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15 Ways Builders Can Solve Their Trade Shortage

In the May 2017 issue of Professional Builder magazine, Contributing Editor Scott Sedam wrote a captivating article showing how builders are doing an inferior job of managing their trades – at a time when trade shortages are a limiting factor virtually everywhere across the country.

According to the TradeComm survey that he conducted, strong local builders consistently do better than nationals or multi-divisional regionals at working with their suppliers and trades. Here are 15 ways in which they do that.

  1. Communicate to suppliers and trades. What are your plans? How much business is in the pipeline? What does the economy look like for the next year?
  2. Ditch bid price as your sole criterion and resolve to buy only on total cost, which is the one thing that really matters.
  3. Know that to get the best trades, you must earn them.
  4. Understand the issue is not merely the best trades, it’s best crews, and that can make the difference between profit and loss.
  5. Kill the paperwork load. Assemble all documents that a trade must use to build our home, and then work towards cutting that in half.
  6. Simplify wherever possible. If there are shortfalls in your systems (like last-minute changes), then both you and your trades will pay the price many times over.
  7. Bid packages 100% complete, with final plans and specs fully detailed and accurate.
  8. Start packages 100% complete, detailed and accurate with job-specific plans and working drawings.
  9. Negotiate firm dates with sales and the design center for all options and selections and hold sales accountable to manage customers to those dates.
  10. Manage VPOs down to the minimum. Every VPO is a loss – for builder, supplier and trade alike.
  11. Reduce charge-backs to an absolute minimum, with a goal of zero. Like VPOs, each charge-back is a loss for all.
  12. Have the best-trained field construction managers in town.
  13. Maintain an intelligent, proactive schedule that reflects the true capacity of your systems, processes, and people working within the current capacity of your suppliers and trades.
  14. Offer nonmonetary rewards.
  15. Accept your responsibility to become involved and show leadership on the local level in the development of the trade base and demand the same of your colleagues, competitors, school officials, and politicians.

Sedam also states that the strong local builders by and large are substantially more profitable than the true giants of the industry. He believes that the supplier/trade element is an essential driving factor for that. I agree.