Software Cuts Cycle Time for Home Builder

“When you're a hammer, everything looks like a nail.” That common expression explains the general human tendency to any fix problem with the solutions we are most familiar with whether they are likely to work or not.

The reason I quote this old saying is in part a reality check on my own worldview, because when I see a problem in the home building industry, I immediately start thinking of technology solutions, because that's my field of expertise. So, I have to ask myself, Am I nothing more than a “high-tech hammer,” looking for high-tech nails?

In areas of craftsmanship and salability of design, technology can't do all the much. Success is measured by the skills of your subs and employees, and the shrewdness of how our sales team reads the market. But I consistently see the benefits of technology in process optimization; process automating; and overall tracking and notification. Can these solutions help nearly any builder? I think so. But let's look at the metrics of one housing giant's case study to make sure I'm not throwing technology at every problem.

Eastwood Homes is a builder who has used technology to achieve award-winning performance, even in tough markets. It's a family-run business that builds homes with Carolina lifestyles in mind. The firm closed more than 1,100 homes in 2007 in North and South Carolina across four divisions. Each division manages regional building efforts with 30 supervisors who watch over 40 different home plans that are being sold throughout Eastwood Homes' 40 model home centers. They are very customer-focused, so each model can have many options.

Eastwood is a big, complicated operation with lots of moving parts, but the company got its 1,100 homes built in an average cycle time of just 110 days, well below industry averages. Although Eastwood does sell homes priced up to the $300,000s, most homes average around $190,000 with 2,200 to 2,500 square feet. The company employs 180 people, including sales, builders and staff.

Year on year growth? Eastwood Homes' story is remarkable, as they have almost doubled in size, from 800 closing in 2005 to close to 1,400 in 2006, with a slight drop in starts last year. And they've won awards for quality as well, most recently they picked up J.D. Power and Associates award for outstanding customer satisfaction in two markets.

Tech Success

How do they do it? Well, the team partially achieves its success with hammers and nails. But it also relies heavily on technology. Back in 2001, Eastwood Homes had been using Timberline Accounting and Timberline Estimating to manage their processes. But as the company experienced growth, it knew that it needed a process and workflow management system that was specific to the building industry. In 2001, Eastwood Homes brought in a workflow management tool to automate the functions that were gobbling up staff time, and it had a special focus on report generation; manual reconciliation of purchase order; and work order, invoice approval and communication triggers. Recently the company added a business process management tool. Before the implementation of that tool, if Eastwood wanted new (or changed) processes embedded in its software systems, the firm would have to pay for custom coding. Instead, employees now use a drag-and-drop tool to do that at very low cost.

If you still think I'm a hammer looking for a nail, don't take my word for the efficacy of technology that automates processes. Check out eWeek.com's story about this exploding business process management software category. The article says, in part, “Business Process Management is an alternative that can be leveraged to develop applications faster and cheaper than traditional methods.”

Eastwood Homes took that business process management alternative. And that approach has bought the company a whole new level of convenience and control over its operations, even for non-computer-specialist users.

The resulting efficiencies? Nothing short of stunning. Eastwood Homes allowed 80 employees to eliminate two to three hours per week in manual duties, yielding up 240 hours per week in savings, to say nothing of the time saved through cost-avoidance of custom coding, which the business process management software has made obsolete. “That two to three hours per employee each week is time these folks can be using to focus on what we hired them to do,” says Justin Myers, the vice president of operations for Eastwood Homes. “That's time they can be selling houses or managing the building process to further reduce cycle time.”

The cumulative results so far are dramatic: At 240 hours per week saved across all operations, that's 12,480 hours, or 312 work weeks, of six full-time equivalents saved each year because of technology.

Am I just a hammer looking for a nail? Apparently not.