Building More With Less
Commentary and analysis from the latest Job Openings and Labor Turnover Survey (JOLTS) by National Association of Home Builders chief economist Robert Dietz notes:
“The overall trend for open construction jobs has been increasing since the end of the Great Recession. This is consistent with survey data indicating that access to labor remains a top business challenge for builders.”
At the same time, layoffs are trailing downward and net hiring, as you can see from Rob Dietz’ graphic here, is holding steady.
As we’ve been observing in this space as well, builders have been pushing growth–especially in the entry-level and moderately-priced 55+ new home communities–a stress test moment for labor capacity constraint.
Anticipating unevenness in access to crews–particularly at cost-per-square foot price points that might have been modeled during budgeting at the end of 2017–many builders have gone through their paces to apply greater rigor to their operational processes.
Disciplines around task completion, fewer days of having crews show up on what turns out to be the wrong day to work on their task, ease and first-time quality of installation of building products and materials, and overall better start-to-completion management have improved, even as simpler, more streamlined, value-engineered, and more iterative floorplans have become the norm. Work hours that are not lost are gained.
As Dietz concludes in his take on construction job openings:
“As labor remains a top cited challenge to expansion, builders will increasingly explore options to find ways to build more with less.”
They are doing so.
From roof truss and framing plants to fully-integrated offsite solutions, builders–some more than others–are working through the mental arithmetic and physical flows of activity, component home assemblies and their sub-components, pre-construction engineering and design, construction documentation, shipping, and the concurrent stream of inspections and approvals.
Their goal is to speed the process–get in control of and reduce in numbers of days the duration from start to completion–to gain the turn on inventory predictably faster. And, preferably, with a higher customer satisfaction rate.
The frustration for many builders is that there are few, if any, “half-measures” of exploration of off-site design, engineering, and construction. If you don’t go “all the way,” the inefficiencies in what remains an on site construction phase can cost more than the savings gained from producing trusses or pre-framed walls offsite.
There are two ways to “do more with less,” and we’ll be diving deep on both at the upcoming Housing Leadership Summit, May 14-16, at the Ritz Carlton, Laguna Niguel (click here to register).
One is to lower the barriers to doing more with less. That will be the focus of our “Tech Tipping Point: How to Make Off-Site Happen,” session on Wednesday, May 16, featuring Katerra Materials president Trevor Schick, Randek head of sales and market development Scott Hedges, and Entekra founder and CEO Gerard McCaughey, moderated by a very knowledgable builder/designer/developer Michele Knapp.
The other way to “build more with less” is to elevate your entire team’s sense of what it can and should accomplish through better across-the-board and up-and-down collaboration. This is precisely the focus of our HLS workshop, “Leading Collaboration,” led by business and construction workflow model gurus Clark Ellis, a principal and CEO of Continuum Advisory Group, and Fletcher L. Groves, III, VP at SAI Consulting.
Their session will explore urgencies, strategies, and tactics in identifying collaboration’s role in building “more with less.”
Home building–like baseball for Yogi Berra–is “99% mental, and the other half is physical.”
Job openings in construction today are a measure of a pain point for home builders, the time and the cost volatility in their start-to-completion cycle. One day, maybe not to long from now, that JOLTS data from the Bureau of Labor Statistics will come out and won’t be as much of a red flag warning. When builders have found “ways to build more with less.”