Making Time

WE ALL KNOW THAT time is money, making it easy to see that time wasted is money lost—and there may be no industry where that point is made more plainly than in home building.

Mark Hodges is the senior vice president for corporate operations at Hovnanian Enterprises, the nation's seventh largest home builder in 2005. Hovnanian's construction cycle time is typical for the industry: about 150 days per unit. But according to Hodges, for 75 or sometimes even as many as 100 of those 150 days, a typical house sits empty all day, with no critical-path work being done.

Given the money wrapped up in a house under construction, Hodges observes, each “empty-house day” costs a builder about $100—“and that's really a conservative number.” Multiply the forgone thousands per house by Hovnanian's 17,000-unit annual volume, he says, and it amounts to significant money.

Trickle-down delays. Where do the empty days come from? Every disruption in the original schedule, explains Hodges, ripples through later weeks of work. “Kick the schedule out one day,” he says, “and that costs you five—because the downstream subs can't react quickly enough to fill that gap that's been created. ‘Oh,' says the next outfit, ‘he can't come Monday? He's coming on Tuesday, and he'll finish on Thursday? Well, we can't come on Friday; we'll have to come Monday or Tuesday.' And then the third trade partner says, ‘I can't come on Wednesday; I'll have to come Friday or Monday.' You lose three or four additional days because there are three or four companies in play.”

BD061101156L1.jpgCLICK HERE FOR IMAGE GALLERY

BD061101156L1.jpgCLICK HERE FOR IMAGE GALLERY

SETTING THE GRADE: Excavators grade a lot next to a completed home at Hovnanian's Four Seasons neighborhood in Smithville, N.J. The company's evenflow system aims to start and complete a consistent number of units each month, for smooth, streamlined production.

MOVING MATERIALS: Timely delivery of materials—on time, but not too soon—is one key to avoiding confusion and delay. Hovnanian uses a centralized procurement system to purchase materials and schedule deliveries for its 400-plus ongoing projects.

SNAPPING OUT: Employees of the Toms River, N.J., firm Capoano Contractors snap layout lines for a framing crew.

SHOVEL WORK: Right, masons install brick siding on a home at Four Seasons. Above, another crew preps for flatwork at a nearby house. Keeping related trades actively employed, but out of each others' way, is the key production challenge for Hovnanian managers.

FINAL TOUCHES: As move-in dates approach, crews have to hustle to hit their schedule targets. Above, landscapers plant shrubs outside an already-sold unit.

BRANDING TIMELINESS: Kansas City–area builder Rick Westmoreland of Liberty Homes on site with his notebook computer. A wireless Internet card, Microsoft Project, and his JobsiteOnTime Web portal let him update job schedules and refer to plans and specs anytime, anywhere. Westmoreland says publishing detailed, current information online has cut his cell phone use to a bare minimum. His Web system is now available for other builders to use, for a monthly fee.

The cascade of delays can turn the whole management problem on its head, observes Hodges: “The schedule becomes absolutely unreliable and unpredictable. And then the trades tell you when they're coming, instead of you saying, ‘This is the day you need to be here.'”

Drive-by scheduling. Even worse is when the tradesmen don't learn that the schedule has slipped until they show up to work on a house that isn't ready. “Trade partners call them dry runs,” says Hodges. “It costs them money, and it costs us money. And if the trade partners can't rely on your schedule, they start going to the communities where builders do provide reliable schedules.” The builder who can't provide accurate info rmation ends up last in line.

Weather, breakdowns, accidents, or government red tape can foul up any schedule. But good management, says Hodges, can minimize the downstream effect. Hovnanian's reforms include two major innovations: centralized schedule updating and consolidation of trade partners.

Hovnanian's 400 neighborhoods are staffed by as many as 600 to 1,000 on-site superintendents (some projects are large enough to keep multiple supers busy). Says Hodges, “Perhaps 30 percent to 40 percent of any builder's construction managers are adept schedulers—people who know how to manage the critical path of a schedule.” To take that load off the field supervisors' shoulders, Hovnanian has brought the schedule management process into the company's central office.

“The field managers are not abdicating responsibility for the cycle time,” says Hodges. “But if you centrally schedule and procure materials, the construction manager's primary responsibility becomes updating the status of the homes under construction. The back office can manipulate those calendars, update the trade partners' schedules, schedule material deliveries, and produce more reliable lookaheads of when those homes will be ready for work.”

Construction supers are expected to update every house's status daily by 3:00 p.m.; Hovnanian's central office faxes and e-mails updated look-aheads at 6:00 p.m. the same day. Instead of field managers having to apply changes to complex house schedules and notify each trade partner individually, scheduling experts in Hovnanian's back office handle all the schedule reworking and notifying of trades. As a result, the company has cut the time its field managers spend on scheduling from three hours a day to just half an hour.

