PB April 2006

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The home sales slump had to happen eventually. Nervous builders across the country are asking: How long will this slowdown last? How bad will it get? The answer depends on the characteristics of your local market.

KB Home is the first Giant to work with the NAHB Research Center to implement the National Quality Certification Program on a national level, after successfully implementing the pilot program in Las Vegas as the prototype for the company's nationwide rollout. The program requires all subcontractors to become certified via a thorough educational NAHB program.

Materials include James Hardie fiber cement siding; Moen kitchen bridge faucet; Elk Prestique laminate shingles; Trane variable speed air conditioning unit; and Boise Build-Rite services.

The common denominator is good management, not whether the company is big or small, public or private.

2006 Shea Homes San Diego - Gold Veridian Homes - Gold Ideal Homes - Gold CP Morgan - Silver Pringle Development Inc. - Silver KB Home Nevada - Silver 2005 Grayson Homes Gold Pulte Homes (National) Gold Ideal Homes Silver Estes Builders, LLC Silver Veridian Homes Silver Pringle Development, Inc. HM 2004 Grayson Homes Silver Boardwalk Builders Silver Schuck and Sons Silver 2003 History Maker Ho...

Determined to make sure her department helps management meet its goal of turning last year's 352 closings into 1,000 by 2010, Ellen Knorring, director of purchasing for Stanley Martin Companies, will need the vigilance of a hawk to keep on top of new Giant purchasing processes.

A milestone in fire protection laws is emerging on two fronts as fire sprinkler advocates push for requirements to install them in all new residences. Whether they are the ultimate protection for people and property is still being debated.

Tiger Teamwork. Adapting a concept originally employed by the U.S. military, Pringle's Tiger Teams typically comprise of a small number of employees representing various disciplines at the company. Like a tiger going after prey, the teams sharply focus on very specific targets —issues that arise in the course of growing the business.

Ask America's top private home builders if going public is a good idea and you're likely to get a smile and a cryptic, "Not for us." Still, the debate rages — public v. private — and each side has plenty of arguing points. The public companies are on a 13-year run of unprecedented growth.

The National Housing Quality (NHQ) Awards give the highest recognition in the housing industry for quality achievement. The NHQ Awards are sponsored by the NAHB Research Center and Professional Builder magazine. Entries are judged by panels of experts who evaluate the role that customer-focused quality plays in construction, business management, sales, design, and warranty service.

Florida reBuilds is a new, entry-level training initiative aimed at alleviating the shortage of construction workers in the state. State universities, community colleges, vocational centers and the like will provide the training. The curriculum will be designed and developed by the Florida Department of Education in conjunction with the FHBA and other industry groups in the state.

Home builders looking for bathroom trends needn't look any further. We've gathered the industry's experts to weigh in on bathroom trends.

Corporate Profile: KB Home Nevada is a division of KB Home. Headquartered in Las Vegas, this division serves the Las Vegas metropolitan market—including a growing number of communities in Summerlin and Henderson—selling and building single family homes.

The Supernovas are changing, as are all the public builders. One of the notable recent changes is the vigor of public builders' movement to diversifying locations and product. They say it's to meet fragmenting housing demand. There's also evidence that public builders need to find new ways to meet Wall Street's insatiable demand for growth.

Ideal Home's rigorous construction-quality processes include: Contractor management: Agreements with contractors detail the scope of work for each completion stage. Ideal associates frequently meet in the field with contractors and train crews to expectation. New practices and procedures continually flow from these meetings.

In this issue of Professional Builder, we gaze upward at the 400 largest home builders in the country — the Giant 400. We do this to provide a benchmark and get a sense of what's going on in the industry. It offers us a touchstone on our individual businesses, provides an insight to emerging trends and delivers a measurement of the movements and tectonic shifts of the industry.

Cabinets — they're not just for kitchens and bathrooms anymore. And the ones that are still there are being used in new and creative ways. Necessity is the mother of invention, and homeowners are finding themselves on a relentless quest for more space to put all of their things.

Corporate Profile: C.P. Morgan is a residential land development and home building company serving the metropolitan Indianapolis and Lafayette markets in Indiana and Charlotte, NC. Headquartered in Indianapolis, C.P. Morgan is the first home builder in Indiana to receive the Better Business Bureau of Central Indiana's Torch Award for Business Ethics.

The NAHB is spearheading a national campaign to pass and or enhance existing Notice of Opportunity to Repair (NOR) laws in every state. NOR laws are aimed at giving builders the opportunity to repair or resolve legitimate home owner construction issues without going to court.

Hiring Practices and Profit Sharing Plan

Most builders will tell you that people — or lack there of — are their greatest challenge to growth. The need for qualified people at all levels is far greater than the supply. Nothing indicates the situation will improve anytime soon.

