No matter how efficient a builder’s internal operations are, it’s the day-to-day performance of your trade partners that can make or break a successful construction project. The best time to address trade partner efficiency is long before the project starts, and fortunately, we have the tools in hand to help put subcontractor and supplier performance on a par with our own staff and processes. Here are 8 crucial steps to improving overall trade partner performance:
1. Communication is Key- maintain trade partner agreements prior to engaging in a construction partnership
Trade partner price agreements should be maintained by payment draw schedules agreed upon by both you and the trade partner. Establish a contractual pricing agreement with payment terms and have your trade partners endorse it. An endorsed price agreement will help to establish line item budgets for your job cost management and guide cash requirement obligations. Well documented and established price and payment agreements also help trade partners manage cash flow positions and grow their companies. Payment terms should be honored when a job is completed per scope. Prompt payment based on payment terms should allow you to keep quality trade partners and maximize the best price agreements. Remember, this is a partnership and both you and the trade partner have entered the partnership to make money.
2. Join and play an active role in your local homebuilder association
Playing an active role in your local builders association will provide you and your company many benefits including but not limited to the following:
- Networking
- Education
- Valuable legislation knowledge and a vice to steer it
- Industry updates
- Membership at the state and national level
Most homebuilder associations recommend that builders do business with associate members. Being involved in the association will allow you to establish many relationships that will ultimately help your business. Most associations provide member directories for both builders and associates. You should take advantage of those directories when hiring local trade partners. Trade partners that are involved in homebuilders associations will prove to be accountable business partners.
3. Disallow your trade partners to invoice you
This may be the hardest policy to implement. Believe it or not, properly managing your business will take the place of trade partner invoicing and eliminate work for both parties. Once you have established a good working relationship with a trade partner, you should treat that trade partner with the same respect as you would treat a valuable employee. Provide them with the tools necessary to perform their job efficiently so they can make a profit. Maintaining contractual agreements with trade partners allows you to use that information to pre-define work agreements for specific construction tasks. Most enterprise management systems for homebuilders will allow you to do this. Approval of the working agreements, usually defined as work orders and purchase orders should:
- Take the place of manually created vendor invoices
- Eliminate price agreement conflicts
- Maximize the book keeping processes for both your accounting department and the trade partners business
- Allow you to run a paperless operation
4. Implement an accurate construction schedule
Your trade partners must be kept informed of the status of a project and your expectation of their availability. Trade partners rely on a projected workload when establishing their available resources. Providing trade partners with a projected and accurate up to date schedule will help them manage the resources to complete tasks expected of them and provide you with a quality product. When choosing a scheduling system, make sure it is integrated with the option selection and payment process. Web based systems will help your trade partners access the information in real time rather than looking at an outdated printout.
Well documented and established price and payment agreements help trades manage cash flow positions and grow their company. Payment terms should be honored when a job is completed per scope. Prompt payment based on payment terms should allow you to keep quality trade partners and maximize the best price agreements. Remember, this is a partnership and both you and the trade partner have entered the partnership to make money.
5. Educate your trade partners on your processes, procedures and technology
Good trade partners remain knowledgeable in regard to their specific line of work. Good builders remain knowledgeable on the entire process of producing quality products. Educating good trade partners on the operations of your business will create a team environment and encourage that trade partner to produce time and time again. If you are using technology to run your business from the field, keep your trade partners informed of process changes/advancements. Make sure they are properly trained on any tools offered. Well trained trade partners will help you maximize the investment that you have made in the specific tool of choice. Check to see if the tool/product provided to the trade partner has established training programs. If you are implementing a web based field management computer system, check with the software provider to see if they offer an established training/support program. Knowledge is the most valuable gift that any business partner can provide to another. Click here for an example of an established training program for valued trade partners:
http://tradepartners.marksystemsusa.com
6. Clearly define a detailed check list for every task required of the trade partner
If your policy is to hold payment from trade partners for a job not done per specification you should provide the trade partner with the specific details of the requirement. Human beings are molded to follow direction from a very young age. Some individuals are not very detail oriented. That usually means that they will leave the details out of requested tasks. Minimize this by providing the details for every trade partner. Let trade partners know if you require a specific angle on a cut or a special type of material or a specific order of task completion during the initial phases of the relationship. Make this part of the scope of work to the contract or provide an addendum referring to specific construction tasks. The National Association of Homebuilders has established a special certification for trade partners to review industry specific standards (NHQ- Nation Housing Quality). Hiring NHQ certified trade contractors will improve quality and help your project supers mange more trades. Some scheduling software products have an NHQ checklist incorporated with them. Check with your software provider for details. You may also research the NHQ certification program for both builders and trade contractors at http://www.nahbrc.com/builder/quality/index.aspx
7. Promote and support technology
It is to your advantage to have your trade partners producing a quality product most efficiently. You are in control of the overall process of building homes. That includes getting each trade partner in and out of each house on time and safely. There are many areas of technology that can assist in this task. Depending on the specific trade, there has been much advancement in tools and services. Local and national homebuilder associations and trade shows are great sources for technology advancements. The best way to use technology to improve the entire process is to implement an enterprise software system that keeps the trade partners completely connected with the operation strategies of the back office. Implementing a business management solution can be costly but those costs will offset with the efficiency and overall communication gains in your organization. Some web based software solutions can be hosted by the software provider. Be sure to consider your trade partner’s operation when selecting a system. Most enterprise solutions come with a program to educate and support them.
8. Establish a trade partner counsel
Be open to well establish partnerships with trade partners working in a counsel format. Your quality and craftsmanship in the industry is dependent on the work of your trade partners. Some of the most successful and well recognized builders across the country have implemented this concept. The NAHB has recently honored three national housing quality award winning homebuilders who each have established trade partner counsels. See “6 Tips For a Successful Home Building Trade Partner Council” at http://www.housingzone.com/article/CA6626634.html to see how these builders implemented this program.
Click here to read about a fully integrated software product that can help make you and your trade partners more efficient today! http://www.marksystemsUSA.com
