Author Archives: Lauren Hughes

How home builders find savings by implementing software and deploying integrated and automated services for building tasks.

Our client’s success is our number one priority. Money matters a lot in homebuilding, every dollar counts, and beyond improving your product offering, finding the right land to build on and acquiring resources for the right price – investing in a homebuilding system that’s truly integrated could be the investment to save you money and resources in the long run.

As you will see, our findings show that an average home builder producing 200 homes at an average selling price of $350,000 and approximately 30 employees can profit from integrated management software by improving hours of ineffective process and optimizing the margins of their operations. We have taken a conservative estimate for wages and for all other variables, and this standard is based on decades of industry experience with hundreds of home builders using Constellation software in their business.

Profits during the Building Cycle

Calculating Field Construction and Sales Operations Savings

The industry standard index dictates that the average building firm of 30 employees about 10 percent would be directly involved in the construction process (3 employees), each builder would be compensated an average of 25 dollars. Due to improved data flows between the head office and on-site builders, each builder will save 4 hours per work week since manual paperwork is eliminated. Considering a 50-hour work week. It is estimated Builders can save an average $15,000 per year.

Hours per week saved due to automation = 4 Hours

X

Weeks worked per year excluding weekends = 50 weeks

X

Hourly wage = $25 Dollars

X

How many builder/ superintendents employed = 3 Builders

TOTAL Savings Per Working Year = $15,000

Calculating savings due to Reduced cycle time due to field integrations

More importantly, the amount of savings created from improved communication between builders and trades is around $90,000 dollars per year. A builder invests significant capital in terms of labor for each extra day a home sits on a lot incomplete. With the new and improved scheduling capabilities integrated back into your accounting process, expect a 6-day decrease in your home build cycle which ultimately cuts costs.

Number of homes built yearly = 200 Homes

X

Number of reduced cycle days for builds = 6 Days

X

Estimated cost per day when a home is under construction = $75

TOTAL Savings Per Working Year = $90,000

For more on NEWSTAR’s Scheduling benefits with on-location scheduling, see how DSLD Homes accomplishes a 43-day building cycle on each home, try “5 Keys to Effective Trade Management”

Calculating improved margins from field integration/scheduling

The biggest return on investment procured from the construction process will come from integrating your field operations with your schedules. Considering the 200 homes built annually by our sample builder with a 2% savings in upgrade costs averaging to about $ 35,000 per home closed – a building company can find new revenue of $ 140,000 simply by paying attention to the productivity of model upgrades and ensuring that the product upgrade process fits perfectly within your existing construction and trade management process.

Average upgrade revenue (option dollars) per closing = $35,000 Dollars

X

Improved options margins with field integration/scheduling = 4%

X

Number of employees = 30 employees

TOTAL Savings Per Working Year = $140,000

Savings Generated from Minimizing Back Office Manual Work

Calculating Home Closing Entry

Builders/superintendents are each spending 4 hours weekly processing POs. Within a company of 30 people, 1 person works full time administrating work orders and 1 person also helps on a part-time basis. At the end of the year, having a manual process is costing you roughly $ 7,500. As an integrated technology provider for home builders, our concern is the build process. An inconsistent process will also incur the builder running costs from building errors.

Hours spent weekly per builder Processing invoices/work order/PO’s = 4 Hours

X

Working weeks = 50 Weeks

X

employees are allocated to Invoice/PO/Work Order Processing = 1.5 Employees

X

Hourly wage = $25 Dollars

TOTAL Savings Per Working Year = $7,500

Calculating Hidden Costs, controlling committed cost

Industry hidden costs accumulate over the year from work order processes lacking accuracy in capturing billable and back charge items, keeping consistent to contracted pricing, consistency with buyer selections, and timely ordering and delivery of resources. With integrated software from warranty, to sales, keeping a steady schedule all the way to accounting. Our prospect builder will save $ 87,500 per year while creating an impactful home buying experience to earn them future referrals.

