Building on the Basics
January 02, 2012
Will 2012 be a year in which residential builders go 'back to basics' in terms of technology? While advances in things like mobile and workflow technologies have been impressive, and initiatives like BIM (building information modeling) seem attractive to some builders, the truth of the matter is if you do not have the right systems in place for things like scheduling, accounting, and project management, to name a few, you aren't able to take that next step effectively.
When addressing the topic of going back to basics, Tom Gebes, president, BuilderMT, www.buildermt.com, Lakewood, Colo., talks about the change in the market throughout the past few years and how this has essentially forced builders to reset the way in which they think about the business.
He says, "As builders 'go back to basics' they have to realize that they are not going to be making much money on land, which was a large contributor to profit before the downturn. The money in homebuilding is in margin made on the construction and sale of the home. I know that sounds rudimentary, but in years past, a fair number of builders were building break-even homes, and making profit on land positions. Now, they have to make a profit on the home. What's an acceptable margin?"
This sets the stage for addressing technology. For builders starting more than 50 homes, this means looking again at the systems in place--beyond the basics, if you will, of the basic functionality. This includes an automated sales system, says Gebes, and not just CRM (customer-relationship management) but a CRM system that also handles automated processes and dynamic updates of the builder's Website, in terms of pricing, lots, and options management.
In terms of workflow management, he believes builders need a suite that automates all the various sectors of the builder's operations, from model option database, purchasing, bidding, work orders, scheduling, communications systems with partners, and superintendent communications.
Coming from the world of best-of-breed software, Gebes believes the all-in-one solution will not be the right fit for builders going forward. For some that might be true, but for others the all-in-one solution is still very much a viable option that can guide you through the tough times.
Technology from Corecon Technologies, www.corecon.com, Huntington Beach, Calif., covers estimating, scheduling, project management, and other tasks, and links with leading third-party accounting packages for builders. The company recently announced a new product, Standard Edition, designed specifically for remodelers and smaller custom homebuilders.
In addressing what systems are necessary for handling the basic needs of a contractor, Norman Wendl, president, Corecon, has a few suggestions.
"One, they need to put a system in place (that has) very good job cost control," says Wendl. "Two, they need a central location of all their project data. They'll be going mobile, they'll be out on a jobsite, and so forth, and they'll need access to information. And sometimes, (systems like Microsoft) Excel, Word, Outlook, and QuickBooks are going to fail at that so, the three areas I like to say in terms of value proposition and what contractors need and homebuilders need to think about is, one, a central location of all my project data, no matter where we're at; two, better job-cost capabilities, because if we're not profitable, we're going to go out of business; and number three, we need to communicate effectively to vendors and owners."
Whether it is a best-of-breed approach or a fully integrated system is not the question these days. More so, for builders the true question to ask about how technology will help you become profitable in 2012 might be: Am I getting enough out of the basics?