Value engineering: Are you familiar with the term? If not, perhaps a quick study of the concept can help you revamp the way you look at certain aspects of your production homebuilding operation. It is simply a way of implementing procedures that produce more “bang for the buck.” No graduate-level coursework needed here, just a nuts-and-bolts approach to controlling costs and maximizing return on the dollars you spend to build each house. In a sense, you might think it epitomizes the concept of building lean. But we like to think it has wider applications.
The Difference Between Margin and Profit
As you know, the difference between what it costs you to build each home and the sales price of that home is your markup or your margin. Of course, you seek to maximize that number on every home. But there can be a big difference between margin and end-of-year profit, whether you build 10 homes or several hundred. That’s where value engineering can be used to increase your margin and boost your end-of-year bottom line at the same time.
Invest some time and effort to identify ways to simplify the building process without focusing solely on dollars and cents. Examine the features that make your plans distinctive, and look at the processes that eat away at your time and energy. You might be surprised at how easy it is to add options, moving some features from the realm of “standard” to the category of customer preference. That single move can save you actual dollars, and allow you to charge a premium for simple-to-incorporate special features. You offer buyers an easy and efficient way to personalize their new home, and you reap the benefit, both in good will and in increased profit. It adds a new dimension to your business.
Partner With Experts
One goal of value engineering is to boost the perception of added value in the client’s eyes, while streamlining the process of building from your side of the fence. Construction ROI isn’t always just a matter of saving money: It can be equally important to save time and energy, to utilize other experts to accomplish goals, and to reduce jobsite supervision and virtually eliminate change orders and jobsite errors.
In the area of lighting and electrical design, Aterra partners with builders to act as liaison between you, your electrician and the buyer. Although on the surface it might seem like partnering with another subcontractor adds another layer of complexity to the formula, exactly the opposite is true. Our professional design consultants free your staff from time-consuming client consultations. We eliminate the need to rely on incomplete or misleading plan changes, and we are experts in the area of electrical options, smart technology and home automation. We utilize fully-integrated computer software that supplies pertinent ordering, scheduling and cost information to everyone involved. We have industry resources and alliances that not only help you stand apart from competitors, but also save you money.
We work with architects, designers and owners of both residential and commercial properties, with the goal of finding unique, individualized solutions. Since 1999, we have been in the business of educating both builders and customers about modern lighting design, and about cost-effective ways to use new technology.
We offer production home builder packages that are designed to add value for everyone. We hope you’ll explore our options as a part of your continuing value engineering discussions. We also hope you like our definition of value engineering.