The home building industry is at the crux of a crisis: the shortage and high cost of lumber is a real threat. Due to a shortage of raw material, many lumber mills are shutting down, causing additional uncertainty about lumber availability and concern that prices will continue to rise.
Lumber prices have more than doubled in the last year. With the dramatic increase in the cost of lumber, many home builders are encountering issues with the ability to deliver houses. Home builders with weaker margins are suffering from low profits on the houses they are producing.
Protecting Profit Margins
The lumber crisis is not going away any time soon. The demand for lumber is extremely high, and lumber production rates are severely low.
To protect their profit margins, home builders need to optimize their plans to minimize the waste. They also need to implement effective strategies for material usage to control costs.
In the current environment, not correctly sizing material can cause major damage to your bottom line. Home builders in the habit of purchasing extra material or ordering next-size-up lumber are compounding the issues caused by the already high cost of lumber.
Big Savings for Our Clients
Our team of consultants has been meeting with home builders to help them improve efficiencies in their lumber management process and cut costs. The first piece we look at is the design. The second piece is the material list. Once we analyze those pieces, we are able to identify problem areas and provide our clients with actionable steps that can result in significant cost savings.
Our strategy involves taking categories of the materials and closely monitoring how they are being used. We also stress the importance of sourcing lumber from more than one vendor, and we recommend home builders use the 80/20 rule when sourcing lumber from vendors.
Despite the current state of the lumber industry, we have been able to help many home builders reduce direct construction costs and decrease variances. Generally, we are able to identify areas for reducing costs by five (and sometimes up to ten) percent.
Help from Industry Experts
In response to the issues our builder community is facing as a result of the lumber crisis, we developed a Lumber Workshop
featuring plan reviews and audits to help home builders reduce construction costs. It’s on online workshop involving four sessions over four weeks. At the time of this writing there was one spot left in the March event.
We also offer customized consulting and coaching packages involving every area of the home building business including proven strategies for improving lumber management processes. Our clients learn best practices for reviewing plans, bidding lumber, structuring deliveries, and defining scopes. They receive one-on-one coaching to improve working drawings, develop efficient material takeoffs, and improve framing procedures. The focus of our consulting services and coaching packages is on helping home builders increase efficiencies and improve profitability.
Contact us a 303-972-7666 or firstname.lastname@example.org
to discover how we can help you navigate the current lumber crisis and improve your bottom line.