Using Technology to Drive Value

The opportunity to make great strides by utilizing technology is at the doorstep of the housing industry. Progressive home builders and manufacturers need to seize that opportunity to help their companies and propel the residential construction industry to new heights of value. In this age of unprecedented technological improvement the industry has an increasing number of techniques and systems available to do just that.

The information technology revolution upon us has been widely heralded as the world’s next growth engine, equaling or surpassing the impact of the railroad or electricity. Some business analysts even suggest the information revolution will equal or surpass the impact of the industrial revolution. This explosion in information technology can be the driving force to accelerate innovation in other areas, too. Businesses as diverse as gourmet foods and financial services are tied into new and bigger markets, as the rewards for new ideas increase and the incentive for innovation continues to compound. In many industries, information technology is revolutionizing distribution and creating large cost savings.

The concern for the housing industry is that it has not been known historically for embracing technology. In fact, an NAHB Research Center study indicates that it takes more than 10 years for a new technology to be absorbed into the mainstream. A study by two professors at Le Moyne College in Syracuse, NY, found that on average, the 417 builders polled had adopted just 1.6 improvements out of a list of 10 changes in construction methods and materials.

While that situation should have changed years ago, today it is even more important that builders and manufacturers adopt a new attitude to take advantage of the increasing pace of change.

How do we position ourselves to take best advantage of this technology revolution? How do we use it to make housing better yet more affordable? The change in thinking by builders, manufacturers, as well as government agencies, should center on what one builder mentioned at the Benchmark Conference. Colony Homes’ Dave Schmit made a comment that has stuck with me: Other industries that have embraced technology have lowered their costs.

Implicit in that statement is that we in the housing industry still have that challenge in front of us. Can we meet the challenge? What will it take to get us there? Will process technology improvements overtake product technology improvements? Or, will the process and the product advancements be combined to provide a synergy that will provide exponential improvements?

The answer to meeting the challenge of embracing technology and lowering costs has to be that we can do it. The future success of the housing industry depends on it.

Historical Perspective

A look back at the computer industry to review the great improvements those companies have made can be instructive for the housing industry. Think back to the brand new computer of 1990. State-of-the art was a 386, 25-megahertz processor with 4 megabytes of Random Access Memory. Hard drives averaged about 50 megabytes. The computer had two drives, one each for 31/29 and one 51/49 floppy disks, but no CD-ROM drive. The new VGA (video graphics array) standard gave us for the first time 16 simultaneous colors. The price for the computer and monitor was approximately $4000.

Just one decade later, a typical state-of-the-art computer is approximately 1000 times faster than the machine of 1990 and has approximately 500 times the storage capacity. The typical desktop machine of today has more computing power than the Cray Supercomputer of 1990 and all for about $1600!

What can we draw from this look back at the computer industry and apply to technological innovation in the housing industry? I believe the answer lies in taking full advantage of the opportunities available through the Partnership for Advancing Technology in Housing (PATH), where one of the fundamental and overarching goals is to accelerate housing technology. The PATH program provides seed money to enable the housing industry to build and remodel higher performance houses over the next decade that will be 20% less expensive to own and operate.

PATH goals also aim to improve the way Americans live. They call for a 50% improvement in the durability of housing materials and components and similar improvements in energy and environmental performance, not only in our new houses but also in the nation’s 100 million existing houses. They also call for improvements in construction safety and resistance to man-made and natural disasters. It is expected that all of these changes will be implemented while making housing more affordable to own and operate.

The vast scope of PATH presents an opportunity for the building industry to accomplish more than it has before. In process technology, for example, information system improvements can lower costs while improving quality and affordability. Clearly, cycle time reductions are possible with enhanced communication systems (cell phones, lap top computers, e-mail, etc) that allow for all parties to work off of one schedule, and immediately know project status. This helps with even flow production, and reduces labor costs. Advances in wireless technology should only help progressive builders.

Product suppliers and builders, however, will achieve none of PATH’s goals, without the direct investment of time and resources. From manufacturers we need the investment of resources into R&D that will bring about innovations to make it possible for builders and remodelers to achieve the PATH goals. From the building and contracting side, we need to learn what types of innovations will help achieve the goals. Then, from both sides, we need a willingness to help us to evaluate the innovations and a commitment to use technology to improve the home building and remodeling process. It is not sufficient to wait for others to do this evaluation for us.

Some builders and manufacturers are already leading the way. Features in Professional Builder about winners of National Housing Quality Awards show how far some of the best builders have come. This awards program, co-sponsored by the NAHB Research Center, shows that much has already been done in process technology. On a related front, builders are also making progress on PATH goals at the California housing site, Village Green in Sylmar, CA, where President Clinton announced the PATH program in May 1998. Village Green is a cooperative effort to develop a new generation of affordable, energy efficient housing. At another PATH site in Tucson, AZ, in the mixed-use community of Civano, builders are focusing on the principles of sustainability, another PATH goal.

These two sites are part of a growing program of pilot and demonstration sites throughout the country that will enhance PATH’s ability to reach its goals and for the housing industry to take advantage of cost-saving technological advancements.

Defining the Future

To coordinate current research and development efforts at existing and future sites, the PATH program has initiated a Technology Roadmapping process. The NAHB Research Center will be working with interested representatives from the industry to create an R&D agenda that will enable the building industry to achieve the PATH goals by 2010. This agenda will define near and longer term priority activities and challenge government and the building industry to work together on the needed advances. We need your help in defining priority areas and in creating the long-term solutions.

Opportunities on the scale of PATH don’t come along very often to help home builders and manufacturers deal with a variety of problems and opportunities. The PATH web site is an ever-growing encyclopedia of technology. Let’s take advantage of the opportunity and challenge ourselves, in the words of Dave Schmit, to let "technology drive value" in housing so that we achieve the worthwhile PATH program goals.

Information technology is revolutionizing business’ standard mode of operation and creating correspondingly large cost-savings. While that has happened in only a limited way in the home building industry to date, we can envision a not-too-distant future where buying on line with just-in-time delivery will be the only way to go. The move toward business-to-business e-commerce has already begun. General Electric Co. (www.ge.com) reported that it has reached the $2 billion mark for Internet commerce. Other large and small manufacturers are already listed on web sites such as www.faucet.com and www.appliances.com. Business analysts predict this type of process improvement will alter significantly the way the home building industry, as well as other industries, do business in the coming years.

Information technology clearly holds an important key to the future success of the home building industry. The time to act is now. Builders, remodelers and manufacturers must acknowledge the significant role information technology can play in the home building industry of the future. Together, they must identify and seize the value-enhancing opportunities to advance the residential construction industry or risk being left behind as the information technology revolution passes us by.

As president of the NAHB Research Center, Liza Bowles has focused the Center’s activities on innovative technology; energy and resource conservation; application of quality methods to home building; affordable housing; accessible housing; expanded programs for laboratory testing of building materials; certification of installers of building products; construction of research houses; recycling and reuse of construction waste; and the use of new communications media to distribute information to builders and the public. Liza holds a Master’s degree in urban affairs from the Virginia Polytechnic Institute.