According to Builder Partnerships, good estimating practices can increase profitability by 3 to 5 percent. More accurate estimates often come with experience, but Builder Partnerships has five tips a builder can follow to improve their estimating process:

• Start with complete, accurate specifications—All selections for any home need to be as complete as possible prior to the start of construction. This will allow the estimating department to create a more accurate construction budget that will contain costs within reason so that you can maintain the target profitability on the home.
• Continually monitor and analyze variances—If each home built is showing the same variances over and over, evaluate whether it makes more sense to eradicate the variance or incorporate it as part of the standard budget. Whatever is decided, this event should not continue to be considered a variance on future homes built.
• Conduct as built audits—After products have been installed, the estimator should evaluate what value and quantity of materials were used to determine whether the estimates were accurate. Adjust the numbers if necessary to get as accurate as possible.
• Proactively manage the bid process—Create standard bid packages and trade specification sheets. Require as much clarity and standardization as possible in the information provided so that you can compare directly across the board. Establish a structured bid analysis process that is clear and simple. Work on keeping the vendors and trades honest with their bids.
• Get the excess material out—Work towards elimination of all the variances. Order just enough materials to get the job done. Do not order any extra or build contingencies into the estimate. Involve the Superintendent and Trade contractors in getting to an accurate estimate. If you order excess materials, chances are it will be left lying around the job site and most likely will be damaged and just add costs for the disposal.

A few years back, Housing Zone took a look at the pros and cons of having expert estimators on staff. Most builders are unable to afford that kind of staffing, but it’s interesting to see how some of the country’s biggest practices still manage to process estimates with remarkable accuracy. Imagine what it could do mean for smaller builders.

A well-written scope of work ensures the service provider and the client — and even any specified subcontractors — are all on the same page, she says, and helps ensure clients are comparing apples to apples when shopping around. That might sound like a bad thing — enabling shopping around — but really, you’re doing yourself a favor by being clear about your service offering and making sure no questions go unanswered. Ricchi writes:

Like any endeavor, the success of a construction project depends on a clear goal and a well-defined path to reach that goal. If your plan is inadequate, your project will be disorganized, take longer to complete, and end up costing more money. But a clear and detailed game plan, called a scope of work, can prevent these problems and help to keep your project on track.

A scope of work refers to documents that describe the project objective and specify the activities and materials that are needed to complete that objective. If you are bidding a small project (replacing a broken water heater, for example), the scope of work may be simply a one-page written document. Larger projects will require a larger and longer scope of work. If plans or drawings are necessary, they too become part of the scope.

More details and a simple but helpful example can be found in Ricchi’s original article on FineHomebuilding.com.

The remodeling business is more competitive than ever. What have you done to stand out?

We made a conscious choice to go back to the basics and what made us successful, and that’s focusing on our existing customer base. This has resulted in a large percentage of our work coming from repeat clients and referrals. Sticking to our guns has set us apart from many companies because so many firms are slashing their prices to get the work. Working with our past clients and referrals has resulted in less of a focus on price and more on trust or value. Our slim marketing budget has forced us to get creative and this has allowed us to tap into some great new networks.

On your site, you offer tips and advice while you use your Twitter account and blog to share news and observations about the building industry. What do you get from sharing these resources?

Believe it or not, this translates into revenue for our business in many ways. First of all, it has established Meadowview Construction as one of the expert professionals not only in my direct area but all across the country. I have publications and contacts all over the country (much like this interview) asking for industry-related updates, which greatly boosts credibility.

Next, the constant Twitter feeds and other social media touch points reinforce what we are and what we do to our prospective clients. I have found that with this broad net I am able to share what we do with hundreds of people in a non-threatening way, and when they need a contractor, they immediately think of us. Often a Twitter follower or Facebook friend will start by asking a simple question about a project, which often turns into a “can you stop by and give us an estimate?” I can’t imagine having a marketing strategy that didn’t include social media such as Twitter or Facebook. And besides, I like sharing my knowledge and tips. Someday that might turn into a career in teaching or help me when I have my own TV show.

From your experience, how does the market compare right now to one year ago? What’s different? What’s been affected by the differences?

