Pipeline workshops™ are now beginning their eighth consecutive year as the most intense, demanding, interactive, and challenging homebuilding production management learning experience on the planet.

Here, in their own words, comments from builders and industry experts who have attended one or more of them.

“The Pipeline game™ production simulations were a brilliant way to demonstrate and drive home the significance of cycle time improvements and improving trade partner efficiencies on ROA and Net Income.”  (Keith Porterfield, COO, Goodall Homes (now part of Clayton Homes), Gallatin, TN)

“Pipeline workshops™, through hands-on simulations and classroom instruction, provide excellent learning experiences to see WIP turns at different velocities, and the effects on Return on Assets.  The principles and disciplines, if applied in the field by you as a builder, will increase your ROA.”  (Scott Jagoe, President, Jagoe Homes, Owensboro, KY)

“I think the concept of ROA or inventory turn can be THE differentiator between success and failure in a production-type environment.  It requires thought one level past the “P&L”, but will allow the manager that can recognize [its] impact and implement it, a major competitive advantage.”  (Wade Jurney, President, Wade Jurney Homes (now part of Century Communities), Greensboro, NC)

“I participated in the first-ever Pipeline workshop™, spending two days exploring the ins-and-outs of production, inventory, and scheduling.  It was quite intense, challenging, and not for the intellectually lazy.  We played repeated rounds of the Pipeline game™, and saw clearly that scheduling requires careful thought and planning.”  (Scott Sedam, President, TrueNorth Development, South Lyon, MI, excerpted from the April, 2014 issue of Professional Builder, “Taming the Chaos”)

“[the] Pipeline workshop™ was by far the most engaging workshop I have attended.  The principles shared relate to homebuilding companies of all shapes and sizes.  The two day program kept me engaged the entire time with a mix of lecture, open discussions and simulations of practical application.  I have already applied some of what I learned to my business, and I am looking forward to fantastic results.”  (Mark Refosco, President, Marcus Allen Homes, Arthur Rutenberg Homes franchisee, Jacksonville, FL)

“I would recommend the Pipeline Workshop™ to anyone interested in improving their homebuilding knowledge.  It offered me a fresh perspective, and got me excited to go back to work to share what I had learned.”  (John Marcy, Purchasing Agent, CalAtlantic Homes, Jacksonville, FL)

“All of our construction guys came back from the conference with a lot of new info.”  (Doug French, CEO, Stylecraft Builders, Inc., College Station, TX)

“The Pipeline Workshop™ is an extremely effective insight to production, for homebuilders of all sizes.  Whether your company builds 5, 50, 500 or 5000 units annually, you will leave this event with a deeper understanding of your company’s production capacity, and where you need to focus your attention.”  (Adam Roller, Florida Division President, Burgess Construction Consultants, Inc., Tampa, FL)

“The simulations at [the] Pipeline workshop™ [were] a very innovative way to demonstrate the critical nature and relationship between cycle time, inventory turn, margin, and Return on assets.  Both days were filled with learning, engagement, and inquiry that proved to be invaluable.”  (Vishaal Gupta, President, Park Square Homes, Orlando, FL)

“Think the same way, and you stay in the same place as everyone else;  challenge yourself with the new theories and strategies, and [you] become more effective in your company[y’s] achievement with your team.  You get to take these theories and teachings and immediately apply them in a simulation of the real world to test your skills against others, and that’s what this business is all about:  finding the right mix of everything to be the best.”  (Justin Parry, President, Parry Custom Homes, Irwin, PA)

“ROA is not discussed much in the building industry;  the focus has always been on margin.  Through the Pipeline workshop™, you will learn that your company ROA is just as important to know as margins per house.”  (Mark Ivey, Owner, Ivey Residential, LLC, Evans, GA)

“The Pipeline workshop™ provides full insight into the application of universal principles of production.  It provides clear and convincing proof that improving velocity will yield not only faster profits but greater profits.  I look forward to attending it again with some of my key staff.”  (Carlos Alvarez, President, Alvarez Construction, Baton Rouge, LA)

“It proved to be a great opportunity to enlighten our entire management team with a ‘higher level understanding’ of how our business works.”  (Craig Morrison, CEO, Cimarron Homes, Durham, NC)

“As an owner of a home building company, intimately understanding the importance of home building production principles, as taught in the Pipeline workshop™ and book, and effectively implementing them in our building processes, will be critically important to becoming a best-of-breed builder in our competitive market.  Running our company using these home building production principles will not only allow us to weather the next downturn intact, but grow in a healthy way.”  (Josh Lysen, Principal, Merit Homes, Kirkland, WA)

“The Pipeline workshop™ . . . was a straight-forward introduction to what matters most in the homebuilding industry – velocity!  Although many of the concepts reviewed are not new to most managers, the manner in which they were highlighted was eye-opening.