Average base home sales price = $350,000 Dollars

X

Industry % – Hidden Costs, controlling committed cost = 25%

X

Number of homes built yearly = 200 Homes

X

Conservative adjustment = 50 %

TOTAL Savings Per Working Year = $ 87,500

Revenue Generated from Improved Process for Interior Decor Upgrades  

Design center appointments are the new expectation when buying a new home. The secret to increased revenue for interior upgrades is to offer your homeowners enough customization to please them without sacrificing your automated process. For example, our customers are finding improved appointment productivity with our new product, Design Studio Manager. With a standardized décor center selections process that promotes relevant products to your homeowners, it is estimated that a NEWSTAR user with a Design Studio Manager integration is earning $15,250 dollars yearly (seems low; overall per year or per house per year? Or per week?). $5,250 dollars in earned revenue from having a software system that promotes your upgrade products logically. While the remaining $10,000 is saved money calculated by the manual process your décor agents would have spent selecting products for your homeowners manually.

Calculating Design Studio Revenue Savings

Time savings from integrated design software = 1 Hour weekly

X

Number of homes built yearly = 200 Homes

X

Hourly wage of a designer = $50 Hourly

+

Upgrade revenue per closing = $ 35,000

X

Percentage increase for optional upgrades = 15%

TOTAL Savings Per Working Year = $ 10,000 + $5,250 = $15,250

 

Savings While Providing Homeowner Care and a Simple Buying Experience

Closer to home sale, builders on average are spending 2 hours with each new homeowner drafting contracts / coming to a sale agreement and 1.5 hours entering home close information. Over the course of a year – the prospect builder would have invested $17,500 for a task that otherwise could be automated. With NEWSTAR, expect sales selections to update in the accounting main module for the real-time budgets analysis and current financial terms. Also, home walkthroughs can be completed on-site with NEWSTAR’s on-location warranty module that directly integrates with the scheduling and accounting departments in case of late-extras or any final adjustments for the fastest reaction time possible.

Calculating Warranty Process Savings

Homebuyer Agreements – Hours spent per home = 2 Hours

X

Number of homes built yearly = 200 Homes

X

Hourly wage = $25 Dollars

+

Hours eliminated from automated home closing entry = 1.5 Hours

X

Number of homes built yearly = 200 Homes

X

Hourly wage = $25 Dollars

TOTAL Savings Per Working Year = $10,000 + $7,500 = $17,500


The Verdict

After examining our clients and their financial performance before and after their NEWSTAR implementation. A home builder producing 200 homes yearly will save $363,625. Over the long term, the return on investment for implementing an integrated software solution comes to $1,818,125 in just 5 years. We acknowledge that all homebuilders are different and operate under many different variables. With the help of industry experts, we have created an ROI calculator to help you customize your potential revenue that is possible with software implementation. Calculate Your Savings today.

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Build the rhythm of the future in Nashville, Tennessee at the largest software conference for home builders. Join builders from across the USA & Canada for education, networking, and interactive seminars.

The home building industry’s software event of the year! The Build Smarter 2018 Conference takes place in Nashville, Tennessee from October 3 – 5. The Constellation Team has expanded the learning curriculum with new education sessions, added new keynotes and panel discussions, and is expecting the biggest turnout to date. Here are the top 5 reasons to register.

Join +300 Prominent Builders

Constellation HomeBuilder System’s provides mission-critical software to 75 of the top 200 homebuilders from North America. Expect 300+ builders from various markets, all with unique product offerings, building processes and technologies. What is bringing all these companies together is their profound desire for innovation in building techniques. Our clients understand business growth comes from the necessity to innovate and automate. The Build Smarter 2018 Conference is the right event for builders of all sizes seeking to grow, enhance their organizational practices and to educate their team members. It is also a great way to see how your peers are leveraging Constellation software.

New Homebuilder University Track

New to this year’s conference agenda is our Home Builder University Sessions. We have partnered with leading homebuilders and market experts to bring you educational sessions. For example, you can join DSLD Homes to learn how a tight schedule allows them to build a home in 43 days.

For scheduling advice, and an overview on the DSLD Homes Builder University Session, also try “ 5 Keys to Effective Trade Management” by Ali Hallak, Marketing Associate.

Our keynote speaker Tim Sullivan from Meyers research will also be leading a Builder University session. Tim brings more than 33 years of experience in analyzing and valuing real estate development opportunities across the United States. Bringing an empirical perspective to our Builder University track, Sullivan will present on local trends and statistics for four hot markets and will lead roundtable discussions on strategic implications of these market forces. These are but a few of the many newly added sessions to provide you with deep insight and innovative ideas.

