Raising the Bar

Demanding customers have created a market for quality-improvement programs.

If you think the building business is tough now, just wait. As JD Power gains more influence over home buyers, big builders will compete harder for top place in its customer-service rankings. Some are already starting to demand commercial-quality work from their subs – and refusing to do business with those who don’t deliver.

But competition for ratings is just one sign of a more competitive business climate. "There has been an overall raising of the bar of quality expectations in our society," says Frank Alexander with the National Association of Home Builders' Research Center. "Just look at cars. Twenty years ago, if you bought a new car, you got a 12,000-mile warranty. Now it's up to 100,000 miles."

Now that bar has been set in front of builders. "The customer wants you to do the job right to start with, and they become unhappy when you have to come back to make repairs. And unhappy customers drive lawsuits," says Alexander.

Demanding customers have spawned a market for quality-certification programs. Alexander oversees the Research Center's Certified Contractor program, which takes the principles of ISO 9000 and simplifies them for trade contractors and home builders. Participating companies must attend a four-day training seminar, submit to quality inspections, create systems for reducing construction defects, and agree to annual audits of those systems.

In a company with a lot of employees, the biggest job may be getting everyone on board. "The auditors speak to everyone from our leadership to our employees out in the field to verify that everyone understands the role they play in delivering on the promise of quality to our customers," says Cathy Teague, with KB Homes' San Antonio division. Sometimes this is a challenge. "Getting all our field personnel to understand the advantages of the program was difficult," says Greg Jones, project manager and quality representative with Dave Jones Plumbing & Heating in Madison, Wisc., which got certified in December.

But that hasn't stopped the program's progress. KB plans to require certification of builders and trade contractors in all its markets. And as of April, the program had trained more than 1,300 companies and certified more than 100. "These companies range from surveyors to landscapers and everything in-between," says Alexander. Training costs $950 per company. Certification costs about $2,400 plus expenses for the first audit, and $1,900 plus expenses for each subsequent year.

Pros and costs
How do the benefits stack up against the costs? "The numbers we hear from trade contractors who have been on board the longest see a 40 to 50 percent reduction in callback time," he says. The training also helps reduce liability. "Trade contractors have always been easy targets for lawsuits because most didn't document the fact that they had done the job right," says Alexander. "The documentation of this program requires them to keep evidence to defend themselves."

One of the first companies to get certified was the Las Vegas division of Executive Plumbing and Heating. Division president Robert Blazek lauds the program's impact on his company. "We had some things in the field that weren't being done correctly," he recalls. One example was sewer cleanout covers in front yards. The training helped them create a procedure for making sure they were correctly installed and protected from vehicle damage. "It has saved us time and money. We can fix problems before they get to the builder's quality-control list. We turn a better house over to them."

That has proved critical in the Las Vegas market, the first in which the program has achieved critical mass. The Southern Nevada Home Builders Association (HBA) figures that 80 percent of trades have undergone training. The Las Vegas area's overall JD Power customer-satisfaction ranking went from no. 9 five years ago to no. 1 last year. The HBA gives most of the credit to the program.

Chris Norman, regional director of sales for RCR Companies, a plumbing contractor based in Riverside, Calif., says his company got certified a year ago. While RCR got certified because its builder customers were requiring it, he says the program has reduced the company's warranty costs and focused everyone on customer satisfaction. "This is really the wave of the future," he says. "It's what's going to make you or break you in the years to come."