50 Mistakes Builders Make

15, Feb 2019


By Charles C. Shinn Jr., Ph.D.

From my decades of working with home builders, I have identified these 50 mistakes builders make in running their companies. Which one is your biggest obstacle to growth and profitability?

General Management
1. Always looking for the magic bullet
2. Lack of systems and procedures
3. Not having good integrated management processes
4. Lack of consistency and reliability
5. Inefficient and ineffective systems and processes
6. Lack of discipline
7. No strategic plan (3-5 years)
8. Lack of training for staff
9. Lack of communication with and among staff

Financial
10. Not enough liquidity
11. Too much debt
12. Bad management reports and too many of them
without consolidated information
13. No operating budgets
14. No contingency plans

Land
15. Too much land inventory
16. Paying too much for the land
17. Buying land outright
18. Take-down schedule too optimistic for anticipated
sales pace
19. Not treating land and home building as separate
profit centers
20. Not having a lot turnover process

Product
21. Poor product design process
22. Not focusing on your sweet spot in the market
23. Too many plans
24. Inadequate construction drawings

Purchasing and Estimating
25. Estimating questionable at best
26. No purchase order system
27. Inaccurate purchase orders
28. Don’t get the best price from trades and suppliers
29. Wed too closely to current trades and vendors
30. Not having trade and supplier contracts
31. Not having, implementing, or enforcing scopes of work
32. No negotiation with trades and suppliers
33. Direct construction cost too high
34. Do not document or analyze variances

Production
35. No master schedule
36. Rush to construction – inadequate planning
37. Jobs not ready for trades
38. Paying trades too early
39. No internal inspections
40. Poor material control processes
41. No start package released to superintendent prior to
construction start

Sales
42. Don’t know the customer
43. Treat customer as one-time customer
44. Lack of good sales training
45. Not maintaining models and spec inventory
46. Not having a transactional web site
47. Selection process not controlled
48. Pricing homes on cost instead of market
49. Too many change orders during construction

Warranty
50. No proactive warranty program

 

50 Mistakes Builders Make

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