Forget houses for a minute. If you’ve ever purchased a brand new vehicle from a dealership, the experience has probably been something like this:
- You arrive at the dealership at a preappointed time, where you’re met by your salesperson and/or sales manager.
- Your new vehicle is parked outside, and it’s ready for you. There is not a spec of dust or dirt anywhere. No scratches or chips, no missing parts. The gas tank full – it’s perfect.
- You are then given a demonstration of how all the bells and whistles in the vehicle operate. You’re told about anything special the manufacturer wants you to know, especially how important it is to schedule regular maintenance at the dealership, and exactly how to do it.
- After signing some paperwork that verifies that yes, indeed, you were told everything you needed to know. The vehicle is perfect (and so is the dealership ). You drive off in a car or truck that at that moment, is the absolute best it will ever be.
You did not expect to have to fix the fuel injectors or adjust a door that would not shut. Not wait until you got home to “hook up the radio,” or worse, use a roll of “blue tape” to point out the flaws in the vehicle’s paint job. You expected to drive off in something where all that and more was already taken care of and that is exactly what the dealership did for you.
Rethinking How We Deliver Homes:
By now, we builders should have learned a lot from how car dealerships deliver their product, but we haven’t. Instead, we torture our buyers, forcing them to take time off of work...a lot. Then we make them wait even more. And, we give them conflicting, often incorrect information every step of the way. Instead of confidence in us, we plant seeds of doubt. We’re pushing to close because we need the cash flow and they’re wondering, “Why aren’t the cabinet upgrades I ordered (and paid for) here? Why is the caulk (or grout) failing after a week or two and what else is going to go wrong with this house over the next 15-20-30 years that we’re paying this mortgage we can barely afford?"
Buyers are not the only people we torture. I was training our “daily walk” procedures (see below) at a client recently when we discovered something in a new home that wasn’t framed correctly. The framing needed major corrections, but the house had already had all its mechanicals roughed-in. Light switches, outlets, a thermostat location and a sink rough-in were all going to need to change, and those trades all faced with re-work, not to mention having to repeat inspections. Even if the builder paid them for the return trips you can bet it wasn’t enough. The good news is we found it when we did, because a day or two later that house was getting its drywall, then paint and millwork. The fix we uncovered was bad enough, but it would have been a lot worse.
Start Right to End Right:
Unfortunately there is no magic wand (and no single “App”) that will fix completion problems overnight. But there is a quality assurance protocol we teach that I promise you will allow you to *really finish* your houses on-time, on-budget, and defect-free, but you need the courage to take it seriously and fully adopt it. Are you ready? You have to START RIGHT to END RIGHT, and here’s the road map:
- Spend Enough Time Planning: It takes a minimum of 45-60 days and sometimes more to produce an accurate job start package and give your staff enough time to review it. If you’re bragging that you can “start a house a week after we get a sale,” you’re kidding yourself, your team, and your buyers. We call it “Build it Seven Times in Your Head” meaning: don’t start before everyone knows what they’re doing. Planning does not add time to a build. You’ll finish in the same time (or less) because every hour spent planning - really planning – will save you a day or more in the field. By the way, the pre-construction meeting with your buyer is part of this process, so when they ask you, “when are you going to start our house” the right answer is, ”we already have, we’re doing it now, and this is the most important part.”
- Slot Schedule and Evenflow: The fastest way out-of-business is selling and starting more homes than you can build efficiently and profitably. You might have enough sales, enough lots, and even enough masons and framers to start 10 houses/week, but if you only have one electrician and he can only wire two at a time, that’s your true capacity. A good slot scheduling system is like a crystal ball. It will let you see where the bottlenecks are going to be, as well as reliably predict when the houses in the pipeline are going to close. But it won’t magically multiply trade shortages.
- Create a Thorough, Accurate Job Start Package for EVERY house you build: It should include buyer and lot-specific plans, an accurate budget, selection sheets, permits, plat plans, scopes of work, construction schedule, and a set of the purchase orders. The more complete the job start package, the better the house will finish. And if you’re not using purchase orders yet, make that your Job1 project for 2020. A PO system is absolutely the best to control your direct costs.
- EPO Review Meeting: This is an in-person hand-off between purchasing/estimating and construction. Call it a “job start package review meeting” if you like. EPO means Estimated Purchase Orders but it’s really much more than that. The EPO meeting is the last, best chance for everyone on your team to get on the same page before construction begins, and should be the last activity on your pre-construction schedule for every job. We have a detailed EPO agenda and meeting guidelines that I’ll be happy to send to anyone reading this. Just drop me a line.
