Building a high-quality house has never been easy. But with houses that are required to perform better than ever before combined with ravenous demand and a shifting labor market, it's harder than ever to please customers, go fast, and keep the bottom line black. This dynamic has tested how we manage the quality of our work and changed the way many contractors direct their building process. Unchecked speed for the sake of paring down cycle time has cultivated an environment of inferior workmanship, the effects of which are rippling through the industry.

Many builders and remodelers–especially those "checkbook" builders using an increasing number of subs and suppliers to do the actual building while they prepare more work or find land–are aware that speed is necessary, but risky. A common check and balance is to undergo more inspections. But according to Frank Alexander, the director of quality programs at the NAHB Research Center (NAHB-RC) in Upper Marlboro, Md., inspections alone aren't enough. "Trying to inspect quality into your work won't work," he says, even if a contractor schedules a conscientious series of them layered with supers, subs, and building officials. "All you're doing is throwing a bucket of water on a wildfire." That "wildfire," as Alexander puts it, is one of the industry's–and individual builders' and remodelers'–biggest challenges.

The "Problem." The anecdotal evidence of the "problem" with faster building are issues ranging from low-budget workmanship in high-end houses to entire subdivisions packed with failing buildings. Consumer Reports said in its January 2004 issue that approximately 15 percent–or about 150,000–new homes are built each year with "serious problems" and said that the fast pace of today's building boom is to blame. These consequences of speed are hitting builders from all sides: The resulting building failures have triggered construction defects lawsuits costing the industry untold millions of dollars, general liability insurance costs are increasing (if you can get it at all), and a more savvy buying public is increasingly dissatisfied on many fronts.

Indeed, the results of poor practices like inappropriately sized or installed HVAC units, framing errors, and inappropriate vapor barriers and drainage planes (the list goes on) are in the number of class action lawsuits, like the estimated $24 million settlement between Atlanta-based Beazer Homes and 2,100 of the company's Indianapolis homeowners for mold problems, or a recent lawsuit by 80 homeowners near San Francisco seeking up to $150,000 per house from Los Angeles-based KBHome and Walnut Creek, Calif.-based Davidson Homes for defects dating back 10 years. In Colorado alone, attorneys filed 556 construction defects lawsuits between 1997 and 2003, though that number dropped significantly after Colorado passed a Notice and Opportunity to Repair (NOR) law (see inset below).

Another backlash: The availability of construction defects liability insurance has shrunk to relatively few carriers, with a growing number of exclusions (including mold) on many policies and significant premium increases.

While the fire burns hot, however, the story isn't new–just more widely known. Builder errors like unreinforced concrete footings, unflashed windows, incorrect drainage, and unvented bath fans are old news. "I'm seeing the same things I saw 20 years ago," says Clarence Cisco, an inspector with Cape Atlantic, in Blue Bell, Pa. "The contractors know better, but they still do it because of time constraints."

And that's the rub–time is money. Cycle time has become more important than craftsmanship for many builders, as finding and developing land outweighs a commitment to quality construction. "Because of the speed of construction today, there's a lower quality of finish [and] mistakes happen [that] a craftsman would not allow," says builder Fernando Pages Ruiz, president of Brighton Construction in Lincoln, Neb., and author of Building an Affordable House. Workers' tradecraft, i.e. their ability to do good work, has become an increasingly important variable builders must consider–carefully, but also on the fly. The availability and cost of a good sub or crew member is a huge challenge for any builder. And, as the makeup of the industry becomes increasingly Hispanic, finding ways to overcome language barriers is vital to builders' quality of work and bottom-line success.

Problem Solvers. There are two sides to every coin though, and good news often gets less attention. Despite the lawsuit against KBHome's North Bay division, the builder's Las Vegas division is doing it both right and fast, according to its customers, which shows that painting a national builder with one brush doesn't always show its true colors. Home buyer satisfaction for KBHome in Las Vegas rose nearly 10 percent in 2003 while warranty claims dropped 24 percent. Simultaneously, KB's starts there climbed 28 percent since 2000 to about 4,000 in 2004 and sales jumped 40 percent during the last two years.

