Home Builders, Stop the Waste!

 Returning from the airport in the late afternoon, my January column was overdue and I was fretting over how to complete it by the following morning. I’d sent a proof of my “(Still) Waiting for the Home Building Technology Revolution” column, slated to run in the November/December issue, to 20 industry contacts and had received a remarkable response. That feedback was key for my next column, a follow-up.

It seems the “(Still) Waiting” column, which asks why home building technology has yet to live up to its promise of, if not revolutionizing the industry, at least making everything easier, faster, and less expensive, had touched a nerve. After receiving two more email responses with great input, I finally admitted I had too much feedback to sort through to get the follow-up column finalized by morning—and who knows what I might receive once the original column was published? What’s a columnist to do?!

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I knew the answer … get some comfort food. So, I did something I haven’t done for more than a year: exited the freeway and turned into the Taco Bell drive-up lane. OK, I know those tacos may not be the real thing, but there’s something strangely satisfying about knocking back a few Crunchy Taco Supremes. After placing my order, the teenage voice over the speaker asked, “And what kind of sauce would you like with your tacos, sir?” I answered, “Three Diablos!” of course. (Sufficient hot sauce can make almost any Mexican fast food palatable.) I moved on to the next window, paid the bill, grabbed the bag, and drove home, still fretting over the column, knowing I had a long night ahead. When I dumped out the Taco Bell bag’s contents, my entire affect changed. The tacos were there alright, but along with them tumbled out not three packets of Diablo sauce but 22! Must be a record. That’s 7.33 packets per taco! The young woman serving me should have asked, “Would you like some taco with your sauce, sir?”

In addition to jobsite waste, there are plenty of examples of white-collar and administrative waste, too, that we all fall victim to, rarely track, and almost never work to remove from our processes.

As I stared in disbelief, my mind wandered back to the online orientation I’d conducted for one of our upcoming LeanBuilding Blitz events just the day before. Recently, I replaced many of the older slides from the Lean orientation PowerPoint file. One of those depicted the results of my staff’s “hands-on empirical research” showing how each order from McDonald’s comes with an average of five more packets of ketchup than you actually need.

No big deal, right? What if I told you these packets cost the franchisee 2.5 cents each—12.5 cents per order? Still not impressed? Well ... Using Google search, you’ll find there are around 39,000 McDonald’s on the planet, serving more than 68 million people daily. Figure two people per order, on average, and you end up with more than a billion dollars annually in wasted ketchup!

To put that in perspective, the burger chain’s net profit for 2019 was $6.03 billion. That slide always got the group’s attention; a vivid demonstration of how seemingly small amounts of waste add up, sometimes to unbelievable dollar amounts. I was kind of sad to see that slide go.

How Waste Creeps Up on You

Earlier this year, during an in-person, pre-COVID orientation, a guy interrupted me toward the end saying, “Hey! You didn’t show the best slide in the entire presentation, the one about McDonald’s ketchup. I went through this 10 years ago with another builder and it’s the one thing I remember. I use the McDonald’s example all of the time to emphasize how waste creeps up on you. Put it back in!”

I listened in amazement as my mind drifted back to an old Joni Mitchell live concert album, where audience members interrupt her, shouting out their favorite songs for her to sing, “Joni, play Both Sides Now!” “Play Big Yellow Taxi, Joni!” “Joni, play BLUUUUUUUE!” Then Joni comments, “You know, it’s a funny thing, no one ever shouted out to Van Gogh, “Vincent! Paint a Starry Night again, man!” That line still cracks me up, and after momentarily feeling proud of myself, I shook my head and thought how weird it was for someone to insist, “Scott, tell the McDonald’s ketchup story again, man!” And here I was again, staring at the same astounding amount of waste, this time courtesy of my local Taco Bell.

During our Lean orientations, for more than 2 hours, I go through one slide after another, asking “What’s wrong with this picture?” to the group of suppliers, trades, and builder team members in attendance. There’s the series on wasted lumber with excess king studs, jacks, cripples, oversized headers, and headers where none are necessary. I only show three or four slides to make the point, but I have literally thousands of similar pictures.

There are often a hundred of those waste items to be found and they really add up, and a dollar is a dollar is a dollar. They all count.

There are the slides on engineered wood products (EWP) waste, which are even more fun because the dollars are astronomical. Among my favorites is one found during a jobsite tour in the Southwest, more than $1,500 per house wasted on just one big EWP over-spec, and the builder had built more than 150 of them—that’s $225,000 wasted, which I always make a little joke about, saying this one item almost covers our fee for the Lean event. But something so egregious couldn’t happen to you because you’re smarter than that builder, right? Well, that builder thought the same.

The examples go on and on. Another favorite shows a gable over a porch where the pitch was raised but no one told the framer, roofer, or sider, among others, creating a window/roofline conflict guaranteed to leak. The construction VP accused me of cherry picking and described it as a one-off that would never happen again. He was much chagrined when we found, in addition to the completed house, four more under construction with the same mistake. After that VP worked through all five stages of grief, it became a genuine epiphany for him and he grew into a veritable crusader for waste removal using Lean methods. Perhaps his biggest turning point: his realization that the window problem was just as much a culture issue as it was a construction failure.

