Managing Trade Partner Growth: Why Some Builders Succeed and Others Fail

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The last couple of years have been optimistic for homebuilders, with rising home prices and increased margins. However, as pipeline reports lengthen, a new problem has surfaced: the trades struggle to keep up with the increased demand. And, when the subcontractors grow too fast, the building quality can suffer.

Trade Partner management is a critical driver in managing a homebuilder’s growth. It always has been, and always will be. Those builders with established standards and training programs will not only grow, but will grow profitably. To do that, successful builders take advantage of systems that quickly and efficiently disseminate information.

Information is power in the evolving world of technology. The home builder that can communicate expectations and standard building procedures to their trade base will hedge off construction error, reduce waste and ensure a consistent level of quality. Builders are also hiring multiple companies for specific activities, which only increases the risk. The builder that can rein in multiple companies under one system will take the competitive advantage.

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The first step is to have accurate documentation, i.e. a Scope of Work, for each building activity. This documentation must be clear and concise so that the Trade Partner understands and agrees to the builder’s expectations. This foundation will ensure that, for example, drywall material, thickness and application are performed the same regardless if Company A or Company B is contracted to do the work.

Activity specific checklists should complement the Scope of Work, and put the builder’s expectations in the hands of the actual subcontractor who steps foot on the jobsite. This can be as simple as demonstrating the correct way of performing a task to double-checking job completion items. Photos should be used whenever possible, as they communicate information beyond the text and can overcome language barriers.

Builders who train crew leaders to use -- as well as how to use -- the checklist will take their standardization techniques to a deeper level. Training always requires an upfront time investment, but the pay-off will come when 100% job completion is achieved. That will have a positive effect on trade performance for following activities, as well as keep the construction schedule moving.

Technology can help. With software you can:

  • Give Trade Partner performance ratings that the Construction Manager can use to communicate expectations
  • Notify crew leaders of incomplete work or errors
  • Share jobsite photos with the subcontractor (which can communicate more information than texts)

The Construction Manager who has job completion data at his fingertips can respond faster and more effectively, reducing downtime and lost time to rework. When senior management has access to real-time data, they can respond faster to change and make better decisions. If a home builder stays focused on its standardization plan and can execute it in a partnership with its growing trade base, it will be in a position to manage growth successfully.

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