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How A Professional Builder Prices A Building Contract


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If you are adding a margin to the cost of materials and labour in order to calculate a contract price…then stop right now.

Your building company is in serious danger of losing money, especially if you plan on growing.

The traditional method of pricing jobs is to apply a margin to the cost of sales.

The problem with this method is that you are hoping you will make enough profit to cover your overheads and wages.

Building companies with revenues of less than $6m DO NOT enjoy the same economies of scale as traditional businesses like manufacturing or retailing.

This results in builders making little, or no net profit at the end of the year, despite taking on more work and increasing their revenue.

When a building company grows, their net profit margin decreases…

Even when they don’t reduce their margin, they can still end up losing money…

How is that possible?

The problem lies in the method they are using to price their jobs.

Most builders add a nominal markup of say 20% to their cost of sale which gives them a contract price to charge the client.

The problem with this strategy is that it doesn’t always cover the running costs for the business.

Where Most Builders Go Wrong

In fact, when it comes to quoting a larger project, most builders actually reduce their profit in order to win the job when in fact they really need to be increasing the margin to cover the additional running costs.

It’s the reason why you hear so many builders say they were earning more money when they were doing less jobs.

It’s also the reason why so many building companies run into cash flow problems.

And it’s why so many builders end up with nothing to show for decades of hard work.

The good news is that there is an easy solution to the problem.

Building companies need to price their jobs using a net margin instead of gross margin.

When you apply a net margin to project you are guaranteed to make a profit.

But when you apply a gross margin to a project, you are simply hoping to make a profit…

And that’s fine when your turnover is at a consistent level…

But when workflow increases and additional resources are taken on, the amount of fixed costs, as a proportion of the contract price also increase.

When that happens you have 3 problems.

First, you don’t know what your break-even point is.

Second, although you are increasing your cash reserves, if you are not making a profit then you’re creating a hidden liability that will get bigger and bigger, a bit like giant Ponzi scheme.

And third, you’ll probably end up cutting margins in order to win more work, which only compounds the problem and increases the hidden liability in your building company.

It’s a bit like the Federal Reserve Bank in the US, only no one will be bailing you out…

But you may get prosecuted for trading insolvently…

The reason it is so important to grow a building company profitably is because the retained net profit provides the foundations to support a growing business.

Without retained net profit you are effectively building a house of cards that will fall over in the next market downturn.

To learn more, download the Professional Builders’ Secrets To Increasing Margins.

Click on the link below to download for free now.

Submitted by:

Russ Stephens
Business Strategy Specialist & Cofounder of the Association of Professional Builders

Since 2014, Russ has been helping builders double the size of their businesses through profitable growth. He is a data analysis expert that has introduced data-driven decision-making to the residential construction industry. Russ calls on 38 years of experience in business as well as the lessons that had been learned from working closely with some of the most successful custom home builders in Australia, New Zealand, Canada, and the United States.

INTRODUCING OKRS


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Understanding why you would want to adopt OKRs

A five-part series: 1. Introducing OKRs, 2. Preparing for the OKR Journey, 3. Crafting Great OKRs, 4. Driving OKR Alignment, and 5. Managing Effectively with OKRs 

Summarized by Bill Gelbaugh from Objectives and Key Results by Paul R. Niven and Ben Lamorte. With additional material from Measure What Matters, Lattice OKR 101 and Perdoo. 

Why a series of blog posts about Objectives and Key Results, or OKRs? After all, aren’t OKRs just a goal-setting methodology? Well, yes, kind of, but more than that, they are a strategy-to-execution tool. When Silicon Valley startups discovered OKRs were behind the meteoric rise of companies such as Google, LinkedIn, Twitter and Amazon, a plethora of companies decided to adopt OKRs, hoping to catch even a fraction of that success. 

This first post will share how the best companies use OKRs to create focus, alignment, contribution, and velocity. To capture the magic of OKRs, we will start by covering the basics; the OKR framework, the philosophy behind OKRs, the four goals of OKRs, and the incredible benefits your organization may be missing out on by not adopting OKRs.

Good questions inform. Great questions transform.
—Ken Coleman

LET’S START WITH A QUESTION – FOUR, TECHNICALLY!