Hovnanian's second strategy is even more innovative and, according to Hodges, potentially more effective: bundling together the trades that are related, or those whose work overlaps. Explains Hodges, “If you can work with a trade partner who is both a plumber and an HVAC guy, and maybe even an electrician, you can hand the house to them when it's framed in, and they hand it back to you when you're ready to insulate it. Then they're accountable for that four-day or seven-day duration between framing and ready-to-insulate. And if house 16 missed a day because we failed the frame inspection, you only have to notify one guy.”

Combining trades under one umbrella also lets them work more efficiently around each other, he adds. “Right now the plumber often finds himself in the same house with the HVAC guy or the electrician, but not happily so—because they're different companies with different objectives. They're competitive. But imagine if they're all part of the same company, with accountability for a series of tasks—then they can begin to work within their own framework around how to reduce those durations.”

Hovnanian has already started implementing this concept by acquiring an HVAC contractor who is also a plumber and then adding an electrical firm to create a three-trade captive subcontractor. Hovnanian is also exploring a proposal to create a foundation and framing subcontractor, consolidating those phases of the work. Ideally, Hovnanian would like to see all the trades on site organized into three main clusters: One set that does foundations, framing, and exteriors; another set that does mechanicals and wiring; and a third set for drywall, paint, flooring, and interior finish. “Even if we can cut the number of trade contractors [in half] from 40 to 20 that will be a lot better,” Hodges says.

So how much ground has Hovnanian gained with its organizational reforms? “Unfortunately, that's impossible to answer, because the improvement is often shrouded by other factors,” says Hodges—“for example, municipalities not inspecting in a timely way or buyers making customized changes that interrupt the cycle. But we do know that where we centrally schedule and procure and provide more reliable schedules, we reduce empty-house days. And we have much happier community construction managers, who can now spend their days walking their homes to make sure they're being built with quality, rather than sitting in their trailer all day long calling the sheet rocker, saying ‘don't come Thursday, come Friday.'”

Smaller companies may lack the market power of a big player such as Hovnanian to purchase entire trade contractors and determine those companies' structure and methods. But a midsize builder can still take advantage of dynamic, real-time scheduling—and with spectacular results.

Rick Westmoreland's company, Kansas City–based Liberty Homes, is a case in point. Westmoreland and partners Rick Stroder and Joe Duffy started the company from scratch on April 1, 2000—“I thought April Fool's Day was a fitting day to become a home builder,” he quips—and built about a dozen houses in their first year. Doubling its volume each year, Liberty Homes was the nation's 14th fastest-growing builder in 2004. Six years into the game, Liberty is now the 10th largest builder in its Kansas City market and builds about 150 units a year.

For most of that time, Westmoreland has been the company's only on-site construction supervisor. With four neighborhoods now under development in different municipalities, he currently manages construction with the help of one superintendent, plus a Quality Assurance Manager who inspects the homes at various checkpoints during construction. Even more remarkably, Westmoreland claims: “Since we started the company, we have built more than 1,200 homes, and we have never missed a closing date. Not once.”

How does he do it? Every project is comprehensively scheduled in detail, and schedules are updated almost daily. But communication is key: Since Westmoreland began posting daily schedule updates on his company's custom-designed Web site (www.jobsiteontime.com), Liberty Homes' subcontractors have found it much easier to perform to expectations—and, he says, his own work has become far easier and less stressful.

Timelines are intrinsic to the building process. Comments Westmoreland, “I've never met a builder who didn't know how to create a basic schedule for any project. It's just a matter of sequencing your flow of tasks.”

But in most cases, it's a skill that goes undeveloped. Many builders never invest the time to create refined or detailed versions of their rough timelines. That's because schedules seldom survive their first encounter with jobsite reality. Westmoreland says he asks every builder he meets whether the builder owns a copy of Microsoft (MS) Project. “Most of them say, ‘Yeah, I bought it a couple years ago. But it's sitting on the shelf. By the time I get a schedule all figured out and I let everybody know, the schedule has always changed. So after a while, I just said, forget the schedule, I'll just do it all on the phone.'”

But for Westmoreland, creating the detailed schedule is just the beginning. To function, the schedule has to be continually revised to reflect progress (or lack of progress) on the job. Then, those updates have to be communicated to everyone involved.

As long ago as the 1980s, Westmoreland says, he was captivated by the potential of scheduling software. “I had a little remodeling company way back in 1989,” he remembers. “I was using Timeline 4 by Symantec on an old DOS-driven computer. And I thought, ‘Wow, this is so cool.' If I could get that schedule information organized and manipulate it, it was amazing how much more productivity I had.”

He says that the more detailed the formal schedule is, the more it helps him. “My little brain can only handle so much,” he jokes. Today, his MS Project schedules encompass 150 to 200 time-interdependent tasks per house. “You have to excavate a hole, then you get the foundation in, then you install the ground rough [underground water supply and drain lines], etc., all the way through to the final clean and changing the construction lock to a permanent lock and turning it over to the homeowner.”