Accelerate Your Career with Software Training

According to a popular study conducted by the National Association of Home Builders, NAHB found that 88% of public and private homebuilders implement software solutions for internal management and 80% leverage technology for project management and staff communication. These results are not surprising to us, we are consistently supporting many homebuilders with these same solutions while ensuring their systems are truly integrated. Our conference will have 60+ software training sessions. As the largest leading systems provider for home builders – software training at our conference goes a long way in developing your role at your building firm and beyond in the industry.

Revamped Tech Lab

Drop in at any time to ask “HOW TO…” in YOUR system. Our team can load your data and work through your questions directly. Our experts will fill in any software knowledge gaps on the spot. Discuss new projects and work through new ideas in YOUR system together with the software experts. Our solutions are developed by the recommendations and hands-on feedback from our clients – and we appreciate the opportunity to listen!

Nashville, the City of Music

Come for the education, stay for the nightly entertainment. Join us for great food, nightly outings, and see where these memorable nights can lead you. Our team is hard at work to reserve for you the best venues to socialize and kickback. It’s music city, you can bet we have something fun planned with dancing and live music. Perhaps we can all go to Blake Shelton’s new place, Ole Red, there will be many options to choose from and you don’t want to miss out. Also, possibly consider staying the weekend in Nashville by bringing your loved ones with a few of our guest passes. If late nights are not for you, then consider touring the history-rich city of Nashville from their guided tours, we recommend you stop by the Cheekwood Estate and Garden for a breathtaking view and a great history lesson, maybe even visit the Country Music Hall of Fame and Museum for the real musical experience of Nashville.

The Verdict

There are many reasons to come to our Build Smarter 2018 Conference in Nashville this year. Having a hard time convincing your management? Share this article! There is educational and training content for every building department to learn something new. Bring your new knowledge back and share with your whole team.

Remember: Every dollar spent on conference registration fees is a dollar that can be applied to future software purchases. Click here for details.

Join us at the Build Smarter 2018 Conference

When: October 3 – 5

Where: JW Marriott Nashville | 201 8th Avenue South, Nashville, Tennessee 37203 USA

For agenda & registration: Click Here

Sources

“Builders’ and Remodelers’ Use of Information Technology” By Paul Emrath, Ph.D. Economics and Housing Policy | NAHB.org

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Designed from the ground up, industry leading education. Innovative products. Inspirational ideas.

Home building meets innovation – what’s available at PCBC 2018 and how it impacts YOU.

The 2018 PCBC tradeshow is just around the corner! This building show has so much to offer and Constellation HomeBuilder Systems is excited to be an exhibitor at the show. We look forward to seeing how the building industry has grown. From project management to artificial intelligence, we are in the market to support home builders and developers to help them build smarter.

Here are some important things to consider during your time at PCBC:

It’s a Big Event

The nation’s top 350 manufacturers and suppliers in the homebuilding industry will be showcasing their latest innovations. Plus, the show gives you access to 10,000 leading builders, developers, contractors, architects, capital sources and key housing professionals. Even if you are not a purchaser, you can surely meet a few interesting professionals that can spark your next big development.

Home Building Meets Design and Technology

PCBC isn’t your ordinary builder show: it focuses on innovation, design trends, and pushing the industry’s capacity for effective building practices. Important topics of discussion for builders will involve:

Modular Construction – Investing in a growing building technique just in time to meet current market needs and labor shortages. Presented by Bryce Hall, Principal at KEPHART a prominent architectural and design firm. Our team looks forward to this session as many of our software users leveraging our many scheduling features would take an interest. Our customers are always looking to improve scheduling workflows between trades and team members, modular building practices is an important part of that dynamic.

Rising Housing Rates and a Recovery Economy – Rick Palacios JR, Director of John Burns Real Estate Consulting will cover current market dynamics and what they mean for builders and their homeowners.

Attainability – In this seminar, you will hear about the hike in housing prices today due to high demand, steep land costs, and surging material costs. Ron Nestor of WHA Architects will dive in to explore the effects of these issues and how builders are implementing design strategies for cost-effectiveness.

Customer First – This session will be presented by a profound marketing professional in the building industry, Teri Slavik-Tsuyuki. Customers are rejecting the same old established ways of providing homeowner care. Homeowners want a brand experience to go along with their home. This is another great session that our customer experience team will look forward to. Customer experience is a core value within all of our technology solutions. Our software goes beyond simply enhancing the customer experience – we help you use feedback from your customers to improve your overall process.

