New Rule No. 2: Design Intelligently
Most reports on innovative plans by builders like Meritage Homes, KB, and Shea herald their open spaces and the ways that rooms can be repurposed as the occupants’ needs change. But those weren’t headlines to the lumberyard-based designers that we consulted. A big shower but no tub in the master bathroom? Check. Wide-open living areas? Done. “Jack and Jill” bedrooms that share a bath placed between them? No surprise.
That’s not the whole story, though. Big builders are finally embracing optimum value engineering, erecting homes that use fewer sticks but maintain their architectural integrity. The savings can be substantial: According to NAHB, framing on 19.2-inch instead of 16-inch centers can save up to a third of the framing lumber needed, while eliminating the second top plate in a 24×40-foot home reduces the amount of wood needed by 35 sticks. Even better, the extra space between the studs helps a builder’s green claims, because it enables a contractor to put in extra insulation, and while homeowners won’t pay for more sticks in a wall, they will pay for a higher R-rating.
Ellis, whose consultancy helps big builders improve their efficiency, says the challenge for big builders is to get out of a mindset that favors tracking dollars rather than materials. “The industry has raised contract managers, not cost managers,” he says. “The assumption is that if they get three or four bids, they must have the best price.” The other result, he says, is completed lots with $800 worth of lumber left over, sometimes to be grabbed for other projects, sometimes to be stolen outright, only rarely to be returned.
Ellis says builders also are trying harder to avoid potential design overkill. One common example occurs when a framer builds a wall panel capable of bearing the load of the truss overhead while the truss manufacturer produces a truss that doesn’t need that wall panel’s support. “It’s not an unsafe building, but it’s got more [engineering strength built into it] than it needs,” Ellis says.
For most of the new designs, especially on the outside, one difference is obvious: Big builders’ new homes are dead simple. The foundations are boxy, gables are a rarity, and cathedral and tray ceilings are practically nonexistent. That’s a trend that might never extend to smaller builders. When the decision is left up to consumers, such as when they pick plans through an online service managed by a sister company to ProSales (see story, page 22), gables and special ceilings are the kinds of features that customers clamor to get.
“I still get asked to design some pretty amazing things,” says Rasmussen of Schoeneman’s. “It’s tough to talk people out of making homes more expensive.” But when firms like M/I homes are selling places in some markets that cost just $120,000 for 1,265 square feet, the fact that none of its ceilings top 9 feet becomes less relevant.
New Rule No. 3: Limit Choice
The award-winning designs that architect Mike Woodley has created for Shea and others have garnered attention for how they’ve reimagined homes based on the desires of younger buyers. “We’d go into houses that had a formal living room and dining room and we’d see a pool table in them,” he says. “[Younger buyers] don’t always want to do houses that look like grandma’s house … or even their parents.”
Equally as notable was how Woodley kept costs down by standardizing. His Spaces series has just three window sizes, and the variations permitted for the line’s kitchen cabinets are as regimented as the homes he designed for a military base in Hawaii.
At 84, McCrobie says other builders are doing the same thing. “They’ll have only a couple of different window types rather than five or six,” he says. “That way, they have less overhead and can go to material suppliers like us to work on buying right.
“Builder grade isn’t cheaper” these days, McCrobie says. “It’s just more consistent.”
New Rule No. 4: Operate Differently
“Among big builders, the days of trying to use cheaper goods has passed,” Ellis says. “Now they’re looking at processes.” Builders are figuring out how to reduce the number of days it takes to put up a home. For instance, Meritage Homes has reduced its cycle time by 31 days, so it now takes just 120-150 days from point of sale through construction to delivery of the home.
Sometimes, a dealer can cut a builder’s costs and help itself in the bargain. Ellis recalls one meeting in which a buying group of mid-sized builders determined that the typical number of trips a dealer needed to make to supply a project could be slashed from the current eight to as few as two, or at least four if one assumes a few miscues.
If a dealer charges $150 per trip for each home project, eliminating four unnecessary trips can save a builder $600, Ellis notes. “If you look at that over the total number of houses you’re building, you say ‘Wow.'” Meanwhile, the dealer benefits because its trucks aren’t tied up on a single project.
In Denver, where Builders. runs a pro yard, operations head Chad Anderson and estimator Rich Rohr say they’ve been working with some builders–especially those with projects in the Rockies–that are sensible about limiting deliveries. But that effort isn’t global; some builders lack space or have too much fear of theft to permit fewer deliveries of what amount to larger loads. It seems some big builder trends might never trickle down
