As the house building industry is challenged by ever-increasing regulation, more demanding planners, a shortage of labour and customers whose expectations have transformed, the costs to your business continue to rise while the price you can sell your stock for doesn’t.
With a strategy based on continual price growth no longer viable, it’s those house builders who control their costs and reduce their time to build that will be the winners over the next 5 years.
Having spent decades working with house builders, construction firms and building material providers to help them dramatically reduce their costs – in one case identifying over £100m of savings for one house builder – we know where you should be looking and what you can do to quickly and effectively improve your operations to reduce cost and speed up your build. Ultimately improving your bottom line.
In this 4-part series, we break down the four key improvement areas that you should be focusing on to help you improve the performance of your sites, reducing costs and improving your time to build.
In today’s blog, we look at the first of our four key improvement areas, minimising your rework – your hidden factory
Right now, on your sites, hundreds, possibly thousands of tasks are being repeated. It could be the first time, it could be the second time, it could even be the 10th time.
Each time someone is repainting a wall, re-fixing a door or refitting a kitchen counter you’re having to pay for that additional labour, additional materials and manage the delays for other trades on site.
We call this rework “The Hidden Factory” and it’ll probably be the number one issue on your sites right now and much of it will be invisible to you.
We’re not talking about the big things, the ones that have been crawled all over by teams large and small and usually with a big price tag attached to them. We’re talking about the day to day problems, the little pieces of repair or repeated work that get picked up by trades, site management and quality checks and then have to be ‘reworked’ by someone else to get right.
While on the face of it these may look like small mistakes, they can add up to a significant cost. For one house builder we worked with we found that over 13 days a week per site were being wasted on minor rework.
For every 10 sites in progress that’s over 6,700 days of wasted labour a year!
As well as these avoidable direct costs there are the other impacts; disruption to build programmes, inconvenience to customers, poor utilisation of trades, additional material costs. The list goes on.
Needless to say, this is a real issue and one that you will want to fix. But what is the cause and how do you fix it?
What creates the hidden factory? The primary cause of rework is often a lack of standardised working methods and an inconsistent understanding of what the end product should look like.
One team of plumbers will fit the bathroom one way while another team will do it a completely different way.
By understanding these different variations in the working methods that your contractors and staff are operating to you can begin to understand and then eliminate the causes of rework to improve quality, time to build and reduce cost.
Firstly, you need to understand where rework is most prevalent in your operations and what is causing it. This may be related to specific sites or certain activities across your portfolio.
You’ll want to start by picking a sample site(s) and conducting a detailed process study to understand the sources of rework and why it’s happening. This will help you understand where the biggest problems are and where to focus your efforts to get the biggest gain.
Once you’ve identified the priority areas to fix, the next step is to take a detailed look at the process and what’s happening on the ground.
This will involve analysing what’s currently in place in terms of processes or work instructions, speaking with your contractors and staff to understand where they see the problems and then refining the process to ensure it solves the root cause of your problem and mitigates the issues that are resulting in the rework. Trust and co-operation are key to this; ensure you bring everyone on the journey with you. Simply mandating a change is unlikely to deliver the results you want.
By doing this across the areas you’ve identified you’ll be able to significantly reduce the amount of rework and the cost associated with it while increasing the speed that you can deliver quality homes.
Rework is often the biggest cause of unnecessary cost for house builders like you. By identifying and then tackling your rework you can dramatically increase the productivity on your sites and reduce your cost of build.
Reducing the rework in your business starts by identifying where it exists and where it’s happening most often. Once you know this you can create a prioritised plan to deal with it and start taking action to reduce it.
In the next part of our series, we’ll be looking at Site Protection and how you can make some simple changes to your processes to dramatically reduce the amount of rework your contractors are having to do.
If you don’t want to wait until next week you can download our detailed ‘Weathering The Storm’ eBook where we explain the tried and tested approaches that we’ve used to help firms across the industry dramatically improve the efficiency of their build programmes and increase their bottom line.
Download our Weathering the Storm eBook today!
If having read this blog, you want to take action but don’t have the knowledge or capacity to do so then that’s where PMI can help.
We have a strong heritage of working with house builders to help them understand where the issues are hiding on their sites and put in place effective improvements to turn their business goals into results.
If you want to find out more please get in touch with our Managing Partner, Rich Seddon: Rich.Seddon@pmi.co.uk
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