During a question and answer session at a recent industry conference, a home builder asked Moody’s Analytics chief economist Mark Zandi for his thoughts about the labor
Custom builders don’t just build houses. The good ones build relationships with clients, with subcontractors, with vendors.
Custom builders don’t just build houses. The good ones build relationships with clients, with subcontractors, with vendors. The best builders combine the strength of these relationships to build the right home for the right client on just the right land. In the process of doing this one-of-a-kind work, they also build a business.
However, successfully leveraging these relationships relies on one very basic principle-communication. Dennis Dixon, president of Dixon Builders (Flagstaff, Az.), knows how critical it is to write a contract that spells out everything-allowances, change orders and change order procedures, draw schedules, specifications, job details, sub and supplier definitions, warranty coverage, etc. He also knows that the best contract, the best procedures, and the best intentions are meaningless if not communicated or explained properly.
Dixon shares and explains his communication philosophy and tools in his book, "Finding Hidden Profits: A Guide for Custom Builders." His reasoning is simple: Effective communications contribute to the projects profit opportunities. Communication skills can help every custom builder reach his or her business goals, including:
- satisfying the owner.
- building a professional reputation with all other parties.
- understanding and identifying the team players and coordinating their roles to the advantage of the project.
- maximizing quality by exercising personal attention to the project to achieve higher profitability.
In his business Dixon practices "personable communications." This simply means one-on-one interaction. Primary contact is either in person or by telephone and then Dixon always follows-up by putting pertinent details in writing.
Key to making this happen is identifying the primary players on every job. Identify the owner’s representative and your representative in the contract. In each case, designate only one person and make sure that all communications involve those named.
For example, the owner’s representative must sign allowances, change orders, clarification change orders, draw requests and all other relevant documents. This makes the owner’s representative the ultimate decision-maker and eliminates confusion about which owner signs, approves or initiates decisions on the project.
Likewise, as the contractor, you have the authority to make adjustments, alterations, interpretations and change orders. The chain of command lets your employees and subcontractors know that they accept direction only from you. This procedure shields the job superintendent from requests for information and provides all crews with an easy out. They can simply answer questions from the owner or architect with "Talk to the contractor."
As the contractor, you’re responsible not only for setting the communication tone but managing it throughout a job. It’s up to you to build and maintain communications throughout the project with the architect, appraiser, banker, inspector and tradespeople. Keeping subcontractors and suppliers up-to-date with changes and job conditions promotes professionalism. Quality is maintained. Safety is improved. Liability risk is reduced.
You are the only person who can set the tone and the overall attitude surrounding a custom home project. A positive outlook, compliments on the workmanship of others and cushioned criticism go a long way toward maintaining an even course toward project completion.
Dennis Dixon’s book, Finding Hidden Profits, A Guide for Custom Builders, is available from Home Builder Press. NAHB members receive a 20% discount on the publication. To order or receive additional information call 800-223-2665 or visit its web site at www.nahb.com/builderbooks.