Housing Giants - September 10, 2008 - (Page 16) Tech equivalents (FTEs). The company has achieved even more “staffing avoidance,” as the firm was well-positioned to flex in size, easily getting larger or smaller in response to market demands. Before integrated software was installed, the builder’s superintendents had the power to inspect the property and approve payments of work and materials. But they had to submit these changes on pieces of paper. Data had to be reentered at the office, and they had no schedule tracking — just static Excel cells that were not fully integrated to QuickBooks Pro. After the installation of integrated software, the builder was able to preload schedules, checklists and sub-checklists that drill down to such specifics as “painter removed tape from windows” on its superintendent’s BlackBerry. Now, upon work-stage or job completion approval, the super signs off, and that wireless signal triggers schedule updates, messaging, accounting updates and payment, all linked to one database. And the builder did not incur the cost of custom code to get this done. percent, and that doubled to 10 percent in 2006 with just the technology implementation. To figure out the savings in dollars, that 10 percent is saved on a gross of $16.7 million gross, with 69 starts and 3 models. That year, the builder booked $20 million on 120 starts and 5 models and started three communities that yielded a gross of $35 million in 2007. The jury is still out on 2008 numbers. Today the builder runs a totally paperless, automated invoice to purchase order work order system. The team even looks at invoices, because the costs/work are pre-authorized when a bid is accepted; invoices are often paid before they’re received. And the vendors love them. The return on technology investment in impressive: net to net margins were driven from 5 percent to 10 percent in the first 18 months of full implementation, giving a return on investment of net-net 5 percent on $16.7 million gross (software and consulting cost around $100,000). Savings will compound year-on-year. HG Tom Gebes is widely recognized as one of the nation’s leading experts on software technology and home building. He is the founder and president of BuilderMT. Contact him at Tom.Gebes@BuilderMT.com. The effecT on The BoTTom Line After the integration, the builder’s net margins immediately moved up to 5 16 hoUSinG GiAnTS.9.10.08 www.hoUSinGGiAnTS.com http://www.buildermt.com/management.html http://www.buildermt.com/ http://www.Housinggiants.com
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