Pulte Homes, with more than 32,600 closings in 2003, topped 11 of 25 metro areas canvassed for new-homeowner satisfaction by J.D. Power and Associates (JDPA) and is in the top three in another nine markets. Indeed, by having all 24 of its operating divisions outperform their respective market averages tallied by JDPA, Pulte received JDPA's first-ever "Platinum Award" for home builders.

And yet both KBHome and Pulte are poster children for modern production home building, relying on subs and suppliers to perform the bulk of production while the front office is under stockholder pressure to keep starts on the rise. While developing an error-free national system for companies of this magnitude is a massive–and necessary–goal, breaking the companies down by division shows what works and what doesn't. So, instead of sacrificing quality for speed, KB, Pulte, and other builders that top JDPA, like Los Angeles-based Pardee Homes, Dallas-based Centex Homes, and Greystone Homes (a division of Miami-based Lennar Corp.), rankings consider customer satisfaction–and the level of comprehensive quality required to achieve it–essential to their survival and growth. "The housing industry has a low benchmark [for quality and customer satisfaction] today, which gives us a huge [competitive] opportunity," says Richard J. Dugas Jr., president and CEO of Pulte Homes, based in Bloomfield Hills, Mich. "We believe that outstanding customer delivery will set us up for the long term, so it's not something we compromise. Ever."

Defining Quality

Know Your "NOR"

At of the end of 2004, 24 states had enacted or were on the verge of enacting Notice and Opportunity to Repair (NOR) laws, which are designed to provide builders and homeowners with a mechanism for settling defects and workmanship claims without lawyers or lawsuits. Though statutes differ, they all enable builders to respond to, evaluate, and fix problems identified by homeowners within a certain timeframe (usually a few months) to avoid litigation or settlements. Combined with the American Legislative Exchange Council (ALEC), a nonpartisan organization of more than 2,400 state legislators from all 50 states (and nearly 100 former members now serving in the U.S. Congress), the NAHB's State & Local Government Affairs office crafted "model" NOR legislative language for builders, trade associations, and lawmakers for drafting statutes. "Each state law is different, but the model legislation gives them a place to start," says Sam Leyvas, director of NAHB's State & Local Government Affairs. The model legislation is available online to NAHB members at www.nahb.com, and to ALEC members at www.alec.org. –R.B.

States with NOR laws include: *adopted in 2004 +pending Governor's signature # vetoed by Governor Alaska, Arizona, California, Colorado, Florida, Georgia*, Hawaii*, Idaho, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi*, Missouri *#, Montana, Nevada, Ohio+, Oregon, South Carolina, Tennessee*, Texas, Virginia, and Washington. Source: NAHB State & Local Government Affairs.

Builders who "do it right" think more about their "process" than individual fixes for specific trouble spots. Ruiz conducts a diligent routine of designing, refining, and reworking plans, specifications, and even homes under construction to ensure quality. "To achieve affordability, I have to refine the construction process so I know I'm spending only what I need to," he says.

That goal requires focusing on quality control to avoid errors, but isn't necessarily complicated. "It can be as simple as identifying a common pull point on the plans for everyone to measure from," says Ruiz.

Alexander suggests that contractors start by expecting their homes to comply with contracts and regulatory requirements, construction documents, and workmanship standards. Next, ensure those commitments are met through a combination of comprehensive specifications, workforce training, and checkpoints during construction. But this isn't just another "inspection." According to Alexander, "Any one of them alone won't work. They must be blended to achieve an improvement in quality."

At Stronghold Remodeling in Boise, Idaho, President Joan Stephens issues comprehensive checklists to crews and subs for nearly every major work phase on every job to define and communicate her expectations. The checklists were derived partly from NAHB's Production Checklist for Builders and Superintendents, which Stronghold also uses to arbitrate disputes. "We build above that [standard], but it serves as a good baseline," she says.

Stephens not only distributes the checklist to each sub prior to starting work, but requires her lead carpenters (or superintendents) to review the checklist with each sub at the conclusion of that phase, and repair, replace, or address mistakes and missing items. "It's easier to fix things in process than at the end of the job," she says.