Brownies vs. Muffins

Moving through the orientation slides, there are examples of foundation waste, such as too much rebar, maybe the right amount of rebar but the wrong size, oversized footers and wing walls, unnecessary corners, and for those using post-tension slabs, it seems there is always something off in either the width or depth of beams or the number of cables. During the very first LeanBuilding Blitz we ran 13 years ago in Houston, a foundation contractor offered a million-dollar piece of advice: “The guys need to dig the trenches for post-tension slabs like brownies, not muffins!” A “what-the (expletive-deleted)” look went around the room and he proceeded to describe how tight, squared-off trenches use far less concrete compared with the over-dug, rounded off ones so often seen. The waste averaged $335 per slab on 1,200 homes that year, totaling more than $400,000.

I am careful only to present a few of the mega-dollar examples from builders with big volume (read: big multipliers for each improvement item) for two reasons: First, we frequently work with builders doing 40 or 50 units and we don’t want to discourage those relatively small builders from pursuing a full-on waste-reduction strategy. In fact, generally speaking, we find the small- to medium-size builders are better implementers. Second, we must accept and even celebrate the elimination of a waste item of just $5 or $10. There are often a hundred of those to be found and they really add up, and a dollar is a dollar is a dollar. They all count.

For example, I show a page full of pictures of abandoned joist anchors, J-bolts, framing straps, tubes of caulk, and other building accouterments scattered around various homes and calculate their cost. I show another page of similar items found in dumpsters. Some of my favorites are 75 feet of Cat 5 cable (which we tested and found to be undamaged), a brand new range hood in an unopened box, seven lengths of insulated duct between 12 feet and 20 feet long packed into boxes, taped, and buried down deep. Please note though that further investigation revealed there was more to the story than mere neglect in each of these cases.

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I also go into examples of more white-collar and administrative waste, looking at the true cost of purchase order errors and inadequacies, variance purchase orders, plan errors, incomplete specifications, late change orders, phone calls for clarification, and myriad other waste we all fall victim to, rarely track, and almost never work to remove from our processes. The scariest of all: The $10K—a very conservative calculation—buried under every house in America for what should have been unnecessary trips to the jobsite.

Want to challenge me on that last one? I’m game, but it can’t be merely your notion; come with facts and data. Be advised, we now have more than 4,000 data points from suppliers and trades using our Trip Cost Calculator. The $10K number is real, quite conservative, and your number is more likely closer to $12K to $15K. Stop here and ask yourself the hard question: Have I even once sat down with a key supplier or trade to address how I, the builder, can work with them to reduce their number of trips to my building sites?

If not, how can you truly say you are serious about waste reduction, not to mention profit improvement?

The World Has Left the Home Building Industry Behind

Just like that, a column emerged from my agitation, prompted by a big pile of Taco Bell Diablo sauce. Our business at TrueNorth is built primarily upon waste reduction, and so far we have no fear of job security. The waste is ubiquitous, and most of it gets a pass as “Well, that’s just home building.” It doesn’t need to be. Other industries, including electronics, automotive, heavy manufacturing, even hospitals, insurance companies, and banks, got serious about reducing product and process waste using Lean methods back in the 1980s and continue to push Lean methodology to higher levels.

We’ve all experienced the results: a new color television with 10 times the quality and longevity that connects to everything and has a virtually unlimited number of channels and entertainment options, not to mention a far bigger screen and a lower cost—around 10% in inflation-adjusted dollars compared with what you’d pay for a good TV in 1980. The manufacturers’ secret? Lean methodology.

Other industries—electronics, automotive, heavy manufacturing, even hospitals and banks—got serious about reducing product and process waste using Lean methods back in the 1980s and continue to push Lean methodology to higher levels. Why can't home building do the same?

And those of you under 40 simply can’t fathom how infinitely better vehicles are today compared with what your parents grew up driving. Ain’t like it used to be? Be glad, when it comes to your car or truck! They made some truly cool-looking vehicles in the ’50s, ’60s, and decades before, but they were gas-guzzling, high-polluting mechanical disasters requiring constant tune-ups while burning through tires, brakes, shocks, and mufflers by 25,000 miles and starting to rust the minute they left the showroom floor, maybe even before. Worst of all were the ’70s and ’80s models, which had all of the mechanical problems and none of the style. Then a miracle occurred: The Japanese taught us that yes, you can build a great car that offers high performance at a low price. Fortunately, we learned our lesson, albeit taking far more years than it should have, and today American-built cars compete favorably with those built anywhere in the world. Again, U.S. auto manufacturers achieved this through Lean methodology. Meanwhile … home building has hardly changed at all, with next to zero growth in productivity over the past 50 years.

During this most bizarre of election seasons, we were barraged with sayings and slogans, such as “Stop the Steal!” (used by both sides, ironically). Another favorite, “Stop the Stupid,” just might apply to everyone, in retrospect. Nearly all of us are happy to move on from 2020, but thematically, let me borrow just a bit from last year and proclaim, “Stop the Waste!” How’s that for a slogan for 2021? Will this be the year home building finally gets serious about productivity and its ultimate outcome—profit—by systematically removing waste in product and process?

It’s now 2021, and “Stop the Waste!” is one New Year’s resolution guaranteed to show a dramatic bottom-line return, with an immeasurable boost to staff morale and your ability to become the genuine builder of choice with your suppliers and trades. We’ll check back a year from now and see how you did.