Soft costs? That hurt so much, how could it be anything but hard? — Lean Tuesday with Scott Sedam

August 16, 2011

I am finishing up my September column for Professional Builder based on a list of the 10 biggest myths of Lean Building, and I just wrote about one of the most aggravating — the idea that Lean process savings don’t count like saving in sticks and bricks.

There is a tendency to call the former “soft cost” and the latter “hard cost,” and there is a definite value judgment associated with those terms. The propensity to undervalue process savings by builders can hardly be overstated. For example, a common problem cited by trades is not enough detail on PO’s to know what to order and what to bring to a site. Add to that confusion over VPO’s. Then add in changes in schedule. To say that through Lean process you could eliminate 10 phone calls for each of 25 suppliers and trades per home would be a very conservative goal. Let’s say you build 100 homes. That is 25,000 phone calls! With 250 work days, that is 100 phone calls per day. If they all came to one person, could that one person handle 100 calls per day, better than 12 per hour, with all the chasing down of details required — not to mention how one call often begets several other calls? Doubtful.

Can you believe you easily have one full-time-equivalent tied up just dealing with phone calls to clarify what’s being built, how and when? For many of you, it’s more than that, but with salary, benefits, and overhead, let’s peg that cost at $75,000. Now, you tell me, hard cost or soft cost? How can anything that hurts that much be anything other than hard?

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Scott Sedam is president of TrueNorth Development, a consulting and training firm that works with builders to improve products, process, and profits. A senior contributing editor to Professional Builder, Scott has written award-winning commentary on all aspects of the business of home building and won the 2015 Jesse H. Neal Award, business journalism's most prestigious prize, for his commentary in Pro Builder. Scott invites you to join TrueNorth's Lean Building Group on LinkedIn and welcomes your feedback at or 248.446.1275.