- Daily QA Walks: Once your team has reviewed the final job start package, slotted the house, and released the purchase/work orders, it’s time to make sure what you sold is what you build, on-time, on-budget, and defect-free. By far the best way is a 10-minute “Daily Walk” that happens in every single house, every day. Issues found are marked in the job (marking paint or blue tape), and they’re logged on a form which is then sent to all the subcontractors working on that job. Everyone is instructed to “do it now” if there is an issue it gets addressed immediately within in a few hours to a couple of days, and most often while the trade is still nearby. The documentation created lets everyone know that we are paying attention, and sets up a subtle competition to see who can complete their work the cleanest and best. The result are jobs that are always 100% ready for the next trade on the schedule. There’s a lot more to setting this up than I have room for here, so drop me a line if you want to know more.
- Jobsite Management Q&C: Your superintendents are one side of the quality assurance coin, but you and your production management team have an equally important job: Regular (but random) Quality and Conditions (Q&C) inspections of your sites and communities. This is a scored system we’ve developed whereby different aspects of the job are graded, and those grades generate an overall score for every project. Those scores become part of your bonus compensation program and are also used as training tools for everyone involved. Q&C is also something that every employee in your company can learn how to do. Instead of wasting an hour going to the “Olive Garden” for lunch, grab a sandwich, and go score a couple of jobs. This gets everyone out of the office and lets them see first-hand what your company produces.
- Internal Delivery: If you’ve made it to this point following our protocol, you’re near the end of the job and there should be next to nothing left to do before you can hand over the keys. But just like the new car dealer, you’re not going to bring in the buyer until you’re positive that is the case, with NO surprises. The way to do that is to deliver the completed house internally, to the company, before the buyer is involved. You will create a QA team or assign an inspector who will go through the house with a fine-toothed comb, following a master quality standard that you will develop for your company. The goal (in case you missed it) is to deliver exactly what was sold, on-time, on-budget, and defect-free. If the QC inspector finds open items, they are corrected immediately, BEFORE the buyer is brought back into the picture. This delivery is also what your production team is graded (and bonused) on. Once the master quality standard has been completed, you can “certify “ that home complete and ready for delivery.
- The HOOT: Finally, we bring the buyer back into the picture for their “Home Owner Orientation Tour” – the “HOOT”. The expectation of the buyer is that you have certified move-in ready home. This is exactly like a new car delivery, with a scripted demonstration of the operating features of the home, and a sign-off from the buyer (coupled with lots of photos) that there are no scratches, chips, smudges, missing items, the mechanical systems are all working as-expected and that every last cabinet, window, and door are operating perfectly. Even if your buyer has been under-foot daily, and even if they are using their own “home inspector” or other third-party, you conduct the HOOT exactly the same way. That way, if the buyer’s movers or decorators damage the house during the move-in process, you will have complete documentation of the “before.” This single thing practically eliminates the “endless warranty repairs” many builders finding themselves struggling for weeks or months to complete.
- Warranty the Right Way: So now, the buyer has taken possession of their new home. Finally, we’re back to warranty, Except this time, because we ran the above protocol and actually finished the house, any issues that pop up after the buyer moves in really will be legitimate warranty items and NOT failures because things were slammed in at the last minute, or that were damaged by the buyers’ movers and decorators (or the buyers’ kids). Now, if there is a legitimate warranty request, instead of the typical fiasco of trying to coordinate your “warranty guy” plus half a dozen subcontractors plus an unhappy customer who had to take a day (or more) off of work, your warranty techs can complete the repair themselves, on-the-spot, during their first visit. Builders who have spent decades doing it “the old way” are always skeptical of this because they’re used to the house requiring some major repair that a warranty tech would not be able to do, but here’s the difference. In our QA protocol, the major items like missing roof flashing, incorrectly sloped shower pan, wrong-sized patio steps or bad drywall seams, ARE still corrected by the trade that did the work. But they do it while they’re still on-the-job, back when the work was happening. HUGE difference. And if you were the buyer, who would you rather see at your door to do your warranty repair? Your trained technician in his company uniform and clean/branded van, or the framers, roofers, or drywallers you hired to build the house? I rest my case. Of course your warranty techs will need to be able to work with tools and be a “jack of all trades,” but the typical minor tightening, adjusting, and touching-up involved in most true warranty repairs should be well within his/her capability. Furthermore, a properly trained technician can reinforce the information your buyer heard during their HOOT. There’s no reason the average homeowner can’t learn how to adjust a cabinet door or even tighten up a dripping toilet supply, possibly avoiding the next warranty call altogether.
I have a lot more to tell you about rethinkng warranty service (like how to transform it from a 100% expense/liability to a 100% profit center/asset.) but that’s going to have to wait for another article. The main thing to remember is that by following a total QA protocol, both the number and the cost of your warranty service calls will plummet.
One last word of caution: a total QA program is not a menu where you can pick and choose. Everything I’ve lined out above (and a few I didn’t have room for) are important pieces of the puzzle. You have to do the whole thing. And be prepared for the naysayers. Until everyone can see the results for themselves, you’re likely to get push-back from both your trades and your employees. Hang tough – if you’re serious about change it will be well worth the effort.