Spring selling and spring training go together as an exciting time, as renewed expectations run high in both arenas. Even as new communities open and sales pace starts strong, reminders help keep us grounded in the real world. The goal to be a financially profitable home builder may start with a land deal, but eventually, whether that occurs or not always comes down to how things play out on the job site.
Getting it right is getting many many little things right, and in the end, making it so that the buyer gets overall value expressed in four primary pillar attributes, three of which date back to Roman engineer and builder Vitruvius: firmitas [solid], utilitas [useful], venustas [beautiful], and, for good measure, throw in a forth value pillar, parabilis [affordable].
Getting it right in the Spring of 2017 means getting products and materials installed right so that they perform as they’re intended, which is part of how a builder ultimately delivers that overall value of durability, function, aesthetic appeal, and economy.
Take insulation, for instance.
Insulation, the product, is made to perform at a certain level, and, providing it’s installed right, it will achieve that level. Taken together, if all the products and materials your tradesmen and women assemble and install are done right, chances are your home buyer customer will be getting that value they’re expecting on their side of the sales equation.
This post, from Halifax, Canada-based building science and technology expert Shawna Henderson explains that if insulation is installed right it nestles evenly, touching all six sides of the cavity into which it’s placed. That goes for walls and joists as well as for floors. Henderson points out that improperly installed batt insulation leaves gaps and voids and areas of compression in the cavity. Then, the product doesn’t perform as it should, and, undiscovered, it can have an immediate impact on the home buyer’s benefit of function and economy, and eventually durability and aesthetic appeal. Henderson writes the reasons here:
- Conduction is heat loss through solids
- Uninsulated surfaces lose heat primarily through conduction from warm side to cold side
- Conductive heat loss can be slowed down by isolating the exposed surfaces from temperature differences
- Insulation works by slows down the rate of conductive heat loss
- Insulation must be in contact with the exposed surfaces to ‘share’ it’s poor conductive properties
- Where there is no insulation, heat loss will continue until both sides of the surface are at thermal equilibrium
This is an instance where one little dollar-level installation error can turn into a many-dollar problem impacting the envelope system of a home. Of course, one of the ways to avoid that many-dollar problem is to do it right the first time, which the Insulation Institute designates as Grade I installation–“without an moderate or substantial defects.”
While Grade 1 installation should be the norm in the residential building industry, there are instances where it is not. The result of a sub-par installation is a home that doesn’t perform to its potential—which unfortunately reflects poorly on builders, installers and insulation manufacturers alike.
The reason this comes up is this. Builders are selling more new homes this year than last, and both last year and the year before stressed labor capacity to deliver homes on schedule and on budget. When there are stresses on costs and construction cycle time, what tends to happen is that quality suffers. Priorities around installation and assembly emphasize speed in workflow management, to maintain margins despite pressure on expenditures of direct cost money and completion dates.
A strategy that builders have adopted to try to keep both quality and predictable cost in their construction workflows, enabling them to model gross margins consistently, is some form of even-flow production. This involves a plan to start a certain number of homes and complete a certain number of homes on a consistent metered basis, irrespective of the rates of absorption, pre-sale or spec sale.
This way, builders start and complete a home based on their ability to meet a profitability and a quality standard that is repeatable, delivering homes to home buyers with a promise of durability, function, aesthetic appeal, and economy. This even-flow template is a win for builder because it removes cost and time variability, allowing it to sustain its margins across time; it’s a win for the home buyer who gets what she or he wants and expects. And, importantly, it’s a win for the 25 or so different trades who come in and either assemble or install the respective parts of each home’s structure or its systems, because they can predict their business flow, their need for laborers, and their purchase of materials to be assembled or installed, allowing them to be profitable as well.
We see new-home inventories starting to climb slowly toward a more ideal level–about six months’ supply–as more builders re-gear their operations models to an even-flow production schedule. This creates more “ready to purchase and move in” inventory, which eliminates some of the profits builders make on giving home shoppers options and upgrade flexibility and choice. What builders have found is that there’s a stream of buyers for both types of operational model–pre-sales and spec sales.
But, during a period of constrained skilled labor supply and evidence of a large, pent-up well of demand who sense that now may be the time to buy and move into a new home, the speculative, even-flow model is proving to be a compelling way to discipline cost, time, and quality and make it a win for builder, buyer, and trades, one job site, and one small part of the home system at a time.
Now, who’s up to batt? What’s on the warranty list? And nobody loses. Nevermind who’s on first.