During our OKR journey here at Outhouse, we have discovered four great questions that help us set successful OKRs:

What do we want most to achieve?
What is the right Objective for our current goals and challenges?

How do we want to measure success?
What measurements would best show our progress and success?

What initiatives would get us there?
Are we working on the right Initiatives to achieve this Objective?

What is the most efficient way to accomplish this?
Are we getting these initiatives completed as efficiently as possible?

Is your Objective to create a thriving business? What do you mean by thriving? Is it growing your user base? By how much? Might it be climbing revenues? By how much? Retention? For how long? Combining an aspirational objective, quantitative results, and focused initiatives creates inspiring, measurable, and achievable goals. 

A great goal is a powerful tool; however, it’s not enough. A leader needs a way to ensure that their organization lives that goal. The real power of the OKR system is figuring out how to live that goal every day as a team. OKRs are best achieved if they are baked into the daily, weekly, and quarterly cadence of a company, from planning meetings and status updates to celebrating accomplishments along the way. 

Ready to begin implementing OKRs at your company?  Let’s get started with the basics!

FRAMEWORK 

OKRs are built around three elements: 

Objective: Where do we want to go? 

Key Results: What are the results we need to get there?

Initiatives: What do we need to do to achieve those results? 

The Objective is the goal of the company, team, or individual. Key Results are the measurable results needed to accomplish the Objective. Initiatives are the tasks you need to perform to achieve your results (i.e., the “to-do list”). This framework is repeated from the top of the organization on down. Starting with an overall company Objective, each group or team sets their OKRs, and individual employees often have OKRs as well. This cascading interplay of goals is what keeps a group of people aligned. 

PHILOSOPHY 

OKRs have a unique belief system around set goals that distinguishes them from other goal-setting methodologies. 

Ambitious
Objectives are meant to be inspiring, set just beyond the threshold of what seems possible. Achieving less than 100% is not considered a sign of failure. The goal is to achieve as much as possible.

Measurable
Key Results are tied to tangible milestones and outcomes.

Transparent
OKRs are viewable across the organization, from the CEO down to the Intern.

This unique approach to goal setting was developed by Andy Grove at Intel and passed down to John Doerr, who brought the company strategy to Google. Today, thousands of organizations from Spotify to the United States Navy use OKRs as one of their main management tools. 

Today, thousands of organizations from Spotify to the United States Navy use OKRs as one of their main management tools.

GOALS 

Developing a focused strategy and making certain everyone is rowing in the same direction and are contributing play key roles in OKR goal setting.  Another prominent feature is organization-wide transparency.

Focusing efforts
OKRs are not, and should never be, considered a master checklist of tasks that need to be completed. They are designed to be far more strategic. The model aims to identify the most critical business objectives and to gauge accountability through quantitative key results. Strategy pundits are fond of noting that strategy is as much about what not to do as it is about what to do. So it is with OKRs. You must be disciplined in determining what makes the final cut. 

Ensuring employees work together
OKRs must be structured and used to maximize employees working together in focused collaboration and alignment. One of the ways this is facilitated is through the inherent transparency of OKRs, which are shared widely so that everyone, from top to bottom, can see objectives and key results throughout the organization. 

Making measurable contributions
Key results are typically (and almost exclusively) quantitative in nature. Whenever possible, we want to avoid subjectivity and note with precision how the business is advancing based on the achievement of our OKRs. 

Driving the company forward
The ultimate arbiter of success is the achievement of your goals.  

BENEFITS 

A popular saying is, “the simpler, the better,” and that is the key to the tremendous benefits that come from implementing OKRs.

OKRs Are Easy to Understand – Increasing Buy-in and Use 
Consider OKRs the “In-N-Out of managing your performance.” One of the most significant benefits of the framework is its sheer simplicity, and that begins with the taxonomy—of just three elements: objectives, key results, and initiatives. Other approaches to managing performance and executing strategy tend to be awash in jargon. This can confuse employees already under siege from missions, visions, core values, KPIs, etc.  

