imperative to adopt Builder of Choice™ principles as you refine procedures and processes to become more efficient and consistent in your operations and also to become more attractive to the trades.

Chuck Shinn, Builder Partnerships

Improve reporting to help managers make better decisions in the uncertain market.

1. Review the accounting structure to ensure it facilitates the calculation of metrics and preparation of reports
2. Identify key metrics to track the health of the organization on an on-going basis to include each of the eight major operational components
3. Determine a target for each of the metrics selected
4. Determine how the metrics should be calculated
5. Determine who will be responsible for measuring and reporting the metrics
6. Determine the course of action to follow if the metric is not meeting the target

Emma Shinn, Builder Partnerships

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You may not have heard of augmented reality, but you probably already know what it is. If you've ever watched a football game and seen the yellow first-down line on the screen, you've seen augmented reality. That line doesn't exist in the real world, only on your TV set.

In recent years, augmented reality has taken huge leaps beyond a simple yellow line, and now it is possible for builders to show potential buyers how their home will look on an empty lot. Not through a film or rendering on their computer, but while they stand at the curb, looking at the lot. How?

Consider this. A buyer can hold a tablet computer in front of them, pointed at the empty lot. On it will appear the house. As they move the tablet, they can see all elements of the house, even as they walk around to the back yard. It is also possible to walk through the front door, stand in the entry hall, and see the interior of the house. While they stand in the middle of an empty lot, holding a tablet.

This is probably the most robust use of augmented reality for builders, but it can enhance the sales process in so many ways, and help differentiate your company from your competition. Any buyer is going to remember this buying experience.

This article is a high-level summary of our recent research on the homebuilding industry. The entire report is available through Cleveland Research Co. Builder Partnerships members can also purchase the report directly through the Builder Partnerships member site.

Our recent work suggests builders are likely to see continued pressure on costs into 2015. This includes price increases from building material suppliers and labor, as well as increasing land costs (more in 2015 than seen in 2014 as low-cost land inventory is getting used up). This continued cost pressure and less average selling price (ASP) progress year/year suggest gross margin pressure for builders in 2015, as well as some risk to consensus expectations. 

Homebuilders are faced with many challenges these days, such as lot shortages, used home supply, a more sophisticated homebuyer, increased regulations and stiff competition. On top of this, we are seeing more and more Architectural Review Boards (ARB) involved in the planning process. Homebuilders are responding by utilizing an authentic approach to architectural design.

When we speak of authentic, most people conjure up traditional architectural styles, such as Craftsman, French Country, Coastal Modern, Contemporary and Mediterranean. No doubt these are authentic styles, but I'd like to talk about the use of architectural elements that make up these styles. If used in an appropriate way, the designer can develop a variety of façade designs which homebuyers aspire to live in and that will fly through the most difficult ARB.

According to our annual survey of our members, builders are doing well and have set plans for growth in 2015 even though the market has been somewhat stagnant in 2014. The average number of units projected for our members has increased slightly, pushing our average sized builder to over 125 units annually.

Of our builders surveyed, 85 percent are planning to build new models within the next six months, which is a large increase over last years' 51 percent. Many (71 percent) plan to release new home designs as well. Most builders will increase price in 2015, while maintaining size and energy efficient offerings. The charts below offer details based on the responses received. 

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One of the biggest challenges facing builders in 2015 will be getting their new and inexperienced staff trained to meet the increasing demands of the market place. To help builders succeed, Builder Partnerships has put together a complete calendar of seminars designed to get your staff up to speed. Check out these options in Denver, Atlanta, and Chicago. 

The Superintendent's Job-Front Line Manager
February 12 - 14, 2015
Atlanta, Ga.

For more information, click here.

Purchasing, Estimating and Job Costing
February 18-20, 2015
Denver, Colo.

For more information, click here.

Managing for Profit
March 11-13, 2015
Denver, Colo.

For more information, click here.

Purchasing, Estimating and Job Costing
September 23-25, 2015
Chicago, Ill.

For more information, click here.

The Superintendent's Job-Front Line Manager
October 23-25, 2015
Chicago, Ill.

For more information, click here.

Managing for Profit
November 4-6, 2015
Chicago, Ill.

For more information, click here.  

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