The class of 2005 Leading Residential Design/Build Firms is diverse in many ways. They are based in all areas of the country, from the Northeast, Midwest, South, Southwest, Mid-Atlantic states and even Canada. They employ anywhere from a handful to a bus load of employees. They build homes in different architectural styles, and sell them in different price ranges.
But these firms are similar in many ways, too. They are most similar in their devotion to the design/build process. They use design/build because it makes the construction process easier for their clients, ensures solid communication between everyone involved in a project, brings jobs in on time and within budget, increases profits and gives builders more control over scheduling and costs.
Successfully controlling schedules and costs is a best practice that makes these firms successful leaders, but that’s not the only thing. For instance, in the Bryan, Texas area, the number of home builders is exploding, and 2D Homes hired an extra designer to bring fresh design ideas to the mix, but also for the ability to handle more work, and do it more quickly.
Being in a market that necessitates hiring more staff is a position most builders would like to be in, and many are. In situations like this, it could be easy to take on too much work, but not at Franklin & Associates in Akron, Ohio. The culture of controlled growth at this Midwestern design/build firm keeps the business safely moving forward.
“Rule No. 1 is not to overextend yourself,” says Tim Franklin, president. “You’ll make a better product as a result, which improves the referral rate.” Maintaining this culture sometimes means turning down or postponing new business, but that’s just fine with Franklin. The design/builder doesn’t lose new business when forced to postpone it to finish current jobs. “(N)ew clients know they’ll get the same treatment some day.”
Successful project management is crucial to any design/builder, and none more than Calvis Wyant Luxury Homes. Tony Calvis and Gary Wyant believe their project managers are the best at what they do, and are critical parts of the company’s success. Being extremely organized and making sure selections are complete before construction begins appeals to many of Calvis Wyant’s clients, Wyant says.
Calvis Wyant isn’t the only firm committed to completing selections before construction begins. On The Level Inc. in Chaska, Minn., sets expectation levels high and customers meet them. The design/builder expects clients to complete the selection process before breaking ground, and that’s what happens. But it’s not easy making this a reality.
“We anticipated that it would be difficult to sell because homeowners would have to put down more money up front. But we sold it by telling them there’d be fewer surprises during construction,” says Chris Thompson, president. This improves efficiency and profitability.
Another leading design/build firm committed to improving is McNeil Co. Builders in Omaha, Neb. It is standard practice for the company’s architects to make numerous educational trips, sometimes four a year. It is through its architects’ continuing education that McNeil can bring innovative, accurate and stunning architecture to its clients. Good architecture takes common sense, and it’s not something a person simply knows, says Patrick McNeil, owner/president. “You get a sense of good architecture from studying it,” he says.
In addition to sharing a common devotion to the design/build process and implementing best practices to improve themselves, the members of this year’s class of leading design/build firms also face many of the same challenges. Common to all of them, regardless of size or location, is the challenge of finding and acquiring suitable land to build on, as well as finding and retaining talented people to work for them.
Not surprisingly, they all have their ways of facing these challenges. And they all have a way of succeeding. Find out how and why in the following pages.
Built on design
Knowing when help is needed is a quality of strong leadership. So when the owners of 2D Homes in Bryan, Texas, hired another designer, they knew doing so would keep their company at the head of the pack.
The workload became too much for the staff to handle properly, so one year ago Victor and Mark Drozd, co-owners, hired a designer who is going for her master’s degree at Texas A&M. Although Victor is a designer himself, the addition of another designer to the staff will help in many ways, including getting jobs done faster, he says.
Another reason for hiring an extra designer is to combat so-called design/builders who buy software and believe therefore they are a designer, Victor Drozd explains. Customers have walked in the door with plans drawn by a builder using a CAD program, and 2D turns away the work due to the poor quality of the drawings, he says.
“Everyone can draw a floor plan, but it’s tough to put a roof on it, and one that will work,” he says. “Our strong point has been our reputation for knowing how to design a house that works. It brings people back to us for more work. Hiring a designer makes us more competitive by making us faster and able to handle more design work.”