OKRs Demand You Focus on What Matters Most
OKRs demand that you isolate the most fundamental priorities and dedicate your focus to that limited subset of potential variables involved in running the company. OKRs are a great way to help everyone understand what’s important and how you’re going to measure what’s important. It’s essentially a great way to communicate strategy, measure strategy, and accomplish strategy. By putting a spotlight on your absolute priorities, you’re winning on two fronts: Identifying what matters most, and by default, providing yourself with the appropriate ammunition to say no to the many initiatives that, while tempting, are not in line with your goals. 

OKRs Shorter Cadence Fosters Agility and Change-Readiness
While there is room for customization with every implementation, most OKR practitioners will set goals quarterly. This frequent establishment of priorities is vital. As the pace of change within and outside businesses accelerates, new information must be captured, analyzed, and transformed into knowledge that can be used to innovate and potentially alter the strategy or business plan. Doing so is immensely difficult if you’re only setting annual goals. 

OKRs Transparency Promotes Cross-Function Alignment
An effective OKR program works on several levels: There are corporate-level objectives and key results in place. Departments or business units have OKRs, and individuals may have OKRs. The composition of OKRs at each level is not confined to their provincial interests. On the contrary, a well-developed set of OKRs should include objectives and key results that foster (and demonstrate) collaboration with other teams on whom they rely, or conversely, depend on them to drive results. OKRs should ideally be transparent throughout the organization, meaning everyone can see what others are measuring and provide feedback and input. This transparency fuels collaboration, alignment, and, ultimately, the execution of strategy. 

OKRs Facilitate Conversation and Drive Engagement
An essential distinction of the OKR model is its focus on inclusivity. They are not a top-down exercise with goals handed down, as if on stone tablets, to lower-level units and departments who are expected to execute dutifully, regardless of their opinion. It is expected that individuals will have a legitimate say in the objectives and key results chosen, reflecting a mix of top-down and bottom-up goal setting. Having the opportunity to meaningfully contribute to what you will be held accountable for goes a long way in enhancing engagement. Moreover, when results are tabulated later, the chance to engage in a meaningful discussion, conducted in a spirit of inquiry, boosts morale. It may also demonstrate to superiors an employee’s readiness for the next level on the corporate ladder. 

OKRs Promote Visionary Thinking and a Growth Mindset
Carol Dweck, a Stanford professor, known for her work on motivation and, more specifically, mindset, posits that people can be divided into two camps. Some individuals believe their success results from innate ability and are said to have a “fixed” mindset. Others feel success is a result of hard work, tenacity, and determination. They are said to possess a “growth” mindset. Fixed mindset individuals fear failure because they feel it’s an assault on their basic abilities. Those with a growth mindset embrace failure and recognize it as an opportunity for learning and improvement. 

Organizations may be similarly classified using this distinction. Those who “suffer” from a fixed mindset will often forgo opportunities that involve risk, motivated primarily by a fear of failure. OKR organizations, on the other hand, embody the growth paradigm, relish failure, embrace a spirit of failing fast, and learn quickly. We believe that to compete in today’s global economy, all companies must adopt a growth mindset. Doing so means stepping out of any predefined comfort zone and creating audacious goals. 

IN SUMMARY

With so many visionary, intelligent, and creative people here at Outhouse, there has never been a shortage of great ideas.  What we realized over time is we needed a better way to organize, prioritize and execute.  With renderings, virtual tours, animations, visualizers, and other interactive platforms for home builders constantly evolving, it is easy to fall into a pattern of starting too many projects.  OKRs allow employees to continue to push the envelope on innovation while forcing us to choose, strategize, and focus our collective efforts on executing those ideas that will have the greatest impact on our company and our clients.  We believe your company will benefit from implementing OKRs as well.

Next up… PREPARING FOR OUR OKR JOURNEY! 

Bill Gelbaugh is one of our Senior Partners here at Outhouse and champions our OKR efforts.

Pants Optional – Episode Two: The Mindset Commute


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Pants Optional is a series focused on advice to company Owners, Managers, and Employees on how to be successful in a Work-From-Home business model.

Man with goggles sitting in front of computer taking a virtual commute to his home office

“…nobody complained about adding their commute time back in their lives, but after a while, many people discovered there was a downside.”

