Consumers are Willing to Pay for Quality

January 15, 2013


A report last year by the NAHB Research Center found that “increasingly, today’s homebuyers want energy-efficient, low-maintenance, well-insulated and well-sealed homes. Survey data in the last few years has also shown that consumers are willing to pay a premium for these types of homes and that they are typically more satisfied with them than with their previous, less efficient homes.

As the design and construction of these homes requires more precise tolerances than typical code-minimum homes – every system within the home is interdependent with the others in the whole-house system. Builders need to be more deliberate and exacting with the implementation of high-tech, innovative green products and construction techniques.

Quality management creates a solid process foundation for a home builder to ensure the right steps are taken at the right time and in the right order to deliver the best product possible to the homebuyer. By coupling quality management with high performance home building techniques, builders are likely to create satisfied customers and, as a result, increased profit.”

This link will take you to an overview of this report which includes key issues regarding the value of quality in the homebuilding industry and a list of metrics to help you measure the cost of quality.

For example, you can break your Cost of Quality down into the following categories:

Prevention: Cost of all activities specifically designed to prevent poor quality in products and services.

Appraisal: Costs associated with measuring evaluating or auditing products or services to assure conformance.

Internal Failure: Costs resulting from products or services not conforming to requirements or customer user needs, which occur prior to delivery or shipment to the customer.

External Failure: Costs resulting from products or services not conforming to requirements or customer / user needs which occur.

For a more detailed report on the Economics of Quality in the Home Building Industry follow this link to access the free pdf .

Denis Leonard has a degree in construction engineering an M.B.A. and a Ph.D. in quality management. Denis is a Fellow of the American Society for Quality, a Certified Quality Manager, Auditor, and Six Sigma Black Belt. He has been an Examiner for the Baldrige National Quality Award Board of Examiners a Judge on the International Team Excellence Competition and a Lead Judge on the National Housing Quality Award. A former Professor of Quality at the University of Wisconsin, he has experience as a quality manager in the home building industry as well as construction engineer, site manager, and in training, auditing, and consulting with expertise in strategic and operational quality improvement initiatives. His work has achieved national quality, environmental, and safety management awards for clients. 

Denis is co-author of The Executive Guide to Understanding and Implementing the Baldrige Criteria: Improve Revenue and Create Organizational Excellence.


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