Quality can be hard to define. Yet, you don’t have to be Sherlock Holmes to find examples of how a commitment to delivering quality homes pays dividends to a builder’s business.
Start with warranty.
Number of warranty claims. Even if claims are small and easily addressed, there is still a cost to process each claim. Dollars spent on claims. Don’t be fooled by claims covered by the trades – there is still a cost to the builder’s business. Certainly, there is a hit to reputation. It’s also likely that the money needed to respond to anticipated warranty claims is built in to the trade’s bid. There should be a relentless pursuit of zero claims for both the builder and trades.
Next, look at cycle time. Days saved due to first-time quality. There are carry costs to the builder – the cost to simply own the property and hold the asset (the home) while under construction. These are real dollars spent whether anyone is onsite or not. Days wasted due to dry runs – days where a trade shows up and the jobsite isn’t ready, so they leave. Often, builders say they don’t compensate trades for dry runs… but they do. The trades will have this cost built into their bids. Or they will likely redirect their best crews to a builder’s site they know will be ready. Both scenarios cost the builder.
Finally, dive into customer satisfaction. Willingness to refer AND referral rates. As home buyer satisfaction increases, their willingness to refer typically also increases. Measuring this is important. However, this must be combined with measuring actual referral rates. A willingness to refer does not equal referrals. The hard part of satisfying them is done; now finish the job by simply asking them to refer a friend or two.
These are the first five places to look, but why stop there? A commitment to quality should pay dividends over time by way of:
Cleaner jobsites
Fewer jobsite accidents
Reduced litigation costs
Better insurance rates and/or coverage
Stronger company culture
Increased employee accountability
Less employee turnover
Reduced jobsite theft
Stronger new-hire recruitment
Stronger trade relations
That’s 15 metrics to monitor. I have a list of 15 more, but we’ll save those for another post.
Comments