Drozd says in his area with a population of roughly 80,000, about 200 builders are in operation. “They all want to try to get on board with what we’re doing, trying to design their own houses. I see that advertised a lot more. Many of the ads offer free plan service. Anything you do for free can’t be worth it, and if that’s your first impression, the plans are not worth much,” he says.
Taking advantage of Texas A&M being close by, the two owners also hired an undergraduate student as an intern for added support. “We’ll give them work to do such as the preliminaries. Then we’ll correct anything that needs it and do detail work on the plans. They get things started for us, and they’re actually learning as we benefit from them being here. It’s a big step in their career, and it helps us at the same time,” says Victor Drozd.
The internship program began 10 years ago. Most 2D interns move to big cities for more experience, but for the six months or year they’re with 2D, it’s a win-win for both sides and keeps the design/builder fresh with new ideas.
Being a design/builder is the only way for the Drozd team to go, they say. Building one’s own design means a trade can call to ask what the design intention was for all or part of a design, and Drozd can tell him. “Otherwise, when building someone else’s design, you have to track down the architect which can take forever. That’s the beauty of designing your own projects.”
Project management at Calvis Wyant Luxury Homes in Scottsdale, Ariz., is extremely important to the builder’s success. The strong management style distinguishes the builder, and co-owners Tony Calvis and Gary Wyant believe their project managers are the best at what they do.
Strong managers work best with people who want to be managed, which is why the duo locates customers who want to be a part of such an organized construction process. “Most people when they embark on something new, they want to have leadership, especially on a project like a home,” Calvis says. That leadership involves explaining why some decisions are good, even if they’re not the decisions a client would make. And when it’s explained, they understand.
Most clients buy into the Calvis Wyant project management style. Being extremely organized, covering all the steps, and making sure every item is selected before construction begins appeals to most clients, Wyant says. “It avoids problems later because there’s no stopping in the middle of the project.”
When the team begins work, new clients are given a three-ring binder workbook filled with questions. The questions cover all areas of the house, including how the owners plan on using it, and all the features they want. “Requiring them to use the workbook makes (clients) think about things they haven’t thought about before. We may ask about special artwork they need a location for, or the dining room and how many people will sit around the table. We have them talk about issues, and we start designing,” Wyant says.
While relationships with clients can be fantastic, they won’t mean much if relationships with subcontractors are not healthy. Calvis Wyant has excellent relationships with its subs, and for good reason. “Right now, if you are a general contractor who subs do not want to work for, you’re in trouble,” Calvis says. “They are only working for generals they like to work for.”
Calvis Wyant has been in business for 20 years, and its subs have been with the builder for almost as long. “A third or half of our subs are original. And it isn’t fair to not pay them on time, or not have a job ready on time,” Calvis explains.
There’s definitely a difference in the work Calvis Wyant gets out of its subs compared to what others receive, Calvis says. “We constitute a significant portion of our subcontractors’ work. If we’re 50 percent or even 20 percent of their work, that sub will at least take our calls and be responsive to us.”
Building beyond price
After years of developing subdivisions, Richard Dickson, president, Dickson Development Corp., Plainsboro, N.J., decided to focus on custom design/build work. Dickson is a meticulous estimator, and appreciates the accuracy of the design/build process.
“I saw an opportunity for the design/build market, and it was my desire to diversify and not be a general contractor. When I bid, the only factor was price. There was always someone who would do it for less, and I was done working like that. As builders, the design/build process allows us to control the cost in line with the budget. Now I’m looking for clients who appreciate the concept of design/build,” Dickson says. “Sometimes it’s hard for a consumer to understand that the price they get on a bid might not be what they pay if the job is not bid properly. We’re focusing on more design/build work so we can ignore other ways of doing things.”
Dickson’s plan is to not only do great design, but to be serious about bringing it in on budget. “Our profit center is the building not design. If we design something that the client likes then they’re less likely to bid out our design. When you can establish good relationships and build trust, you can have a very high conversion rate, like we do,” he says.
Dickson Development, in an effort to improve its conversion rate, has hired a full-time designer, which has reduced the turnaround time on smaller jobs. The builder still maintains a relationship with an outside design firm to do working drawings and help on design.
