Is Total Quality Construction really anything more than a good
point-up and punch-out? Isn't it just an expensive customer service feature that finds a
niche market ... and drives away cost-conscious buyers?
This is true for builders who layer customer service on top of business as usual. But builders who embrace Total Quality have a different approach. They use Total Quality to build more home for the money and reduce hard costs. It's a systematic approach that is far more precise and reliable than stripping features and squeezing trade contractors. How do Total Quality builders do it?
CUSTOMER-DRIVEN DESIGN FEATURES
First, they look at their design plans and determine which features are valuable and which are dead weight. Then they look for additional features that home buyers are willing to pay for.
Rather then rely solely on experience, they make design decisions on the basis of facts. Consider what can happen when you have actual data on what customers are willing to pay for specific features. Or if you know what features are selling in your market, for how much, and what the trends are. Or if you have the hard facts on what your and your competition's homebuyers liked and didn't like about their homes. Total Quality builders constantly survey the marketplace for this kind of information and use it to refine their design plans.
One builder that does this is Oakwood Homes of Englewood Colorado. During the last three years, Oakwood has used the Total Quality approach to reduce hard costs over six percent on entry-level homes while adding standard options of tile roofs, tile kitchen countertops, vinyl windows, upgrade kitchen appliances and plumbing fixtures. Total Quality paid off with gross margin per unit almost doubling and the sales volume increasing from 89 units in 1992 to 450 units in 1995.
EFFICIENT DESIGN PLANS
Streamlining construction is another way TQ builders reduce costs. Total Quality builders systematically involve construction and trade subcontractor teams in the search to find more efficient ways to build a home. This often includes changing dimensions to reduce waste, routing of mechanical systems for efficient installation, and the use of high-performance engineered products.
Mercedes Homes of Melborne, FL used this approach to remove over $5 in hard costs per square foot in 2,000-square-foot homes, without changes to the design flair or amenities. They reduced sales prices. Profits soared from improved margins and higher sales volume.
PREVENT PROBLEMS
Do your frame check and final punch-out lists have the same things on them as they did five years ago? The wasted time, effort and materials could make most builders rich.
Total Quality builders involve employees and subcontractors in an organized attack on waste and chronic problems. They use a formal system that analyzes the underlying causes of problems, develops solutions to prevent them from happening again, then follows up to see if the prevention effort worked. By preventing one problem at a time, punch-out lists become short.
Del Webb Sun City West allows trade contractors to keep savings from their problem prevention efforts. Over the last five years trade contractors have been able to maintain their job bid costs, even in the face of inflating material and labor costs. Would you like your price increases from the last five years to go straight to your bottom line also? In case you are wondering if defect free homes cost more, Del Webb in this same time period has reduced punch-out lists to an average of .25 (1/4) items per home.
Total Quality is the systematic approach to creating designs that customers want, that support an efficient building process and produces the highest value products at minimum costs. Next time you see a builder offering more home at a price that you think must be below their costs -- think again, maybe it's a Total Quality builder.