Movers and Shakers: Village Homes

New Market Ventures
Denver’s healthy housing market, a product line that requires no exterior maintenance, and the integration of diversified businesses helped Littleton, Colo., builder Village Homes climb to 69th in the Giant 400 this year, up from 82nd last year.

“We’ve been able to grow as this market’s grown,” says CEO John Osborn. In the coming year, Village Homes will expand its operations from Boulder north to Fort Collins and about 125 miles west in the town of Eagle. Village has 300 lots in the Eagle Ranch master-planned community, where it plans to build alley-loaded, detached homes that are part of the LifeScapes series of maintenance-free housing. “We would expect to grow from our presence in Eagle into the other markets along the I-70 corridor,” says Osborn.

The area north of Denver to Fort Collins is a big draw for retirees as well as seekers of high-tech jobs and other employment; State Farm and ConAgra, for example, have facilities in Greeley. “It’s become a very attractive mini-economy right there,” he says. West of Denver, the Eagle Valley (between Eagle and Vail) is a popular recreation area with a permanent population base of about 30,000 that is in dire need of affordable housing.

“It’s typically been resort housing that gets built, and that has to serve as primary housing for job holders. For the most part, the employees that work in that valley really don’t even live there anymore. They generally live in Glenwood Springs and other, smaller towns up and down the I-70 corridor, so they have very long commutes,” he says. The smaller-lot product Village is building at Eagle Ranch is intended to meet part of the need for lower-cost housing, says Osborn.

Diversification at Village Homes isn’t only in product types. Since 1993, the company has been integrating new businesses such as mortgage banking, land development and building supplies—all of which contribute substantially to the bottom line.

In the last 18 months, the company has made great strides in its quality management program, working more closely with trade contractors to develop job checklists. “In real summary fashion, the checklist states how the job is to be presented to the trade contractor—that is, what things they need done to begin their work. Then it has a list of various items they will complete.” The on-site job foreman signs off on the checklist when work is completed, signifying that the house is ready for the next work step.

The checklist system was combined with “a command center capability that allows our on-site superintendents to update their schedules every day with a hand-held device.” Daily updates are electronically transmitted to the corporate office and to each trade contractor. “They have a much higher assurance level that the job is really going to be ready for them when they arrive, as opposed to having three or four items that are incomplete and thus, they make a wasted trip to the site,” says Osborn. Penalties are charged if a contractor doesn’t show up on time.

Another improvement the builder made was to have all paperwork completed prior to the start of construction: “We do pretty extensive custom changes, and it’s very important to have all those things finalized before we start the house.”

All of these factors have helped Village Homes get its construction process organized and reduce cycle time. At the beginning of 2000, Village was 47 variance days behind schedule. By the end of the year, that number was down to 20—a 57% decrease. Production days on houses closed also declined 25%.

Regardless of what happens with the economy and the local housing market, though, Village Homes isn’t hedging any bets. The company is positioning its balance sheet, preparing for a lower level of sales activity and focusing on internal quality. To bring decision-making closer to customers, Village Homes is decentralizing its operations, giving regional managers complete autonomy over their projects. More emphasis will be placed on customer satisfaction, says Osborn, “Because the best position to be in during a downturn is to have raving fans.”

By this time next year, the builder expects to be closing houses at Eagle Ranch and in the new markets north of Denver. “We’re going to be looking at Colorado Springs as another place to venture, particularly with our LifeScapes products,” says Osborn. “We probably will be looking at 2002 as another pretty substantial growth year.”

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