By Barbara J. McHatton
October 24, 2006—While many builders consider their work a craft, a mainstay of mass production has introduced a new kind of science, known as even-flow or controlled production, into the industry, especially among larger builders.
Even-flow production requires that home builders commit to developing, processing, selling, starting and closing a certain number of homes within a specified time frame. As in assembly-line manufacturing, the processes are rigidly scheduled so each subcontractor knows what he or she will be doing on any given day and what is expected to be completed. This predictability enables builders to streamline their production processes and create more efficient construction methods. Perhaps more importantly, builders can potentially avoid the large spikes and troughs in volume, minimize overhead, cut cycle time, reduce costs and increase profits.
Plenty of builders recognize the potential in a process that has worked well in manufacturing for more than a century. According to Richard Rodriguez, senior vice president of operations and process, John Laing Homes, Newport Beach, Calif., many already are thriving from its benefits. And he should know: He has led process improvement efforts at Arvida and Centex Homes. At Arvida's Weston division, he implemented initiatives that reportedly increased closings from 800 to 1500 annually and raised customer satisfaction from 80 percent to 97 percent.
Though several factors have evolved from even flow's original processes, much of the basic model remains the same. "Previously, the focus was only on the construction process," Rodriguez says, "Now we look at the process from land acquisition all the way through to closing and warranty."
In fact, the model has been doing so well, a consultant group devoted specifically to implementing even-flow construction practices opened its doors in 1998. Using specially designed software, Totally Productive Group, Cape Coral, Fla., assists builders in mapping out construction processes, system improvements, training and creating reports to successfully implement even-flow techniques.
Step by baby step
Basically, even flow requires management to study data and devote resources to allow for expected sales, mapping the entire process in minute detail from development to final closing and creating a schedule for each step of each building phase. This way a builder can know far in advance which materials will be needed on a specific day and what the subcontractors will be doing that day.
Many builders abandoned even flow because they couldn't always stick to their prescribed even-flow number due to changing market conditions. From this dilemma, even flow evolved into "controlled flow"—allowing builders to alter the number of homes sold/started/closed as market conditions lagged or improved, thus still avoiding the huge spikes and troughs that plague many public builders.
Weather data plays a critical role in controlled-flow scheduling. "You can look at an almanac to determine what the expected rainfall will be in any given month in any given area," states Rodriguez. "If there is an average of 10 days rain in September, you can add those days into the schedule, or erect tarps so subcontractors can keep working in the rain or even increase the number of subcontractors when the weather improves to keep on schedule." Weather should rarely be a reason for production delays, but ignoring available data can greatly affect the schedule, he asserts.
Another bonus of controlled flow is that it permits purchasing materials on a regular basis, spreading the costs over time and over multiple units. It also lets subcontractors know where and what they will be working on and what's expected to be completed on any given day. Constant schedule analysis can reduce schedule time, claims Rodriguez. "At Arvida, over a three-year period, homes that were on a one-year build schedule were constructed in 110 calendar days. Our vendors loved it, because they were busy, too."
No more going with the flow
One major factor in making a controlled-flow system work is committing to the process. "The senior management must be behind the system 100 percent," Rodriguez says. He also claims it is imperative that the company have a full-time process manager to keep a close eye on scheduling, resource capacities and bottlenecks, both before and as the work is completed.
Communication is extremely vital to controlled flow's success, Rodriguez says. "If you let everyone know what is expected each day, there is less chance of falling behind," he explains. "When a delay is found in the production process, a builder can spot the exact place in the production chain, and analyze with the staff and subcontractors what can be done to prevent future delays." He recommends using process boards and other visual tools, accessible to and readable by each member of the building team, and updated daily with schedule information. Regular staff meetings also help keep the team abreast of the cycle times.
A builder must invest time and effort to see tangible results, and Rodriguez adds that it will take time to see the results—as long as six months to see any improvements. "Some builders expect to see results immediately, and when they don't they give up," he says. "But builders who stay with the controlled-flow process can enjoy significant reductions in cycle time."
Perhaps the biggest benefit of the even-flow process is customer satisfaction, says Rodriguez. "Controlled flow enables creating a consistent and predictable process on time and with higher quality. It works whether you build 20, 2,000 or 20,000 homes." And no matter how you process it, six months of waiting for results seems like a reasonable time when the payoff is so many happy customers.
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