Overall I find it to be very similar to the past few years with a few exceptions. This year has seen many more people shopping, which is a positive sign. Budgets are being stretched but at least people are starting to look at spending again. What is see is that prospects are expecting much more on a smaller budget. We manufacture custom cabinetry for every room in the house and I am seeing more clients lean toward stock cabinetry as budgets are challenged.

Suppose a growing portion of your clientele are those who’ve opted to remodel rather than buy a new home. What are they looking for – a quick facelift to boost eventual resale value or changes to accommodate taste and needs for years to come?

Being a remodeling firm, most of our clients are looking to transform their homes to suit their taste but more and more they are mindful of resale values. For example, 5 years ago most clients wouldn’t think twice about just having a large walk-in shower and no tub, but with home values plummeting they are saying things like “my friend who’s a realtor said that it’s better for resale value if we put in a tub.” I find out how long they plan to live in the home and am honest with them while steering them in the right direction rather than just trying to up-sell.

What’s been the single biggest change to your practice since the recession hit?

For over 10 years we managed to keep about 3 projects going at all times using the lead carpenter system. With the drop in business we have been forced to slim down considerably as a company and focus on a very specific clientele to meet our revenue goals. Part of the solution has included me putting back on my tool belt after almost 10 years out of the field.

What makes you most optimistic about the future of the remodeling industry?

From what I can see there is a pent up demand developing with homeowners as they have saved up cash over the past 4 years at the highest rate in decades. Being the consumers that we are, I feel this will result in increased spending in the near future albeit in a more conservative manner. Lastly, I strongly believe that these hard times will make the survivors stronger and weed out the weaker companies. This can only benefit the consumer in the long run.

There are two main parts to window safety: falls and escapes. Improperly secured windows and children can be a dangerous combination. Additionally, windows can also be a main escape route from a home in case of disasters like fires. According to Window and Door Magazine:

“…there is another aspect of window safety beyond mitigating the risk of falls, and that is to preserve the function of windows as potential emergency exits. Fall prevention and fire safety concerns must be balanced. Note, for example, that while windows with guards, security bars, grilles or grates will likely prevent falls, the windows are useless in an emergency if the devices on them do not have a release mechanism as now required by the International Residential Code.

And that is the essential purpose of Window Safety Week–to heighten the awareness of what can be done to help keep homes and families safer from the risk of accidental falls, as well as from fires.”

How do you learn more about window safety? How do you teach your customers? We encourage you to communicate to them the benefits and limitations when it comes to windows and safety. Let us know in the comments!

Qualified Remodeler has a great blog post on things you need to have on your website. First off, start simple: let people know how to contact you. You need to provide an address, phone number and email at the minimum. It seems like a no-brainer, but if people can’t reach you, they can’t hire you.

Some other things we think are helpful: images and descriptions of past projects you have worked on, biographies of company executives, company history and testimonials from satisfied customers. You may also want to include information about any certifications your company has and education materials for your customers so they understand more about the building and remodeling process.

What’s on your website? What would you like to add? When you are exploring other companies’ websites, what do you like to see? Let us know in the comments!

Sub-Zero/Wolf Shares Kitchen Design Trends
Residential Architect
“Kitchen appliance manufacturers Sub-Zero and Wolf have collaborated with three notable designers to identify current kitchen design trends and predict future directions for the space that has become the heart of the home. New York–based interior designer Jamie Drake, Chicago-based kitchen designer Mick De Giulio, and Atlanta-based kitchen designer Matthew Quinn joined together to analyze kitchen designs entered into Sub-Zero and Wolf’s biennial Kitchen Design Contest, track the design trends illustrated therein, as well as through their own practices, and pinpoint potential evolutionary developments that may yield future trends in kitchen design.”

Socially Connected Remodelers
Daily 5 Remodel
Remodeling professionals talk about their experiences with social media.

Can We Build in a Brighter Shade of Green?
New York Times
“A so-called passive home like the one the Landaus are now building is so purposefully designed and built — from its orientation toward the sun and superthick insulation to its algorithmic design and virtually unbroken air envelope — that it requires minimal heating, even in chilly New England. Contrary to some naysayers’ concerns, the Landaus’ timber-frame home will be neither stuffy nor, at 2,000 square feet, oppressively small.”