It's been more than 13 years since the housing industry faced this kind of uncertainty.

Corporate Profile: Shea Homes San Diego (SHSD) is part of the J.F. Shea Co. Inc. family of companies. Established in 1881, Shea is one of the oldest and largest privately held operations in the United States. Started in 1968, Shea Homes builds homes and develops master-planned communities throughout California, Colorado, Arizona, North Carolina and Washington.

Every business encounters unhappy customers, even when they've received the best service and products available. For home builders, these potentially hostile homebuyers can present serious problems. Enter the Builder SWAT Team concept, which can serve to help maintain good customer relations and a reputable public image.

Corporate Profile: Ideal Homes is a Norman, Okla.-based builder serving the Oklahoma City metro area with 16 communities for first-time and move-up buyers. The company is Oklahoma's largest home builder, and operates an in-house mortgage company that handles an average of 60 percent of the company's closing.

1) HomeTracker – innovative customer relations software program that tracks all customer communication, including the home orientation, 30-Day visit and 11-month visit, all in an effort to ensure excellent service. 2) Home Towne – Veridian's custom-built lead management system which has been integrated with other applications to facilitate extensive reporting, lot man...

The public home builders' filings with the federal Securities and Exchange Commission show these companies made their best margins ever in 2005, even though they don't separate land profits from those made by building and selling houses. It will be a tough act to follow this year. "The publics are secretive about costs," says management consultant and PB columnist Chuck Shinn.

These are the metrics used to score National Housing Quality award applicants. A list of winners dating back to 1993 is also included.

As the 2005 tax season wraps up, keep in mind next year's new tax credit for new homes qualifying as energy efficient. The Energy Policy Act of 2005 (EPACT), signed by President Bush in August 2005, outlines new Federal tax credits for consumers and businesses pursuing energy efficient usage. Home builders can claim EPACT tax credits up to $2,000 for the construction of a qualified new energy-efficient home.

Paul Bertsche and Wendy Andrews formed C.A. Development to build the home and the community they wanted for themselves -- an equal blend of city life and suburban feel. Bertsche and Andrews report on the opportunities, obstacles, outcomes of their most recent development -- the Residences at Old Irving Park.

Close communications. C.P. Morgan uses an integrated structure around leadership which directly contributes to the company's ability to consistently meet goals. Each functional area of the company has an executive team member reporting directly to president Dan Horner. The executive team works closely to initiate action in each leader's area of responsibility involving people str...

Who knows how deep the current downturn in home sales will go? The crystal ball is cloudy for everyone. But one thing is clear: many Giants are rushing into high-density infill development — including high-rise condo buildings — just as housing demand is faltering, and that's a dangerous move.

Trade Partner Council: To ensure these principles, SHSD manages a Trade Partner Council that meets monthly with an eye toward project improvement to discuss industry practices, solve problems and distribute information. The Council consists of principals from eight primary contractors such as framers, carpentry, HVAC and plumbing firms, as well as several SHSD staff, including tw...

What should you do about a cancelled customer - simply move on or maintain an ongoing relationship? Several sales people provide their perspective.

William Lyon Homes' Garland Park neighborhood, in the master planned community of Woodbury in Irvine, Calif., attracts buyers because it offers privacy, square footage and affordability. The townhouses are attached, but they live as detached.

Corporate Profile: Eustis, Fla.-based Pringle Development is a developer of active adult communities and builder of single family homes in Central Florida. The company has a record for more than 20 years focusing on the Florida retirement community concept, offering complete architectural design services for pre-designed and custom homes.

Professional Builder's 39th Annual Report of Housing's Giants is, as always, a snapshot showing where the largest production builders stand at the end of the previous year. Four months into 2006, we have the perspective to now see 2005 as a bellwether year for housing's big boys by any measure.

Employee Feedback and Training ProgramsVeridian believes employee development is the heart of a respected company. The Madison, Wisc.-based builder is one of the few in the industry that conducts in-depth weekly one-to-one meetings with associates. The meetings cover a review of accomplishments, frustrations, issues or obstacle resolution, setting of new goals, review of goals an...

What is your strategy for finding money when you need it most? Here is an exercise for discovering how you and your staff go about uncovering hidden assets.

If you want to build kitchens and baths that are beautiful inside and out, you might want to make some upgrades where they can't be seen — the plumbing system. Technologies like home run plumbing, air admittance valves (AAVs), tankless water heaters, low-flow fixtures and gray water reuse piping provide homeowners easier long-term maintenance and lower utility bills.

Corporate Profile: Veridian Homes of Madison, Wisc. is a semi-custom production builder of single and condominium homes. Family-owned and operated, Veridian was formed in 2003 through the merger of Don Simon Homes and Midland Builders, two of Wisconsin's oldest and most respected home builders.

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