Before you answer, multiply it by the number of homes you build. That’s real money... money you can flow to the bottom line or be invested back into your business to hire and keep the best people, improve your processes, expand your footprint, and weather whatever storms may come your way.
The question is how to get it. The answer is: QUALITY
But then, quality has never been easy to quantify, right? That is, until you hold back $22,278 on every home to pay for failure and realize that’s exactly what you’ve done1. Of course, it makes more sense to invest proactively in ensuring quality – in doing things right the first time – than it does in failure due to poor quality. However, too often, builders are fixated on first costs and miss the fact that thousands of dollars are being spent to fix mistakes long after homes are sold.
Research conducted since 2014 suggests that builders could save more than $10,000 per home with just a 3% improvement in quality across eight areas of their business, including: value engineering, jobsite waste, construction oversight, cycle time, cost overruns, employee satisfaction, customer engagement and warranty spend.
That’s $1 million in savings for every 100 homes delivered.
For a more detailed perspective on how production homebuilders can realize substantial cost savings by focusing on improving quality, read IBACOS' journey into the Cost of Quality:
- Lead story, September 2016: Quality Progress
- Feature article, April 2017: ProBuilder
In addition, consider taking our Cost of Quality Survey to see how you stack up against other builders and where your opportunities to increase profit lie.
All responses are strictly confidential. Once the study is closed in the coming months, you’ll receive a snapshot report of your results, and we’ll continue to connect you to Cost of Quality resources.
1Average per home accrual to cover anticipated warranty + litigation costs over 13 larger public homebuilders (2012-2016 Annual Reports)
Study conducted by T.Weston, DuPont Protective Solutions; Mar 2017