Product Pros and Cons: Asphalt Roofing vs. Metal
BUILDER
“The roof is arguably the most important surface in a home, perhaps even more essential than the exterior walls. As the most exposed plane, the roof has a mammoth task. It’s under constant assault from the sun and rain, and, if leaky, could result in thousands of dollars worth of direct repair as well as ancillary damage. Still, a roof is one of those things that many consumers don’t think about until there is a blizzard, hail storm, or rainstorm.”

Right-sizing Your Price: How Architects Are Tweaking Fee Structures in a Touch-and-Go Economy
Residential Architect
“To sustain their businesses during what likely will be a long, slow recovery, some firms also are getting creative with their pricing, without cutting too deeply into their profit margins. Call it phase two in the survival of the fittest: When overhead is cut to the bone, the only thing left to flex is the fee.”

“These remodelers may earn a wage for what they do, but is there any profit earned to compensate them for the risks they take in owning and running a company? If the business is not earning a profit the business is not professional. If you offer free plans and estimates, are you truly a professional or are you an amateur hoping to be discovered? If you think you have to do free plans and estimates because so many other remodelers do, either learn how to get paid for these services or work to eliminate the amateurs.”

Interesting idea. Now in this tough economy and housing market, sometimes if you are not making money it’s because there is not a lot of business to go around. But maybe offering freebies to potential clients isn’t necessarily the best way to go about things.

As always, a strategic look at business practices is needed: Do your initial free offerings bear fruit in the form of new and repeat business?

The blogger, Shawn McCadden, also makes the point that true building professionals know and follow building codes and adhere to safety practices. They get permits, care about the safety of their workers and follow laws for payroll and taxes.

What do you think about this? Do you agree with McCadden’s definition of a professional? What are some other things that make a builder or remodeler a true professional. Strategic planning? Marketing? Customer service?

Please leave a comment here or check out Integrity’s Facebook page for some more thoughts.

Image courtesy of Saginaw Future on Flickr

A Design Makeover for Affordable Housing
NY Times – Real Estate
“A design revolution has taken place in affordable housing since the 1980s, when the federal government essentially stopped building income-restricted apartments. The featureless red-brick monoliths are gone — replaced by stylish buildings that resemble market-rate condominiums, with expensive finishes, attractive lobbies and landscaped grounds.”

Are Forestry Groups Talking to the Wrong People About the Green Wood Certification Fight?
ProSales Online
“The forestry community is scoring headlines from its campaign enlisting governors, members of Congress, and ordinary citizens to persuade the U.S. Green Building Council (USGBC) to open up its LEED wood-certification standards. But that effort raises a so-far unanswered question: Why spend so much money and effort persuading people who don’t have a say on the issue and focus instead on the people who do-USGBC members?”

Affordability Remains Housing’s Biggest Challenge
Builder Online
“The rate of job growth will determine the pace of recovery for a housing market whose prosperity could also depend on how it provides more affordable and sustainable options to the diverse buyer segments likely to drive the industry in the next decade.

That is the familiar refrain that the Joint Center for Housing Studies of Harvard University reiterated on Monday morning at the Ford Foundation in New York City, where it presented “The State of the Nation’s Housing 2010,” its annual analysis of where America’s built environment was, is, and might be headed.”

Writer Nigel Maynard surveyed a variety of professionals (LEED architects, sustainable builders, the works) to obtain an accurate prediction about the future of the industry. Furthermore, his article is enhanced by various facts and quotes regarding energy use and new building practices.

In future years, there will be a strong emphasis on the home functioning as a system. This applies to everything from plumbing to insulation; all parts are interconnected and can make a difference in energy and cost savings. Another change on the horizon is regulation of water usage and a strong emphasis on conservation.

Most important, the article discusses the role human behavior will play in these new practices. There is to be a much stronger focus on “educating green” and teaching homeowners how to properly use the sustainable features of their home, garnering greater cost savings and protecting mother earth. There is even a new feedback system available that reports energy usage levels within the home using red, yellow and green lights. “Studies have shown that when people see how much energy they are using, they will alter their behavior.”

Obviously, change is coming. Which of these trends, technologies, products and practices do you think will become most established in the next 10 years?

Image courtesy of Builder Online, Brian Stauffer