“The case study, simulations, and discussion with the instructors made it crystal clear as to how to go back to my operation and implement immediate improvements.  The interaction amongst the diverse group of attendees was also invaluable.  How often do we get the opportunity to discuss best practices with others in our field?  The workshop was time and money well spent, and I’m already getting a return on my investment!”  (Mike Cancilla, General Manager, SE, Essex Homes (now a part of Stanley Martin Communities), SE, Lexington, SC)

“Great opportunity for any individual to uncover the potential of the pipeline and maximize their business returns.”  (Brian Small, Land Acquisition Manager, Toll Brothers, Jacksonville, FL)

“The Pipeline Workshop™ reminded me that there is no substitute for moving quickly and efficiently in every aspect of our business.  The workshop agenda and material was focused and challenging.”  (Greg Stallard, Division President, Essex Homes (now a part of Stanley Martin Communities), Charlotte, NC)

“I walked away with a new perspective on making returns in residential homebuilding that challenged the models and assumptions I have worked under.”  (Mark Carter, Operations Manager, Drees Homes, Jacksonville, FL)

Come.  Participate.  Learn.

 

Pipeline workshop™ No. 15 will be held March 17-18, 2021, at the Ponte Vedra Inn and Club, in Ponte Vedra Beach, Florida.  The stated attendance fee remains $895.00.  However, due to COVID-19 restrictions, the first fifteen (15) attendees will be registered at no charge, and the next fifteen (15) attendees will be registered at a reduced $395.00 per person;  the only requirement is proof of room reservations (two nights, single occupancy) at the Ponte Vedra Inn and Club).

Attendance will be capped at only 30 attendees, so everyone attends at a significantly reduced cost;  there is no early registration;  there is no team pricing.

For more details:  www.buildervelocity.com

 

Be the first to comment
      

“What’s your legacy going to be?”

Posted January 12, 2021 By Fletcher Groves

It was three years ago, almost.  April 2018.  I was leading an eight-hour class for the members of Builder 20 Club 29, based on the production principles we use in our Pipeline Workshops™ (SAI gives back to the industry, by doing work pro-bono for the B-20 program anytime NAHB asks).

McKinsey and Company

Afterwards, that evening at dinner, I sat next to Wade McGuinn of McGuinn Homes, who was the President of Club 29 at the time.  At some point, he turned and asked me a question.

“What’s your legacy going to be?”

He went on to clarify his question:  “What I mean is this:  SAI Consulting is basically you.  You can’t practice forever.  How do you plan for the principles and disciplines that you teach to continue beyond you?  How are you going to pass what you do on to someone else?”

I thought for a moment, and replied, “I don’t know.”

It was the best response I could give to a question I had not expected.  In truth, I had never considered how – or why – I should stop doing the work I loved to do.

This past summer, my thinking changed.  The impact of the coronavirus had nothing to do with it;  the fact that I had just had major back surgery within days of becoming a Septuagenarian no doubt induced some reality into the question of how long I wanted to continue to manage a consulting practice.  I have concluded, that after a business career spanning almost 50 years, 25+ years consulting in the homebuilding industry, I want someone else to assume SAI’s role in the industry.

I want to turn my attention to other interests.

If you are interested in acquiring SAI, its assets are available in their entirety, on an all or nothing basis:  the future consulting revenue;  the ownership rights to the Pipeline game™;  the revenue from future Pipeline workshops™;  the royalties from future sales of The Pipeline: A Picture of Homebuilding Production©;  all of the intellectual property;  the websites;  the client relationships;  the consulting deliverables;  the work product and insight from every previous consulting engagement;  all of the previously published work in Builder, Professional Builder, and other industry publications.

It also includes the completion and publication of a second business novel, with its intellectual property rights and future royalties.  The sequel to The Pipeline©, Horizontal© traces the progress of the same mythical homebuilding company, involving the same job positions, the same characters;  the story becomes a guide to Business Process Improvement/Reengineering, and the workflow perspective that underlies the business proposition of every homebuilding company.

My friend and colleague Pascal Dennis, the founder and president of Lean Pathways, tells me, from his personal experience, that the typical M&A arrangement for a consulting firm involves some multiple of annual revenue and a time period of continued involvement by the principals.

The beginning of the year is as good a time as any to announce this.  Yes, there is new and ongoing work to be performed for new and existing clients, and that is where my attention needs to be.  Still, while I am in no particular hurry, my goal is to transfer the ownership of SAI sometime in the next two to five years.

If you think you would be interested and you want to know more about SAI Consulting – its knowledge base, its consulting models;  what it does, how it operates, the focused, results-based solutions that it delivers;  the SAI Library;  the most intense, demanding, interactive, challenging production management learning experience on the planet (Pipeline Workshops™ and Seminars™);  the best production simulator/business game in the industry (Pipeline Game™);  the book that inspired it all (The Pipeline: A Picture of Homebuilding Production©) – go to the SAI website:  www.saiconsulting.com

And, go to the Escape from Averageness® weblog:  www.escape.saiconsulting.com

If you are interested, contact me:  flgroves@saiconsulting.com

 

Be the first to comment
      

Homebuilding is an industry that leverages equity with debt, therefore, some version of Return on Equity is the final measure of a homebuilding enterprise’s economic return.  However, from an operational perspective, leverage doesn’t have to be considered, which makes Return on Assets the most useful measure of economic return.