Before working from home my daily 16-mile commute in Phoenix, Arizona was 23-minutes each way. Half on the freeway and half on busy city streets during rush hour. I was fortunate to be driving a safe, comfortable, and reliable vehicle. I fell right in the average American commute time to and from work. Other employees ranged from a few minutes away to several driving over an hour each way. Regardless of the time, nobody complained about adding their commute time back in their lives, but after a while, many people discovered there was a downside. A potentially serious downside for some.

Even if they did not realize it at the time, their daily commute had become a critical step in transitioning from a homelife mindset to a work life mindset, and vice-versa. During their commute to work, they could think about and mentally prepare for their day. On their way home it might become a time of reflection, or a time to think about what is for dinner, or to simply zone out and crank the music.

Lady in her car singing to the radio

People discovered the 5-second work from home commute was a shock to their system, suddenly jarring their mental states from home to work and back home again. At the end of the day, people found themselves irritated by their family, or roommates, or pets, because they did not feel like they had any downtime after work. And they didn’t! Their family was acting the same as when they walked in from the garage before. The only difference is that you never realized you used that 15, 30, 45-minutes of commuting to transition from your work life mindset back to homelife. It was completely unconscious.

Enter the Mindset Commute. If you had a 20-minute commute before, then try taking 20-minutes to do something that is going to give you the time and environment you need to get that transition back. Get out of the house and take a walk or go for a run. Step out on the patio and enjoy a beverage by yourself.

Whatever you decide, most importantly, make sure you have an agreement with whomever you live with (except the dog) that the 20-minutes after you walk out of your home office, those minutes are still yours and you are not to be disturbed unless something literally catches on fire. Explain to your roommates or family how you need this personal time to purge your mind from work. If they have noticed you have seemed irritable after work, they will understand the importance of giving you this.

Bonsai tree

Spend some time on a hobby or start a new one! Admit it; you have always wanted to try Bonsai.

And the word commute can really mean just about anything. By one definition, your mindset commute can mean literally getting into your car and driving around the neighborhood for 20-minutes, return home, walk in the door and announce “Honey, I’m home!” Or take the money you are saving on gas and eating out and buy a VR headset. Take a virtual drive anywhere in the world! Here are some great ideas:

  • Hobbies – Spend some time on a hobby or start a new one! Admit it; you have always wanted to try Bonsai.
  • Exercise – Obvious, but how many times have you made excuses of not having enough time to be active? Look up the 7-Minute Workout.
  • Gaming – Jump off the work computer and onto the gaming console. Because not everybody gets excited about pushups, crunches and burpees.
  • Meditate – There are hundreds of ways to meditate. Do a little research and try one out.

Personally, my morning commute was a ritual of creating the perfect cup of coffee. It seems like such a pretentious thing to me now, but I would take about 15-minutes to meticulously brew a carafe of coffee. Get this, I would hand-grind fresh, expensive, gourmet coffee beans in a manual ceramic burr coffee grinder, place the grinds into a double-walled, stainless steel French press (with mirror finish of course), while boiling water in my gooseneck kettle on the stovetop. After blooming the grinds for 30-seconds with a splash of hot water then pouring the rest in, I would wait 2-minutes before slowly plunging the press with only the weight of my hand. Part of me hates to admit how much I enjoyed that process, but let me tell you, after that I was mentally ready to walk into my home office and get to work.

Man making coffee in a stainless steel French press

My meticulous coffee commute lasted all of 2 months. Since then, just like tonight, I will think to myself, “Gah, I need to get the coffee ready.” and as if it were the last chore before going to bed, scoop the generic pre-ground coffee into the 10-cup electric coffee maker and hope I remember to hit the timer button so it’s ready in the morning. Honestly, after the first year I no longer need a morning commute. I’m mentally ready to jump right in the home office with my mediocre coffee and get to it. After work, most days now I no longer need a commute either, but when I do I usually like to sit out on my patio for 10-15 minutes, with the dogs, and enjoy an adult beverage while shamelessly scrolling through social media on my phone.