For more on effective homeowner care strategies post-home sale, try “Reduce Risk of a Cancellation” by Lauren Hughes, Marketing Manager in The Home Building Industry.

Green Building – Construction that limits a builder’s footprint not only makes a positive impact on our environment but can also provide economic benefits. Wes Sullens from the U.S. Green Building Council has the latest news in the sector.

The Verdict

This year, our involvement in the PCBC show is unique. Our team of software specialists and management will be present on-site for any technology-related questions. Whether you are interested in an integrated software solution, are having issues within a specific building function, or simply interested in how we are pioneering the ability for builders to build smarter. You can find us on the show floor, booth 1844.

Visit us at PCBC 2018 – Your Ticket is On Us

When: June 27 – 28

Where: The Moscone Center, San Francisco, CA | BOOTH # 1844

For your complimentary ticket: Click Here

To schedule a building solution consultation: Meet us the Key Buyers Club

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Trouble finding quality trades? Keeping them? Here’s how scheduling & process can improve your collaboration with trades and suppliers.

Working with trades and suppliers can be challenging. Across the country, trade shortages are making it difficult to find and retain good people. From lack of communication in the field all the way to scheduling issues, we consistently hear that builders find it difficult to integrate trades into their business process.  Here are 5 keys to effective trade management.

People & Culture Matter – Think about your trade base as an extension to your builder family. it’s important to compare the cost of labor from your contractors – it’s just as important to nurture those relationships by committing with them over the span of several project. This establishes trust with contractors and lets them know they can depend on you for a fair working standard. Building trust and controlling your trade base could mean a better negotiation stance when contracting trades that could also save you money.

Strengthen Your Company Framework – Establish a strong supply chain for building resources, this is a defining factor that determines how desirable you are as a partner to work with. News travels fast, trade commitment goes hand in hand with a builders’ internal structure and how steady their operations are. Making sure you have a steady supply chain makes you an attractive employer for trades as they can count on you for future work. Since trade professionals are a scarcity, so is their time. You can bet your trades base is constantly checking on whether their investment in time to the revenue generated for the work complete is even worth it.

Establish a Standardized Scheduling Process – High volume production builders implement a co-dependent scheduling process with a “payment upon completion” system with their trades. A walk-through process upon each task should be incorporated into the build schedule, once all issues are resolved, the contractor receives their exact payment 2 days later. With co-dependent tasks accounted for in your work flows with fast payment implemented, you are ensuring a home is built in a logical order and that your trades complete the job on time with quality. For example, if your frame is set to go up by vendor A, then the schedule for vendor B, who oversees roofing should be dependent on vendor A’s schedule. At the end of it all, automated payments incentivize your trade base for collaboration with you and with each other while respecting your set schedule.

Technology and company goals should be complimentary – Give your trades enough trust and the right process to get the job done on time but ensure an efficient work load for each partner by delegating tasks they excel in. Always maintain control over the schedule. It is a common issue where trades do not commit to the established plan and other trade tasks get pushed back, this can cost you as late-extras occur when tasks are not completed in a defined order. We recommend a fixed scheduling software solution that works by “leader tasks”. This ensures that during the rare times of schedule shifts co-dependent trade tasks shift accordingly. Having technology in place that sets clear measurable goals from your trades means you are in control of your production standards.

Collaboration Through Enhanced Communication – Knowing your trades on a personal level means they are more likely to keep you updated on all tasks. Implement company-wide trades meetings to boost morale, while in the field, schedule timely check-ins with trades that don’t interfere into their work but enhance their incentive for quality work. It’s truly a balancing act. Having something simple like a mobile application for your trade partner to use will translate into effective communication. Constellation HomeBuilder Systems’ vendor application is the VendorGo App, the app combines the trade and builder data into a single account and functions freely from any job site.

The Verdict 

Healthy trade relations will strengthen your building backbone. From higher quality craftsmanship to lower labor costs, a builder needs treat trade partners as part of the company. Set up technology that enforces company expectations and nurtures the right culture to attract committed trades. To keep that relationship strong for future projects, collaboration should be encouraged by having the right scheduling work flow that is supported by effective technology from the heart of the job-site. During times of labor shortages, a lack of order and collaboration amongst your trade base could mean the next builder in town will land your contractors for their projects.

