Tuesday, October 16, 2012

Puzzle Masters - The Builders

(Editors Note: The following is an excerpt from my new book Raising the Roof! A Homebuilder's Secrets to Saving Time and Money. So often homeowners take a "Ready, Fire, Aim" approach to the building process. Raising the Roof! attempts to re-orient the process so most of the planning occurs upfront, before leaving the architect's office. This piece is a snippet from the section dealing with the second of the Team Members, the builder. Many additional "tricks and tips" can be gleaned from the balance of the text, but you'll just have to wait for the book to be published before you can see the rest of what we're up to!) 

Puzzle Masters – The Builders
On one hand you have architects that specialize in design but don’t know cost. The other hand consists of the contractor/builder who doesn’t know design but lives in the world of cost everyday. Sounds like a marriage made in heaven doesn’t it? Wrong. Seemingly architects always want to be on the budget and production committees, and builders want to sneak over to the design committee. The problem? Each is convinced they know more about the other’s discipline. The truth? Architects need only to design – and stay away from cost issues; builders need to specialize in the cost and technique of putting puzzle pieces together, and stay out of the design.

Let’s sort this out. But before we do, let’s clean up the difference between a “builder,” and a “contractor.”  Though the terms seem interchangeable, and will be used interchangeably in this book, a “builder” is someone who builds things and accepts all the normal risks inherent of the building business and also accepts the economic risks of being able to sell, or not sell their product in the marketplace. A “contractor” builds things for clients, still shouldering the normal risks of the building business, but works on a “for hire” basis, thus eliminating  most economic risk. Whew…is all of that clear as mud? If we go way back to the beginning of this book, the builder is the “businessman,” and the contractor is the “artist.”

By the very definition of their job description a builder/contractor has to be in cost and budget everyday. (Note: the title “Contractor” is derived from the word “contract” which everyone knows means lawyers and money must be involved). Whether building for a specific client or the open market, it’s impossible to build something without incurring cost. So, with pricing fresh in their mind, the Contractor is much more likely to know the cost of a pier and beam foundation then the pencil pushing architect.

But ignorance doesn’t stop the architect from guessing. Almost every day in Dallas, Texas you have an architect guessing how much it’s going to cost to build the magnificent structure he/she has just designed. They’re clueless! (Qualifier: unless the firm is “design/build” where architecture and construction both come out of the same office – see the section on Architects). Some of the hardest deals ever done are projects where the client has hired the architect independent of the contractor, designed a magnificent home with the architect, and been told it can be built for say $175 per square foot (exclusive of land). Just imagine the surprise of the client, and the embarrassment to the architect when the project prices out at $300 per square foot. ARCHITECTS DON’T KNOW COST – they think they do, but don’t let ‘em fool ya.

Earlier, in defining the difference between builders and contractors, the rather unusual and precarious risks faced by builders everyday were noted.  Any occupation where people are putting large objects together; standing on walk boards two stories in the air; installing roofing on slopes too steep to possibly walk; and playing with methane gas, to name just a few potential dangers, has inordinate amounts of risk. Assembling the large pieces necessary to build a home requires hanging in mid-air on scaffolding (usually walk boards to the framers), and nailing shingles on a steeply pitched roof while plumbers connect methane gas lines throughout the structure. The chemicals used in painting have yet to even be considered.

A natural argument says builders must be nuts to want to build houses. Some   are – “nuts” about the people, “nuts” about the process, and “nuts” about the finished product. Building gets in the blood and just won’t go away. Sure, risks can be managed through incorporating a business and buying all kinds of insurance but my Father-in-law said it best “…if you’re going to build big houses, you’re going to have big problems.” Truer words have never been spoken.

Builders wish the risks and liabilities were limited to only jobsite related functions. No way - those risks are too manageable. Add economic risks, downturns in the economy, international trade regulation risks, raw product price spikes (copper and gypsum are two prime examples), shortages, client management and relations risks, even the threat of litigation, and it makes one wonder why anybody would sign up for being a builder. (I once had a client that was soooo mad they said their attorney was ‘going to sue me until I bled to death!’)

What’s the incentive in begging for this kind of potential punishment? Where else can a person literally conceive an idea one day, start building on it the next, and end up with something becoming a legacy when long gone? Fourteen months in the oil and gas business years ago filing files taught me about missing the spontaneity of the homebuilding business….. (probably didn’t make near the money, but I’ve had a much better time).