To secure business for his clients as well as his company, Dickson offers assistance with financing. The builder suggests relationships with banks that offer construction financing in which the loan is based on the value of the finished product. “We have the ability to introduce them to several institutions. It’s simply a way of facilitating the project. And it falls in line with our philosophy of offering any services they need.
“When you do custom work, you must be prepared to do anything. And you must understand that you won’t always be able to turn every little job into a profit center. Sometimes you do things to accomplish the job for your clients, and nothing more.”
Knowing when to turn away jobs is a skill that serves Franklin & Associates well. The Akron, Ohio, home builder began as many have, taking jobs it shouldn’t, just to survive.
As business grew, the firm established a good reputation, won awards, became known in the community, and jobs began coming to its door. After a few years of defining its niche in the custom home market, business began to be too much to handle effectively, says Tim Franklin, president. “We were all too stressed, too thin-staffed and it was tough to keep clients happy. Details started falling through the cracks, so we had to put on the brakes. We didn’t want to ruin our good reputation.”
When someone delivers a lead on a multimillion dollar home the first urge is to take the job, he says. “Rule No. 1 is not to overextend yourself. You’ll make a better product as a result, which improves the referral rate. Because if clients aren’t happy, they won’t refer others to you.”
Franklin has had a few clients approach him with jobs, which had to be postponed for a month or two to accommodate the needs of current clients. New clients are told the company will focus on finishing the jobs of current clients before full attention is given to new clients. “We didn’t lose any jobs because of this. People understand we can’t let current clients down. Plus, new clients know they’ll get the same treatment some day.”
This culture of controlled growth creates happy customers who come back for post-sale work. For example, clients call Franklin to ask what they can do about a leaking roof. Franklin comes up with a quote and gets the work. “They come to us with something they haven’t taken care of in six years, and we get it done in three days. We get the work, and a good relationship. We service anything our clients want but refer them if we can’t do it,” Franklin says.
Franklin is happy as a design/builder. “Design/build evolved even before it was called design/build. In the beginning a lot of firms called themselves design/build, but they couldn’t design. Others couldn’t build. Now I really think it’s the future of residential construction.
“The process gets rid of miscommunication, but you’ve got to do it right, and if you can do it right, it’s the only way to go,” he says. “Design/build will be so ingrained in consumers’ minds in five years, people won’t accept anything less.”
Building trust, buying land
Finding suitable land to build on is tough. But finding it is only half the challenge. Convincing people to sell that land to one buyer and not another is the other half of the challenge.
“There used to be land suitable for four- to 10-lot subdivisions before the 1960s, but the only lots left now in many areas are teardowns,” says Joseph Grignaffini, president, Grignaffini Construction, Wellesley, Mass. “Because we’ve been in business for so long, we get first whack at a lot of what comes up. Private individuals come to us because of our reputation.”
Grignaffini loses out on quite a bit of land as well, he says. But luckily, the builder doesn’t need more than a few lots each year. If he can’t buy the land for $100,000 less than what his competitors are willing to pay for it, Grignaffini would just as soon lose it than spend the extra money. “It makes our projects look that much better because the other builder has to cut on quality so the house ends up at a price level that will sell.”
Being a design/build firm that builds custom houses, some of its customers want additions but Grignaffini advises against it. “We can give them what they want more efficiently by tearing down and building new than through remodeling. You have to evaluate whether it’s worth putting on an addition or doing a teardown.”
Once Grignaffini identifies available land, it’s time to convince owners to sell. The ability to show owners exactly what Grignaffini will build on their land, and exactly what it will look like, and how it will blend into the neighborhood is the strongest tool Grignaffini has. And it works.
“With a teardown we are considerate of the remaining neighbors. We make sure that we contact neighbors and let them know we will preserve large trees, and make the new house conform to the neighborhood style so it does not stick out. When we design the house, it’s important not to take a stock plan and plop it in the neighborhood.”
It helps Grignaffini’s chances of purchasing a piece of land that the company can buy the land with no contingencies. “The deals get closed right away. Someone selling their house will sell it at a lower price for an all-cash deal. Plus they know they’ll leave with neighbors who are not mad at them for leaving the neighborhood with an eyesore,” he says.