However the mindset commute looks to you, the common denominator is personal time—that magic amount of personal time allowing you to shift from one mindset to another. Your routine before work may be completely different and take only a fraction of the time you require after work. Some of you may not require a morning or evening commute at all. The type and time of commute you need today may not be the same next month or next year. Try alternating between different commutes based on your mood. Before working from home, you could drive different routes to disrupt the monotony. Why not do the same thing at home? Give yourself permission to change your commute and try new things.

Outhouse partner Stuart Platt

About the Author: Stuart Platt, Managing Partner at Outhouse LLC restructured his 25+ year company to an Office Optional (OffOp) business model in 2018. Stuart’s version of the OffOp model enabled the company of nearly 40 employees to downsize its physical office from 14,000sf to 6,000sf. Based in Phoenix, local employees desiring to work in the office for a few days, weeks or months can reserve any open desk whenever they want. The remaining employees work from home, fulltime across 10 different states and counting.

Facing a Challenge? An OKR Might Solve It


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I moved to downtown Phoenix last year for the view and big-city feel.  The 19-story Stewart Apartments, built by The Empire Group, offers sweeping views of the Valley, a rooftop pool, and popular breakfast joint Snooze which just reopened.  It’s a pretty darn cool place!

Life here also comes with a couple of not-so-great features unique to downtown living, the biggest being the parking nightmare.  Even with a reserved space that I pay for each month, I often end up late at night walking from a couple of blocks away to my apartment.  The issue comes down to inconsiderate people, some not even residents, pirating reserved spots, and minimal guest parking – approximately 15 spaces total (including handicap) for a 300-unit complex.  Yes, you read that right.  How in the world does the city allow this?  The management company seemingly has no way of controlling the parking situation.  They have been working on it since before I moved here in September.

Life here also comes with a couple of not-so-great features, the biggest being the parking nightmare. “

“They need to commit to an OKR to resolve this parking issue!” I yelled internally to myself as I walked from down the street this past weekend.  Short for Objectives and Key Results, OKRs were invented by former Intel CEO Andy Grove and made famous by companies like Google, Amazon, and Microsoft.  They are designed specifically for situations like these.

The goal with OKRs is to make changes and solve problems by setting Objectives and determining success by tracking Key Results.  We start by defining a timeframe, typically quarterly, but 30-days may be sufficient for the parking project.  In this case, the objective would be to ensure residents who pay for parking have a place to park.  The key result would be residents no longer whining to management and social media about not having a place to park.  Open parking, reserved signs for occupied spaces, permits, and the right to tow may all be up for consideration.  That last one is a biggie as people figure out pretty quickly the towing signs are bogus.  Once you have an Objective and Key Results, you determine the initiatives that will accomplish these in the given timeframe.

Here at Outhouse, the initial department to kick off OKRs was Product Development.  With so many innovative ideas coming in, we often struggled to get a handle on them.  At our weekly team meetings, we discussed the ideas and started working on a few.   At subsequent meetings, “bigger and better” ideas came up, sidetracking us from the ones we were already working on.   Although we made progress, this process wasn’t very efficient, and it took a lot of time to complete projects. 

The goal with OKRs is to make changes and solve problems by setting Objectives and determining success by tracking Key Results. “

And this is how OKRs came into play.  We now approach the same projects with a manageable, three-step process:

  1. Our team agrees on one to three top Objectives (no more than three) that we are committing to accomplish each quarter.
  2. We then decide on several meaningful Key Results to track our progress towards the objective and ultimate success.
  3. Finally, we map out the initiatives and tasks needed to achieve and move our OKRs forward.

With multiple tech people from various specialties working on product development, OKRs ensure the best use of time for each, and the entire team is working towards shared goals.  They also force us to ask ourselves, “Why,” whenever we consider a new Objective.  The goal is to pick those that are most critical.  An added benefit has also been a reduction in meetings, from weekly to bi-weekly.       

OKRs ensure the best use of time, and the entire team is working towards shared goals.  They also force us to ask ourselves, “Why,” whenever we consider a new Objective. “

These examples (parking and product development) offer a simple overview of the OKR process.  With the tremendous success here at Outhouse, we would like to share with you what we have learned in a five-part series:

  1. Introducing OKRs
  2. Preparing for the OKR Journey
  3. Crafting Great OKRs
  4. Driving OKR Alignment
  5. Managing Effectively with OKRs

Watch your inbox over the coming weeks for this series written by Outhouse partner Bill Gelbaugh.

