In February 2005, the U.S. Commerce Dept. and the National Association of Home Builders reported that housing starts jumped 4.7% in January to a seasonally adjusted annual rate of 2.159 million units, the highest pace in 21 years.
But nothing lasts forever, especially low interest rates. Builders need to think lean for the future or they will be challenged when rising interest rates put the brakes on both residential and commercial buildings and we return to the days of managing tight margins. And perhaps the most significant way to improve ones bottom line is to decrease ones "waste" line.
Anyone whos been in construction for very long understands that there always is opportunity to tighten ones belt. According to the U.S. Environmental Protection Agency, wasted materials account for 6 to 8% of the total weight of materials delivered to construction sites. Of the 15 million tons of drywall produced in the U.S. annually, 12% winds up as scrap, a California study found. In Oregon, wasted building materials accounted for 10% of all discarded materials there in 2002.
Driving much of this waste is the fact that the players in the project chain dont work together effectively. The value chain is fragmented across multiple parties and the product typically is custom built.
Wasted materials are only the tip of the iceberg. The National Institute of Standards and Technology (NIST) estimates that the industry wastes about $15.8 billion a year in time and resources from the errors and delays caused when architects, builders and engineers dont work together effectively.
Collaboration across this value chain is complex and not often treated as important as it should be. Consider that one of the most important players in the industry is Federal Express! The industry spends more than a half-billion dollars a year collaborating via paper construction documents delivered by that carrier alone.
Thanks to new technology tools for electronic communication and project management, the industry now can attack these issues. More than just sharing drawings and data, these tools allow everyone on the team to easily and quickly communicate change orders, RFIs, and project status.
Whether there is a change by the architect due to materials cost or an inquiry from the site because of a complication, all stakeholders have insight into the change and can avoid the mistakes and lost time that come from paper collaboration. Electronic collaboration helps make the industry more profitable in less certain times.
Modern collaboration tools also can help those in the building market take on new challenges. Consider the growing complexity of commercial buildings. The Freedom Tower rising at Ground Zero in Manhattan is an incredibly complicated design that will make tremendous demands on everyone involved. Instead of the 150,000 documents generated on a typical large commercial project, the tower is expected to produce at least 1.5 million. Paper is not a viable option.
As projects become more ambitious, electronic collaboration becomes vital. At the same time, projects also are becoming more global, with French architects working with U.S. contractors to assemble Korean steel and Canadian lumber into an office complex owned by Mexican investors, for example. Collaboration technology ensures that everyone is connected and shares the same building models, across time zones, continents and languages.
Even if the good times were expected to continue for years, it is clear that collaboration technology will be a tremendous boost to the bottom line of an industry that loses time and money through paper-based processes. As times change, thinking thin is not simply a good idea, it is a necessity.
ou can never be too rich or too thin, so the saying goes. But some parts of the building market may now be feeling too rich. The continued record-low mortgage rates of the past two years proved a boon to construction in 2004.