MS Project links the dates of interdependent tasks. Completion of roof sheathing, for instance, can trigger the start date for roofing. “Everything in my schedule is link-driven,” says Westmoreland. “I have a start date for the schedule, and I don't have any other dates that are fixed. I've got every task in my schedule set to start ‘as soon as possible'—with the exception of delivering materials. I want materials delivered as late as possible, so they're not sitting there on the jobsite over a weekend or something.” If completion of the framing is delayed, for example, MS Project will automatically change all the start dates for subsequent tasks.

The automatic updating makes schedule revision a snap. But it's the Internet that brings the real power to Westmoreland's method. He tried MS Project's “Team Inbox” function to send e-mail updates to all his subcontractors, but that quickly proved too cumbersome: “Subcontractors would get an e-mail every time the schedule changed. Well, if you're doing 25 or 30 houses at one time, and there are at least 150 specific tasks per job, one subcontractor might be assigned to 300 tasks at any given time. So every time the schedule changed he'd get 300 e-mails.” Worse yet, the system required the subs to open and respond to each e-mail. “I was getting back 4,000 e-mails a day,” says Westmoreland. “I really didn't like that.”

In the end, Westmoreland hired an IT contractor to build him a custom Web site linked to a database server. He can still create and maintain his updated master schedules on his own desktop computer or on the notebook computer he carries in the field. With the click of a button, a small program on his PC takes the data from MS Project and uploads it to the Web database.

As Westmoreland goes on his daily rounds, he updates the “percent complete” status of each task in his tablet computer; that evening, he pushes his data to the Web and each subcontractor's individual tasks automatically update. “I don't have to try to remember what's supposed to happen next or remember who I called and told them to be there on Wednesday,” he says.

At the online portal, Westmoreland's trade allies can view only the tasks assigned to them, sorting the information by house, by neighborhood, or by start date. Along with the schedules, Westmoreland also posts 11-inch-by-17-inch house plans in PDF format, and specs that provide any details not included in the plans. “We make a framing plan, a plumbing plan, an electrical plan—every trade ally gets to see the plan that applies to their trade,” he says. “And if something goes wrong, everybody knows whose fault it was. There's no verbal communication—it's all written down in the schedule, the plan, or the specs. And if they forget to bring it with them, they can go to the jobsite trailer and download another printout.”

When he hits his stride, Westmoreland says, he can sometimes reverse the process of cascading delays: Continual updates mean that gains in the schedule can also be passed along to advance future start dates. “Suppose it's a beautiful weekend and the framer decides to work Saturday,” he explains. “Well, maybe the electrician or the plumber can get in a little earlier too.” Westmoreland has never built a house in four days (see “A House in Four Days?” page 160), but for one rush job he did complete a 3,500-square-foot house in 47 days. “We had to do a lot of things right to make that work,” he says.

“Ticklers” in the job schedules alert Westmoreland's office manager to query customers about optional upgrades or other decisions. Buyers also get their own access privileges to view the status of their jobs, cutting down on telephone work in the office. And the Realtors who serve as Westmoreland's salesforce in the Realtor-driven Kansas City market also have access to continually updated schedules, enabling them to handle many customer queries and to sell spec homes in progress more effectively.

His system has been so successful, he says, that his subs and suppliers have been asking him how they can get their other builder customers to use it. In response, Westmoreland has invested tens of thousands of dollars in upgrading his Web site to allow secure access for other builders to post their own schedules and other documents. Westmoreland's public-access version of his Web site rolled out in late September.

Use of the Web interface costs $25 per month for each house a builder logs into the system. One benchmark, however, might be for builders to consider the value of time saved talking on the phone. Says Westmoreland, “These days, my total cell phone minutes are less than 100 a month. Before I developed and implemented my Web site, they were in the thousands.”

You can only squeeze so many days out of a construction schedule. But the limits on how fast a house can be constructed may be far lower than most builders imagine. Says Hovnanian's Mark Hodges, “We built a 2,000-square-foot single-family home once in four-and-a-half days. And we didn't do anything radically different—we just assigned work differently. So, for example, the electrician prewired the entire house with seven people in about 90 minutes. Normally, that's a three-man crew, and they take a day and a half or two days. But when one worker goes around the house nailing the outlet boxes while another is in the garage installing the panel and starting to fish the wires up into the rafters, a third person is just pulling wire, and a fourth is snipping the wire and hooking it into the outlets. When they delegate their tasks differently, they are much more efficient and much faster.” The insulating crew completed its work in 30 minutes, says Hodges. “One person was measuring the bays for the insulation, another was cutting it, and a third was installing it.”

Hovnanian devoted a single supervisor to the house for the entire week that it was under construction, says Hodges. “He told me, ‘This is the single best house I've ever built, because I was in it every single minute of every day.' We had zero defect items on that house.” In theory, Hodges points out, “If I give him four weeks of vacation, he can build me 48 perfect houses a year—one a week [the company average is 30 houses per supervisor per year]. Now, that doesn't include winter; it doesn't include a lot of things. But it's a very interesting notion.” ted cushman