Creating Great Plans


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Beautiful dusk rendering of the top selling Values That Matter 50-2695 Floor Plan.

Offering outstanding home plans is one of the most fundamental requirements of a successful home building business. Business writers and academics alike constantly refer to price and product as two of the cornerstones for success in any business. In this section, I will discuss the individual components that determine whether a plan is perceived as outstanding or just another “nice house.”

Essentially, the factors that determine the market success of a home design can be broken down into three broad categories: (1) functionality, (2) aesthetics, and (3) perceived value. To a certain degree, these categories are in conflict, with the most successful plans finding the correct balance between them. Trying to sell a home that is very livable but ugly is difficult. Attempting to sell one that is beautiful but totally non-functional is almost impossible. Creating a home that is both beautiful and functional but beyond the financial reach of your customers is nothing more than an exercise in irrelevance.

Creating a home that is both beautiful and functional but beyond the financial reach of your customers is nothing more than an exercise in irrelevance. “

Because it is the most complex, and I believe the most important, of the three categories, I will focus on functionality, specifically the following eight aspects of design that are at the very heart of creating a plan that provides customers with the home they truly want and need:

Square footage:
In many markets, square footage assumes even greater importance than it should, due to the market (and its realtors) focusing on dollars per square foot as a key indicator of value. Astute buyers understand that discussing price per square foot without a detailed discussion of what is included in those square feet is meaningless at best and misleading at worst. However, not all buyers are sophisticated, so by increasing the size with minimally expensive footage (i.e., pumping air into a plan for the sole purpose of making it bigger), we can drive down the selling price per square foot. I am not a proponent of this technique but I am pragmatic enough to utilize this methodology in those markets that require or, at least, reward it. My fundamental advice about square footage when creating great plans is this: Design houses that feel bigger than they are by using diagonal-view corridors, opening up public spaces to each other, and, in narrow plans, trying as hard as you can to have a section of the house that is open across its entire width. Try to hit the targeted price point with a design that appears bigger than it is. For most buyers, how a plan feels is as important as the advertised size. On that subject, we shouldn’t automatically believe the size claims of our competitors. I have seen numerous house measurements that were grossly inaccurate – from builders who measure to the outside of brick instead of framing (common in some markets) to those who count a 2-story great room at 1.5 or 2 times its area. We should always check the square footage claims of our competitors.

Room count:
As size goes up, well-designed houses typically add rooms. The most common is bedrooms, but once we get to four, master bedroom sitting rooms often enter the picture as a substitute for a fifth bedroom. In public rooms, studies and formal dining rooms are the most common add-ons as size increases. The point I want to make here is simply this: While it is nice to enhance the size of marginal rooms as our plans get bigger, once we have achieved room sizes that are acceptable, the best thing to do with additional square footage is to create more rooms, specifically rooms that give targeted buyers what they want and need.

Room size:
When discussing design, it is always difficult for me to decide whether to talk about room count first and room size second, or vice versa. They are, basically, two competing uses for the space we add to a home, so which is more important? I think the paradigm goes like this. First, for the targeted footage of the plan, we should decide which rooms are absolutely required. Then, based on accurate information for our marketplace, we should determine the minimal acceptable dimensions for those rooms. After doing the preliminary design, if we have what we need and are under the targeted square footage, we need to decide whether to add the excess footage to existing rooms or add an additional room (or possibly a mini-room). If we decide to add the square footage to existing rooms, we must determine where the increased dimensions will have the most impact. For example, taking a 10’9” bedroom to 11 feet can be a significant marketing benefit. Adding 8 inches to the width of a single loaded (L-shaped) 5’6” walk-in closet allows it to become a 6’2”-wide double loaded closet, with 50 to 60% more hanging rod. If we decide instead to add a room, we need to think carefully about what room to add for maximum perceived value.

