By Ed Hauck, Builder Partnerships
A builder achieves Builder of Choice status when suppliers and trades want to work for you over all the other builders in your market. They want to work for you, will send the best crews, and give you the best price. This can be worth 5 to 10% in lower costs compared to your competition. The best crews can take several days off a build schedule. If you do this with every supplier and trade, you can significantly lower your direct construction costs and decrease your cycle time.
This should be the first thing you talk about when you meet with a supplier or trade. You need to sell the efficiency of your operation. By the end of that meeting, they should want to work with you over any of the other builder in your market.
I have spent a lot of time working with suppliers and trades trying to understand how to help lower builders’ costs. Dry runs are by far the biggest issue. Always have your site clean and ready on the scheduled date so they can complete their job. Every date scheduled on your site should be money in the bank to a trade.
Good detailed plans and scopes of work are critical for trades to accurately bid and perform the task timely and profitably. Plans sometimes have errors. Make sure plan errors are addressed quickly and updated plans reissued to the trades in a timely manner.
A good process will help trades do their job right the first time. Start orders, purchase orders, takes offs and selections need to be complete, accurate, and easy to understand. The order should be sent out with plenty of lead time so they can process the order.
Master schedules are extremely helpful for trades help trades to manage crews to meet your schedules. Make sure you allow them the proper lead time and the correct duration to complete the task.
Trade portals are becoming the preferred communication method. All the information trades need should be available on your portal. If you have a portal, consider hosting a meeting and teach trades how to use it. Let them know what information is available and when you post updates. Make sure the right people in their operation have the appropriate access.
Back charges are sometimes a necessary part of life. If you need to, make sure trades know the details in advance. The best method can be to create the team atmosphere on site. I like to make sure everybody knows everybody on site so you have better odds they work well together. A Pre-construction meeting with the crews can help.
Believe it or not, pay can come at the bottom of their list. I have heard from trades about builders who pay every week, but the trade can never complete the job so he can’t get paid. That’s why everything we just reviewed is so important. Pay process and cycle should be detailed in your contract. Make sure trades and suppliers know the submittal process so you are not wasting time for either party.
The final step in the negotiation process is convincing your suppliers and trades—who include builder inefficiencies in their cost of doing business—that you are the Builder of Choice. Then, you need to show the benefit of your efficient operation, and that working with you means they can take those costs out of the bid. If you truly are a Builder of Choice, they will make more money on your site with lower pricing.
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Ed Hauck is a 30-Year veteran of the building industry. Most recently, Ed was a Partner of Rouse Chamberlin Ltd and Director of Purchasing for Rouse Chamberlin Homes. He spent 20 years working in the company to oversee operations, purchasing and other special projects. Recently, his main focus had been on value engineering, implementing energy efficiency processes to meet NAHB codes and standards and streamlining processes within the organization. In 2011, Ed served as president of the Home Builders Association of Bucks/Montgomery Counties. With Builder Partnerships, Ed’s main goal is to reach out to our builder members to assist them with understanding the different programs and support Builder Partnerships offers.