The Five Scariest Trends Facing Custom Home builders
In today’s soft market can you really afford to continue to ignore the trends that are threatening your very livelihood? The answer is NO! With the housing market down, materials at an all time high and interest rates increasing, let’s face it. It is getting harder to stay in business each year.
It must be frustrating for you at times and if you are like most other custom home builders we know… you’re even losing sleep over it. You are not alone and because we care about your success (and your sleep) we hired a fortune 500 research firm to examine your industry. We found some very interesting information you are going to want to check out for yourself.
The Five Scariest Trends Facing Custom Home builders That Threaten Your Livelihood
Rising costs of raw materials and transportation bottlenecks are at an all time high
Experienced craftsman are being forced out of the industry
Not solving your clients biggest problems
Failing to partner with the right vendors can get you sued
Not properly understanding today’s homeowner trends
Let’s look at each of these 5 trends a little more closely to be sure you understand.
1. Rising costs of raw materials and transportation bottlenecks
Logistics is the part of the supply chain process that plans, implements, and controls the efficient flow of goods, services, and related information to fulfill customers’ requirements.
Efficient management of construction material planning tasks requires an integrated approach toward various logistical functions.
In particular, the fundamental construction operations of facilities, inventory control, and communication planning need to be closely coordinated.
2. Experienced craftsman are being forced out of the industry
The growth in building activity through 2005, the departure from the workforce of older tradesmen and the decline in apprenticeship programs have led to shortages of skilled labor.
More than 150 occupations -- in crafts, technology and business -- are required to build a home according to the Home Builders Institute. The industry employed 6.7 million workers in 2001 and an additional 1.5 million are needed by 2010 just to sustain productivity.
High-tech jobs, law and medicine offer more glitz and glamour than the grit and grime a construction site has to offer. Since 1997, computer careers have occupied the top 10 positions while construction work ranks a dismal 247th. This according to the National Business Employment Weekly almanac of the top 250 occupations.
3. Not solving your clients biggest problems
To be successful, construction managers must realize that their firms will survive ONLY if they provide value to their customers and that value is provided with superior business practices. This includes a thorough investigation of what customers want and what is important to them.
Construction managers need to work closely with architects so that they both give the customer comfort, appeal and quality at the right price.
4. Failing to partner with the right vendors can get you sued
Unfortunately, disputes occur between owners and contractors (and contractors and subcontractors) during a building project that can lead to the courthouse.
Construction and engineering firms average $31 million annually on litigation, according to the 2006 Litigation Trends Survey conducted by international law firm, Fulbright & Jaworski LLP.
That amount does not include the ultimate case settlement or judgment payments—or time spent in deposition and testimony.
5. Not properly understanding today’s homeowner trends
To be successful, construction managers must realize that their firms will survive ONLY if they provide value to their customers. That value is provided with superior business practices, including a thorough investigation of what customers want and what is important to them.
Construction managers need to work closely with architects so that they both give the customer comfort, appeal and quality at the right price.
5 Ways You Can Reverse These Trends, Get More Business And Even More Sleep!
(1) MEASURE TWICE, CUT ONCE WILL REVERSE THE TREND OF RAW MATERIAL AND TRANSPORATION COSTS!
Avoid making costly transportation mistakes. There isn’t enough time to make sloppy mistakes. WE live in a “Now” world and not paying attention to the details could mean shipping product twice. Make sure what you are ordering is correct and the companies you partner with have a good understanding of exactly what you need.
Make sure that the companies you purchase from have a good freight damage replacement policy. Sometimes shipping twice isn’t your fault. When shipping freight on an LTL level your product may be handled 10-20 times throughout a freight companies’ system. It is also vital to make sure that the vendor you are purchasing from packages the product well enough to minimize freight damage.
Partnering with the right vendors from the inception of a project is important to make sure that both the vendor and the builder have an understanding of when the products will be needed. This could be the difference of meeting your deadline to close and having the homeowner walk away from the deal should the project not being finished.
(2) NOT GOING QUIETLY WILL KEEP YOU FROM BECOMING AN EXTINCT CRAFTSMAN!
This trend of skilled craftsmen being forced out of the industry allows you to do what you do best. Having skilled craftsmen on your team plays to your advantage when competing against lesser skilled and lower bid competitors.
It is extremely important that you communicate to your potential clients how important it is to hire skilled craftsmen. Make sure your clients understand just how crucial craftsmen are when building their home. This gives you a distinct advantage in assuring that their house is built to your skilled standards.
Remember, there is no substitute for the skilled eye and steady hand of an experienced craftsman…but your clients won’t know that unless you continually communicate it.
(3) CREATING SOLUTIONS WILL SOLVE YOUR CLIENTS TWO BIGGEST PROBLEMS!
Can you help overcome the “boxiness” and “plainness” of my home? There are too many blah and boring apartments or homes without decoration. These environments have flourished due to the construction of thousands of “cookie-cutter” subdivisions where every house looks almost the same.
Can you add a rich and vintage look to my home? “Rich and vintage” is gaining popularity today because of the huge push in older building and vintage home renovations. Many of these older buildings are very stylized, decorated with architectural details, ornamentation and millwork. Making them look like the people living there are wealthy. Details add beauty, character and a time-less quality which helps to accentuate other design elements and add value.
Homes reflect the homeowner’s sense of self worth, ego and pride. The answer to both of those questions should be “YES” or “ABSOLUTELY”.
(4) SELECTING KEY PARTNERSHIPS WILL MINIMIZE YOUR RISKS
Collaborating with others is necessary to make money today. One of the larger chapters of the AIA (American Institute of Architects) organized a forum which identified a list of the top trends and made proposals and recommendations for 2007 and beyond.
Three of the most important conclusions & recommendations were:
Building owners are weary of finger pointing between designers and constructors. The survivors in the industry of 2007 will be architects, engineers and contractors who practice partnering at the inception of projects.
Clients want the design profession and the construction industry to supply more information. The clients want to see not only plans, but also detailed costs, benchmarks, operating expenses, facility management data, etc. Clients are interested in projects that are ON TIME, and ON BUDGET. But, they also want QUALITY products that will LAST.
To provide these items, the forum suggested that contractors and architects consider partnering with materials vendors. This way they have a better chance of delivering clients great products with warranties that are on time and on budget.
(5) UNDERSTANDING HOMEOWNER TRENDS MAKE YOU MORE MARKETABLE
A big trend is millwork and architectural details. These include columns, balustrades, moldings and many other fine points.
These items provide the following benefits:
People get the rich, vintage look they are after
Details & millwork add character to the home
Millwork and other architectural elements have a timeless quality and beauty
Millwork and other architectural elements increase a home’s value immensely
The architectural pieces accentuate other design elements such as archways and barrel-vaulted ceilings
Curved & bendable moldings allow for more versatility in design than ever before
Homes built or designed with architectural details can earn a premium of up to 30%. Architectural details have been popular for years, and statistics show they are becoming even more popular in the 21st Century. Although value is difficult to compute, a recent nationwide building society survey found that buyers pay a premium of up to 30% for properties with more “character” – defined in the survey as architectural details, ornamentation and moulding/millwork. How much of this premium your clients can earn depends on how much character you build or design into the home.