For most Americans, every day is a day when we have more possessions than the day before. “

Storage:
For most Americans, every day is a day when we have more possessions than the day before. Without realizing it, we are constantly acquiring clothes, electronics, tools, furniture, and countless other items at a much greater rate than we are discarding these items. This is why storage space is such a crucial consideration when creating home designs. Let me sum this up succinctly: It is virtually impossible to include too much closet space. No one will say they can’t buy the house because there are too many closets. Almost everyone would prefer a 3-car garage to a 2-car garage if they could afford it. So what does this mean at the micro level?

  • Have a great master bedroom closet or closets – this room still belongs to the people who are paying the freight.
  • Learn how to be a great closet designer overall – truly understand what works and what doesn’t – and don’t skimp or cheat on closet layouts.
  • Have as good a pantry as you can fit – people love to have food in the house, and the rise of Walmart and Costco has them buying in greater quantities than ever before.
  • For many people, the garage is a place to store more than cars – go for oversized garages whenever possible.

Circulation space:
Minimizing circulation square footage is important because it utilizes space that would have a higher perceived value if its functionality were better defined; that is, bigger rooms or more rooms. Aside from this general comment, the most important thing to remember is that the halls, stairways, and foyers that comprise circulation space need to be sized correctly for the specific product we are designing. Just as a 4-foot-wide hallway is a waste of space in a 1400 square foot home, so too is a 3-foot-wide hallway inappropriate for a 2800 square foot home. Circulation spaces, such as the rooms we discussed previously, must be sized proportionately to the product we are building.

A great plan, the 50-2695 features big, open rooms and minimal circulation space. Take our Interactive Floor Plans, with Furniture Planner, for a spin today!

Special spaces and memory points:
In the competitive new homes marketplace, it is more important than ever to create plans that buyers remember. Good design requires memorable spaces and features that inspire buyers and put the greatest degree of difference possible between the home they currently occupy and the one we want them to buy. We need not only an island in the kitchen but one with a different and notable shape. We want built-ins, details, work spaces, and time-saving features that convince the buyer that there is more going on than a simple change of address. We need to convince them that their lifestyle in the new house will be better – more interesting, more exciting, more productive, and more fulfilling. We need to make the move a requirement in their minds, not just a desire.

Good design requires memorable spaces and features that inspire buyers and put the greatest degree of difference possible between the home they currently occupy and the one we want them to buy. “

Features and spaces for today’s lifestyle:
I’ve discussed many specific features up to this point that are related to today’s lifestyle, but let me be even more specific. Today’s buyers want more time to do what they want to do. They want lower maintenance, lower utility bills, and a home that supports their increasingly technologically dependent life. They work at home. They surf the Web. They need to charge phones, iPads, computers, and battery-powered tools. If they have children, these children require power and bandwidth just as their parents do. They want to eat breakfast in a hurry, but they also want to have the entire family over for Thanksgiving. They want a place for the 60” TV, as well as the microwave oven. Most of all, “they” is really not one demographic group but many. Non-traditional families make up a huge proportion of new homebuyers, and the specific needs of diverse ethnic buyers are a factor that must be recognized. The builder who designs his or her product without understanding the lifestyle and needs of the targeted buyers is doomed to mediocrity at best, but more likely to failure.

Flexibility:
It is fitting that the last of the functional design aspects we will discuss is flexibility, because I believe that it summarizes a necessary attribute not only of a winning plan but also of a winning builder. Never before has the marketplace changed as rapidly as it is changing today, and never before has it been as diverse as it is today. This requires plans with rooms that can serve multiple functions, plans created with additions, modifications, and personalization in mind. We live in an age of specialization, but the smart builder creates home plans that allow that specialization from a well-created portfolio of great, flexible plans.

Submitted by
Alan Trellis, Author, NAHB Speaker, and co-founder of Home Builders Network.

With 40 years of experience as a custom home builder and consultant for the home building industry, Al is co-founder of Home Builders Network, which provides management consulting, marketing, residential design, and land planning for home builders throughout North America. Collectively, their clients build 3,000 homes per year, for a sales value of $1.2 billion. Al is the author of many books on residential construction; has served as chairman of the NAHB Custom Builder, Education, and Business Management committees; and is a leading speaker at the NAHB International Builders Show (IBS).