A strong sub-structure
Good business is built on good relationships, and no one understands this more than Ronald Klopfenstein, president, C.G. Klopfenstein Builders in Leo, Ind. In a time when every trade is struggling to replace the large numbers of retiring workers with younger, skilled versions, Klopfenstein is moving forward without many problems.
Some of the subcontractors that work for Klopfenstein have been doing so for almost 40 years, some with a second generation of ownership. Subs don’t stick with a builder that long unless they are being treated well, which means paying them on time and having work sites prepped and ready to go, when promised.
“Obviously paying them on time or even early goes a long way. I never understood why a builder would not pay subs on time,” Klopfenstein says. “Over the years we have chosen subs that have a philosophy that lines up with ours of placing value on quality and not being the least expensive, but in the long run being the best value.”
Communication also plays a critical role in good relationships with subs, he emphasizes. “If we make a mistake, we own up to it and don’t blame the subs. We maintain straightforward communication with them, and they do the same with us. Another powerful tool is to call your subs just to say they did a good job. Too many times they only hear the bad stuff. I make a regular point to do this. I enjoy doing it and they enjoy hearing it.”
Klopfenstein’s relationships with its homeowners are healthy, too. The builder has formed an advisory board consisting of clients who have recently moved into their homes. The advisory board provides direct feedback on product and processes from people who have been through the Klopfenstein experience. It also allows the builder to stay in front of its best clients, and to increase possible referrals.
“We ask them what they liked about working with us, and what we could have done better. We do this to help us improve. It’s the experience of working with us that we’re trying to improve. The more questions you can eliminate or answer before turning over dirt, the better experience a customer will have,” he says.
The advisory board has reaffirmed to the Klopfenstein team to stay the course. “There are so many builders in our area, it’s easy to be tempted to throw in the towel as to how you’re doing your job, But this process provides us with affirmation not to change.”
A partnership approach
There are more ways than one to build a house, and George Foster Jr., president, McFoster Custom Homes in Naperville, Ill., builds custom homes in a way that works best for him.
Foster relocated his business from Chicago to the suburbs and decided to focus on single-family custom homes. Not knowing the area, the next logical step was to learn the market quickly and get some help to build the top-quality homes he wanted to build. So Foster began forming his team by finding a real estate broker with intimate knowledge of the market.
He then found an architect who also knew what the market wanted, and who could get things done. Foster located an independent designer with ASID certification, and was studying at Harvard for construction management certification. The next team member was a cabinet designer who can make a $3,000 bath look like a $30,000 bath, he says. These people form Foster’s team of partners, and together they build, as equals.
Foster likes the partnership approach and the nature of outsourcing, because when working with partners outside an immediate staff, a new flavor is added to each project. “They are working for others as well as with me, so my clients get the benefit of diversified perspectives without paying extra for it. I know some big builders in my area, and they all have someone who works in their office on their designs, but is limited to how the owner wants to design houses.”
Foster and his wife don’t follow the crowd. “We go the other way. We are students of our craft, and we don’t do what everyone else does. We like to set the trends. People ask us, ‘What made you do that, and why? We never thought of doing it that way.’ We bring innovations to our clients.”
One reason Foster’s team approach works so well is how everyone is treated as equals. “You need synergy and continuity to your buildings by using the same trades and outsource providers on every job, which we do. Together we build houses. They don’t build houses for me, they build them with me. And by treating them as partners, they have a vested interest in doing a good job.”
Foster believes the partners to which he outsources have a different interest in their work than an employee. And employee will do a job and go home, but because outsourcers are business owners as well, they put their heart and soul into their work, he says. “They want to keep their good name intact. My outsourcers know their name is on the job, too, so they make sure the product looks spectacular whereas an employee might just do a job and not take ownership of their work.”
Innovation through education
A commitment to continuing education has allowed McNeil Co. Builders in Omaha, Neb., to be known for exceptional quality and stunning architectural designs. McNeil Co. designers take educational trips several times a year, attending seminars or visiting manufacturers to learn what’s new and innovative.
Education provides an appreciation and great perspective for what else is done in the custom home market, says Patrick McNeil, owner/president. “The designers bring back whatever’s new, applicable to, and makes sense for what we do. They are exposed to ideas they can introduce that benefit us,” he says.
