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 the last part of our series we focussed on Site Protection and in today’s blog we look at the third of our four key improvement areas, Plot Utilisation – reducing the idle time across your sites.
As the industry has evolved so has its approach to planning the build process for its sites.
To help increase efficiency and reduce the time to build, businesses like yours have iterated and iterated their build programmes to ensure that there is as little idle time as possible.
At your sites, you will no doubt have a clear build plan for each phase, broken down by unit type, trade, etc.
It’s then down to the operational teams to make the plan happen; book the trades, call-off the materials and pray for the right weather!
While this approach is great in principle, what we often see is that while these plans may be robust at an individual unit level, they don’t always align when you go up to the phase or site level. This results in plots being left idle, not progressing, waiting for the next trades to come in.
When we say idle, we aren’t talking about the instances where there are issues that mean a plot can’t be worked on. We’re talking about the time where an active plot is available to be worked on but doesn’t currently have any activity ongoing.
This can be a real problem and add huge delays to your builds. From our work with clients in the industry, we’ve found house builders with up to 68% idle time on their plots. To put that into perspective, that’s almost 3 weeks in every 4 where a plot is sitting there, without progress.
If you’re looking at ways to accelerate your build programme and deliver more units quicker, helping you increase cash flow and reduce your holding costs then this is a huge area of opportunity.
From our work across the industry, we’ve identified five primary reasons for poor plot utilisation which, if corrected, can dramatically reduce the idle time across your sites.
We talk about two of the five in detail in this series – Rework (Part one) and Material Availability (Part 4 coming next week) – but there’s three more that you’ll also want to address to improve your plot utilisation:
Siloed Labour: we often see house builders take a siloed approach to their builds. Trades will work on one site and one site only, with little sharing of resource across site. As a result, it becomes much harder for you to respond to peaks or troughs on your sites, meaning some sites are flat out while others are putting their feet up at the local burger van!
Poor process: processes are often developed once and then left to run on site after site, with little consideration for the variation in how the processes are run across sites. Likewise, problems that are identified in the process, such as inefficient build routes, are rarely reported back and acted upon in a structured way. As a result, poor processes continue to exist, causing the same utilisation problems time after time.
Lack of consideration for the weather: we live in a country with hugely variable weather. While you can’t predict the weather, you can take steps to reduce the impact it has on your build. For example, extending the use of prefabricated building systems or reorganising your build to systematically ensure units are weatherproof as quickly as possible.
Unfortunately, many house builders disregard this, taking the weather as a given and accepting all of the issues that it causes and then rushing to make up lost ground when it improves.
Siloed labour can sometimes be the quickest issue to resolve. To resolve this, you’ll want to start by reviewing your site plan at a regional level and not a site-specific level. Identifying where resource could be shared across sites to smooth out the peaks and troughs.
Doing this will let you create a unified, region wide, resourcing plan that ensures the right trades are on the right sites at the right times. Not waiting around doing nothing on one site or flat out on another.
Yes this may mean a small increase in labour costs as you have to pay for the trade to go from site to site but in the long term you’ll see a significant saving as you’re not paying for trades to sit idle.
The solution for the last two problems is the same and that’s to undertake a detailed review of your site planning process. You’ll want to ensure that it’s up to date and reflects the realities of your sites as they are now, not as they were when the plan was created.
Once you have the outline of a revised build plan you then want to take a step back and go step by step to ask, how could we still do this if it was raining? This will enable you to design as many weather dependant activities out of the process and build in alternative approaches where that isn’t possible.
This may all sound like a lot of work but done properly this can help you increase plot utilisation without reducing quality.
Poor plot utilisation can dramatically increase your time to build and increase reducing both profits and cash flow.
Through our work in the industry, we’ve identified 5 primary causes for this poor utilisation that are happening on your sites right now.
By taking action to reduce these issues and improve plot utilisation you can make your sites run smoother to reduce issues and speed up your time to build.
In the final part of our series, we’ll be looking at Material Availability and how you can make some simple changes to your processes to remove the critical bottlenecks on your sites.
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 in to 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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