See how national production builder, DSLD Homes enhances trade collaboration with the right scheduling technology http://bit.ly/2Je5Ygk

Sources:

http://www.builderonline.com/money/two-builders-strive-for-greatness_o

http://www.builderonline.com/money/how-to-offset-increases-in-your-biggest-costs_o

 

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The 2018 Builder 100 List: How the 10 fastest-growing public builders found success after “The Great Recession”

Recent findings show we are close to reaching the all-time high in the home building industry in terms of the number of homes sold when comparing the numbers from a decade ago, before “The Great Recession”. In 2007, we had a record high in home closings of 389,902 units in comparison to 2017 with 326,984.

The numbers are a sure sign of a healthy growth year over year, especially after one of the worst market crashes since the great depression. We have explored the past decade in providing hundreds of home builders with mission-critical integrated software solutions.

We found that many of the Top 10 fastest growing public companies listed on the Top Builder 100 list not only leveraged Constellation’s software but also shared a common theme when it comes to business operations during recession recovery.

They Doubled Down on Resources in a Down Market

As company growth stalls, builders invested back into their communities to produce more homes and tried to be mindful of their bidding strategies. As the recession hit the housing market, so did all other resource assets related to infrastructure. Builders tightened up their budgets and running costs to invest in the long term. Although this has not been a complete comeback, 2017 did see higher revenues in the homes sold to due to a rise in the average home price as demand is also rising and home builders were more willing to innovate with their products for higher margins. Last year saw $133 billion in revenue versus $123 billion from 2007.

Managing a Tight Market with Automation & Innovation

With limited internal support, growing builders turned to cost-cutting strategies that streamline processes on the job site, that eliminated manual work in the back office, and provided insightful reports for better decision making – this became a necessity for every real estate investment after the recession. Many growing builders stayed afloat by spending less time administrating tasks and more time on strategy. They also leveraged software at any given opportunity, time became of the essence in investing in real-estate. Builders waited for key pockets of metropolitan neighborhoods close to a bigger builder’s community to ensure buyers would come. Builders constantly assessed and reassessed plots of land, they integrated accounting into all their business functions for increased financial analytics, scheduling became the law of these firms as any building errors were simply too much to pay for.

Simultaneously, as precision home building became more and more automated, design center upgrades became a trend. New homeowners wanted personalization from production home builders. With integrated décor centers, home builders were able to offer up “premium” finishes to home interiors that improved margins without sacrificing too much building time. Some builders have even integrated their contract addendums to their homeowner’s selections for real-time data on profits and capital costs of each home.

Also try, “Top 5 Builder Tips for Efficient Décor Centers to Drive ROI” for improved design center appointments.

Rebuilding Teams with Goals and Effective Processes in Mind

As the housing downturn affected where people worked, home builders carefully restructured their companies with key talent that understood the company’s deliverables and goals. Key members were usually sales driven and understood the necessity of streamlined processes. This new generation of builders figured out that the old way of building needed to change as new technical solutions became available, with data and metrics injected into the workplace culture of building companies. Accountability to achieve financial success was heightened, while streamlined process left more time for home product innovation.

The Verdict

The fastest-growing public home builders today are where they are because they believed in their trade. During the recession, they doubled down where they saw fit and planned for future developments. They invested in automation technology and best practices that became cost-effective ways of completing the same task with less effort. They also innovated but did so in accordance with what they can afford by measuring, tracking, and budgeting. Overall, home builders chose to innovate and offer better homes than before by rebuilding their company culture around goal setting and improved workflows.

The Housing Leadership Summit

At this year’s Housing Leadership Summit, we are proud to be supporting Hanley Wood and “Top 200” builders as a gold event sponsor. We are happy to announce that builders can now anticipate and maximize productivity with the latest advanced home building technology. From artificial intelligence to the design studio, access real-time business predictions so you can focus on improving all aspects of your work processes. We look forward to meeting all top thinking builders at this year’s event.

Source

“The Great Recession: Builders Look Back” by Jennifer Goodman | Builderonline.com

“The 10 Fastest-Growing Public Builders” by Hanley Wood Data Studio, Charlotte O’Malley | Builderonline.com

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