“Here, we are all students of architecture and design. We study and learn how materials are blended, what materials are more popular, what materials are timeless, and what architecture is trendy and yet strong. These are ideas our designers bring back from these educational trips.”
Good architecture takes common sense; it’s not something a person simply knows, McNeil says. “You get a sense of good architecture from studying it. When someone wants a home with Midwestern flavor, we can deliver. We have an appreciation for different styles of architecture, and force ourselves to understand what makes it great. Was it the trees? The use of materials? Great architecture is a sum of all this.”
It’s not important for clients to understand everything a builder understands about great architecture, but it is important for them to stick to the selection schedule. Selection is difficult to complete before breaking ground because it places pressure on owners to make decisions before they might be ready, he says.
“We explain to them, ‘It’s your home and we’re here to help you make decisions. However, here’s when we need those selections.’” Builders must get decisions, on time, and help clients make decisions because that’s a builder’s job, McNeil says.
When clients have no idea of what their home should look like, a good builder takes control. “Then it’s your job to ask them where they have lived before, and what’s their favorite home. We take them on virtual tours and eventually we create the home of their dreams.”
Setting great expectations
Set the expectation level high and people will rise to it. This is what happens at On The Level Inc. in Chaska, Minn., which expects customers to complete their selection process before the design stage is finished. The builder expects it, and the homeowners do it, says Chris Thompson, president.
“Sometimes it seems like a dream come true, because it’s definitely difficult to achieve,” Thompson says. “We decided it would be worthwhile to set this goal. We anticipated it would be difficult to sell because homeowners would have to put more money up front. But we sold it by telling them there’d be fewer surprises during construction if they put up the money early. But that’s difficult too because one person thinks spending $100,000 on appliances is significant, and others think $20,000 is a lot, so it’s hard to set allowance levels.”
Selections aren’t always 100 percent complete when construction begins, he says. Exceptions typically include landscape designs. But for the most part, selection has been completed.
There has been no resistance to this selection policy, Thompson says. The staff has embraced it. “The staff never doubted it, but knew it would be time-consuming. It has made our estimates more accurate, and benefits us because there are fewer change orders, which makes for a happier client. It’s actually a selling point with our clients.”
Another expectation of On The Level staff, its subcontractors and vendors, is to work with its online project management tool. Online project management is not new, but it is new to On The Level, and plays a role in making the builder a local leader.
“When we first heard about the online management tool, we were in the process of redeveloping our daily logs. For liability reasons, it’s important to log who was on a site, when, what they did, and include as much information as possible. If my guy doesn’t show up we log why.”
On The Level’s vendors love the online tool, and use it regularly, Thompson says. Of all its vendors, only two were a little resistant as they were not computer savvy. Once shown the ropes, they were fine. “As an owner, I think of liability. Keeping accurate records in one place in case you need something a year or two down the road, is important. It has streamlined our processes.”
When money is no object, as it typically is for the clients of Homes by Richmond in Buffalo Grove, Ill., it can be easy to go overboard when it comes to details and decorating. That’s when Richmond’s philosophy of subtle elegance is applied to prevent a home from becoming over-the-top.
Subtle elegance can be an art form, says Stephen Day, vice president. “At this level of clientele you’re trying to match their wishes with what looks great, and those two don’t always coincide. So we try to ensure that from house to house the level of detail is appropriate, throughout the home, not just in one area and not in others. Subtle elegance truly is a fine line between over- and under-done.”
Day’s partner and he have learned over the years that being a leading custom home builder takes refinement. “Every time we build a home we think we can do the next one a little better. So we’re constantly refining our craft as we go along. The goal is to create spaces where you don’t need furniture to enjoy looking at it. The architecture should speak for itself.”
Homes by Richmond’s clientele has a certain sophistication level, and understands what is meant by subtle elegance. If Homes by Richmond sees clients going down the wrong path, the builder brings it to their attention, but ultimately homeowners have the final say, he says. “When homeowners are starting to run wild, we try to show them examples of what we believe to be good,” Day says.
In the custom home business, clients are looking for a builder who takes an active interest in what type of home is built for them as opposed to a builder who is looking to churn dollars and sell whatever a customer looks at and likes, Day says. “We’re more passionate about what we do than a lot of firms out there.”
