Posted by: JC Gatlin | March 21, 2010

Construction Cost Reduction starts on the jobsite

Daily waste cost both the homebuilder and the Building Partner tens of thousands of dollars annually. The Construction Professional who firmly grasps this concept will position his community to leap out ahead of the competition. Those who manage their time and materials the best will elevate their company to become one of the top producers and most profitable builders in the market.  

Unfortunately, waste runs rampant on the jobsite. Just today as I was walking some home sites I saw the dollars adding up. Not only was there a surplus of materials left over after a job was completed, but no one even tried to protect them from the rain.

On this one afternoon on this one home site alone, there was (conservatively) over $600 being thrown away with little thought to eliminating waste, much less simply reducing construction costs.

Now multiply this by the number of jobsites this superintendent was “managing.” Then add the number of superintendents just like him in all the other communities, building homes on even more jobsites just like it. It’s easy to see how the homebuilder and Building Partner lose tens of thousands of dollars annually needlessly to waste.

A Construction Professional uses lean concepts to give him the advantage over the competing builders. Lean will allow him to build faster with less error, which will naturally reduce construction costs. But to achieve this, he must pull those lean concepts out of the text books, beyond the classroom and onto his jobsite.

A Construction Professional engaged in lean transformation on his jobsite actively pursues and thinks about eliminating waste every day.

© March 2010 Homebuilding Partners, Inc.   twitter-logo

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Responses

  1. Most people think the way to reduce costs is to look at costs. But looking at costs doesn’t often show you much about why the costs are what they are. A more effective way is to focus on waste reduction. Not all waste reduction leads to cost reduction. But on the whole, as you continue to reduce waste, costs will come down with it.

    Jamie Flinchbaugh
    Hitchhiker’s Guide to Lean

    • Well said. Most construction companies look at cost reduction soley as the best price given by a specific trade. Analyzing why the costs are what they are may identify waste in their bid, or at least further negotiating room. I think some bids are inflated to account for dryruns and return trips for punch outs. Eliminating that wasted motion would allow the Building Partner to lower costs and still be profitable. There are certainly many other opportunities there too.

  2. We call our Trades and Suppliers “Building Partners” for a reason. If you engage them in the journey of eliminating waste, you will help their company as well. Every one becomes stronger on the business front, creating long term success.

  3. Certainly in traditional manufacturing processes we would look at scrap or yield rates. We even have a scrap market set-up for many assembly production processes. I think the first step to improvement is making your problems visual. And from your post it looks like there is opportunity. How do you capture info on this waste and make it visual for everyone?

    Tim McMahon
    A Lean Journey
    http://leanjourneytruenorth.blogspot.com

    • Good question. Our Construction Professionals will write a Take Off Change — a process in which they calculate and deduct the overage from the master budget so the next home that is built using that plan should have the correct amount of materials delivered. However, there is no visual means of identifying and capturing this waste that I know of. How are scraps and overages reduced on the manufacturing floor?

  4. This was a great e-mail sent out to eliminate waste. If you eliminate waste on the jobsite it will in the long run reduce costs and prices will start to level off!

  5. I’m a “lean guy” with a long history of improvement projects in the automotive industry… I am looking to retire before I am 50 (not long) overseas and my “plan” to provide a regular income is low cost housing.

    I have recently built a 60 square meter house, single storey, for less than $2000, concrete and block construction! (not including land costs). Building included, all doors, windows, roof, internal walls etc. Finished reasonably.. I physically participated in the construction process with 3 other guys and it took us about 2 and a half weeks part time during my vacation..

    We made lots of mistakes and I am pretty confident that the final cost will be closer to the 1K mark than the 2K.

    Would love to chat about how to reduce costs and times….

    how to implement lean manufacturing


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