Running a smarter business: 50 ways builders waste money
By John Kirchner
December 2, 2010
It’s fair to say that home builders are more worried about cash flow and cost efficiencies today than ever before. It’s a necessity. After all, that botched foundation pour, costly callback, or unchecked billing error could mean the difference between making or breaking a wafer-thin margin.
Which makes it all the more mystifying that so many builders continue to leave money on the table, or—as some expert observers and peers will tell you—commit the operational equivalent of throwing a pile of cash into a dumpster and setting it ablaze. Even in the most brutal of economic conditions, capital is being squandered in some amazing and clueless ways.
A while back, Builder magazine published a report on 50 ways builders waste money. It’s a great write-up, and we thought we’d share some of the highlights here. If you have any of your own ideas, share them in the comments section:
- Overlook lot orientation: For expediency’s sake, builders most often orient their lots based on the street grid. But the truth is that the single biggest move you can make toward energy efficiency is to orient your house for maximum benefit based on the sun and the breeze.
- Estimate lazily: Tighten your estimating with better framing details and work with your lumber dealer to optimize your frame packages to reduce your waste factor to 5 percent or less. Apply the same discipline to sheathing, drywall, interior trim, and siding to reduce the “lazy tax” of those hard costs, too.
- Send all your construction waste to the dump: Deconstruction expert Paul Hughes of Fairfax, Va., salvages or recycles up to 85 percent of a teardown, while Columbia, S.C., architect Mark Bostic turns the lumber waste and clearing debris of his new-home projects into landscape mulch and erosion control material.
- Give your customers an invitation to comparison shop: There’s a way to be honest about costs without giving away the farm. Specify a standard set of default products and include them in the base price of the home, advises building consultant Chuck Shinn.
- Neglect your website: Sure, you can save a few bucks without a webmaster to update your site periodically, but consider that surfing the Net for new homes is the first step in the process for about a third of all buyers, and 94 percent of them use it as a tool to search and refine their home buying choices.
Read the rest at Builder Online. What other smart cost-saving measures have you implemented?