Richmond’s expertise comes at a higher price than that of its competitors, but this sits well with Day. Simply put, you get what you pay for, he explains. Some customers understand that, and others just want their home to look “good enough. There’s a big market out there for simply looking good, but we have a minimum quality standard, and we don’t deviate below it. That sometimes means knowing when to say no. There are a lot of deals that walk out the door, but that’s OK because we won’t cut what we perceive to be a corner. It doesn’t make sense to jeopardize the good reputation we’ve built.”
Harvesting homegrown talent
Rather than sitting back and letting potential employees of varying skill and ability levels come to him, Jonathan Zerkee, owner of Sonbuilt Custom Homes in Langley, British Columbia, created his own junior apprenticeship program in a proactive effort to hire the best people he could find.
Zerkee was taught the trades by his father, and this is his way of returning the favor to young people today. The apprenticeship program identifies young students before they get to the college level. “I try to get them in grade nine and 10, to work with me on Saturdays. In some cases we have identified very skilled workers, and they go on to work with our company.”
The students are trained how to work in the mill shop, on table saws, with planers, safe use of pneumatic tools, and how to read their tape measure correctly. “We teach them how to put a wall together, and use their square. So when they go out and work with our crews, they know what to do. I can identify if a student has the hand/eye coordination needed to work in the trades, and if they’ll be successful down the road.”
One apprentice worked with Zerkee for eight years, and only recently left the company. Now he calls Zerkee and asks for advice. “Yes it’s hard to lose someone, but it also makes you feel good to help people succeed.” The average apprentice remains with Sonbuilt for two or three years. Only one in 10 years hasn’t worked out.
Sonbuilt benefits by employing young people that have energy and enthusiasm, and by training them while young, Zerkee is building loyalty and trust. Zerkee also is able to train apprentices in the way he wants the job done, and doesn’t have to deal with a person who is trained by someone who does a job differently from how he works.
Growing talent at home improves business and presents a better public image, which also is why Sonbuilt has constructed a new headquarters building and showroom. The entire space is finished with different lighting, mouldings and other products, and contains a board room with a big screen, where clients can sit down, watch videos, and go through services that Sonbuilt offers.
The large mezzanine area contains samples of windows, siding, doors and brochures. “The building separates us from our competition. A lot of guys work out of their pickup truck, and this sets us apart. We’re trying to show clients that we’re different than our competition.”
The art of image warfare
Just because a custom home builder is small, doesn’t mean it must project a small image. Perception can mean a lot to many customers, which is why Tom Stephani, president/owner, William Thomas Homes in Crystal Lake, Ill., created a marketing program that projects his custom home business as larger than life.
Stephani’s mission was to create an image bigger than reality to show people the company is involved in the community, that it is local, and has been around for a long time. With beginnings in 1999 as a new division of an existing development company, Stephani’s team felt it was important to create a large image out of the box and create public awareness that the company is not new, but it is part of one with more than 100 years of experience.
A major element of the marketing plan is to remain active in the community. Stephani is active in the chamber of commerce, as well as the local home building association. “By being active, we get a lot of press. Plus, the association gives out a builder-of-the-year award, which we received in 2000 and 2002. So the public knows we’re a respected builder as well,” Stephani says.
As part of an active, multifaceted business structure, Stephani organizes custom builder seminars on a regular basis. The public is invited to learn how to go through the design/build process. “We send press releases about these seminars to local newspapers and they are happy to print it. We also buy an ad or two for the event, but ads are not a big element. We attract groups of 10 to 40 people. It’s a great way to get your name out there.”
As is the case in most populated parts of the United States, developable land is difficult to find and acquire, Stephani says. “One thing we do to find land is work with the local realtor community, and the ones that have their ears to the ground. We have good reputations with them, give them business, pay commissions, and they are comfortable with us. Sooner or later we pick up on land about to come on the market before it hits the market,” he explains.
To acquire land, small custom builders have to engage in guerilla warfare, hide behind trees, and not march down the middle of the road like big national builders, he says. “I believe you can survive like this. There’s always a place for the small design/builder. He offers a hand-holding capability that national builders can’t offer.”