Unless you’re playing mini golf with your kids, successful golfers need to be good at both driving the ball off the tee and putting the ball across the green. Strength in one or the other is good, but likely still results in a frustrating afternoon. The same is true of homebuilding. Often, homebuilders pursue short-game results – closings, margin, etc. – at the expense of their long-game success.
Hitting projected closings in a month or a quarter is critical to maintaining control of cash flow and meeting buyers’ expectations. But accomplishing this by stacking trades on top of one another in a house to get it done isn’t sustainable. Quality suffers. Trade relations suffer. Construction Managers’ well-being suffers. And the expense doesn’t end here. Likely, long-term customer satisfaction and willingness to refer declines. Warranty spend per home increases. Trade bids go up, or, at the very least, a trades' best crew may be sent to another jobsite that isn’t as stressful. Plus, the cost of replacing outgoing staff with new hires is significant.
But getting your long game right doesn’t have to compromise short-term results. A systematic focus on reducing cycle-time and increasing consistency by attacking the issues that are causing variability and disruption will produce greater predictability. Greater predictability is often the precursor to lower costs. There are many factors at play that can contribute to variability, but the way you choose to build shouldn’t be one of them.
There are two schools of thought in homebuilding:
1. As the general contractor, the builder hires skilled labor and relies on that group of trades to make smart, informed decisions on how to build homes for that location, that buyer profile, that builder, and that price.
2. As the entity owning the relationship with the home buyer, the builder embraces the responsibility to decide how their homes are to be built, usually in collaboration with the trades, and hires the skilled labor to execute.
The first approach may deliver in the short term but makes long-term results uncertain. The second does not guarantee success but is far better at achieving lasting results that a company can anticipate and build upon. So the moral of the story is you really need to do both, as a laser focus on one will jeopardize your success with the other. Just ask a golfer... or heck, even the caddy!