The Housing Chronicles Blog: The collegial nature of the building industry

Monday, January 14, 2008

The collegial nature of the building industry

When people are quick to blame "greedy developers" for some much more complicated issue, I get a little protective because I've found people who work in the building industry to be among the most supportive -- even among direct competitors -- in my working life (and I've worked at Disneyland, at a university, in entertainment, at a hospital and an S&L, all of which one would think would allow for easy networking opportunities). I have several direct competitors whom I see at various events, and count many of them as former colleagues and (current) friends.

So it's interesting that Builder magazine Editorial Director Boyce Thompson takes on this subject in his most recent blog post. By offering each other advice at several builder roundtables in Chicago hosted by Boyce, here are some shared insights into surviving a bleak time:

  • Re-writing job descriptions. They are asking their people to wear multiple hats and moving managers down to contact level with customers, suppliers, and subcontractors. Well-capitalized builders are examining functions that they outsource with an eye toward bringing them in-house. Others are making necessary personnel reductions to improve cash flow.
  • Building homes faster. Many are bringing their subcontractors and suppliers in for meetings to talk about how they can work more effectively together. They are providing subcontractors with better information on tightened schedules. They are asking subcontractors to work together and are monitoring jobsites more closely.
  • Value-engineering their designs. Builders are taking wasted space out of houses, removing vaulted space, extra bedrooms, and rarely used formal rooms. They have engaged in classic value engineering--trying to achieve the same architectural look with less-expensive products. But many have also developed new sets of smaller plans, because this is the most effective way to save on direct construction costs.
  • Lowering direct construction costs. Recent home price declines have led to redoubled efforts to lower direct construction costs. Builders have negotiated additional savings with subcontractors and suppliers. They have improved scopes of work, subcontractor walk-throughs, and quality control to lower their costs per square foot.
  • Positioning their company for recovery. If history is any guide, the turnaround, when it comes, will be swift. Builders want to make sure they are ready. They are upgrading managers and changing incentive plans to hold on to key employees. Many are entitling land so that it's ready for building once the market turns.
More insights can be gleaned from the BuildTV series in Chicago, which can be found here.

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