All it takes is one glance at the essence of the DuPont identity to inform you that non-leveraged economic return has two components:

Margin (Return on Sales) and Velocity (Asset Turn).

From an operational perspective, the vast majority of assets on a builder’s balance sheet ought to be houses in some stage of construction, particularly when raw land and developed lot inventory is held off-balance sheet, as it should be.  This means, when we calculate Return on Invested Assets, we can equate Asset Turnover (a financial measure) with Inventory Turn (an operational measure).

What is the point, you ask?  The point is, you want to thrive in this business, not just survive in it.  In order to do that, you have to excel on both the margin side and the velocity side of ROA.  That understanding proposes two fundamental questions:  (1) How much money can my company make on every house it builds?  (2) How many houses can my company build with a planned, finite, and controlled amount of inventory and production capacity?

As a builder, consider this scenario:  You have a competitor that has exactly the same work-in-process, overhead, working capital requirements, borrowing capacity, and risk profile.

If you generate a Gross Margin of 24% and turn your inventory twice a year, you will be outperformed by your competitor that generates a Gross Margin of only 18%, but turns its inventory four times a year;  you will be outperformed in terms of Revenue, outperformed in terms of closings, out-performed – by a better than two-to-one margin – in terms of the Net Income you earn and the Return on Assets you generate.

You will struggle to compete;  you will struggle to survive.

It is the picture of a slow, marginally-productive homebuilding company versus a fast, highly-productive homebuilding company;  your competitor generates 85% higher Revenue and 40% more Gross Income than you do, and does it with the same resources.

It is also the picture of your 180 day cycle time versus your competitor’s 90 day cycle time.  If that comparison seems too stark, then consider this one:  your competitor – the one with the 18% Gross Margin and a 4x turn – produces almost the same Return on Assets as you would with a 24% Gross Margin and a 3x turn, which is the picture against this same competitor, if your cycle time was 120 days instead of its actual 180 days.

And, at this point, you should now be asking yourself what happens when this competitor becomes your equal on the margin side of ROA.

In the face of clear differences in economic outcomes, remember this:  In this scenario, your competitor is exactly the same size as you, when the real measure of size is not Revenue or closings, but, rather, the amount – the burden – of work-in-process you each have to carry.

This is not a choice forced between either higher margin or higher velocity;  it is the challenge – and the opportunity – of doing both, of maintaining higher margins at higher velocities.

Very few builders will meet that challenge or avail that opportunity.

Despite the obvious advantages, the demands of achieving higher velocity – the demands of generating higher productivity – are so hard, require so much rigor, so much discipline, so much resolve, that most builders won’t attempt it.

And, therein lies competitive separation.

Pipeline workshops™ are a two-day immersion into the production physics – into the principles and disciplines – that enable homebuilders to thrive on the velocity side of economic return, to thrive on the velocity side of Return on Assets.

Come.  Participate.  Learn.

 

Pipeline workshop™ No. 15 will be held March 17-18, 2021, at the Ponte Vedra Inn and Club, in Ponte Vedra Beach, Florida.  The stated attendance fee is still $895.00.  However, the first fifteen (15) attendees will be registered at no charge, and the next fifteen (15) attendees will be registered at a reduced $395.00 per person;  all that is required is proof of room reservations (two nights, single occupancy) at the Ponte Vedra Inn and Club).

Attendance will be capped at only 30 attendees, so everyone attends at a significantly reduced cost;  there is no early registration;  there is no team pricing.

For more details:  www.buildervelocity.com

 

Be the first to comment
      

Pipeline Workshops™: Finding TrueNorth

Posted January 2, 2021 By Fletcher Groves

Scott Sedam is President of TrueNorth Development, Inc., and is the homebuilding industry’s foremost Lean Production practitioner.  A well-known, well-respected Lean Building purist, Scott is a Bill Pulte protégé, with roots that go back to W. Edwards Deming and TQM.

He is a friend and longtime fellow consultant.

In 2013, after the first edition of The Pipeline: A Picture of Homebuilding Production© was published, as I was planning the first-ever Pipeline workshop™, I suggested that Scott attend as SAI’s guest, so that he could judge the merits of pipeline-thinking for himself.

I wanted his opinion of the workshop, but I also wanted him to share with those first-time-ever attendees his thoughts on applying Lean Thinking to both sides of the DuPont identity equation for Return on Assets, to the velocity side of economic return as much as the margin side.

Scott graciously came to that first workshop in March 2014, functioned just like any attending builder in the discussions and in the Pipeline games™, and he and I co-presented our thoughts on blending improvement methodologies towards solutions that work best for homebuilding.

Afterwards, this is what Scott wrote in a discussion on the BUILDER group on LinkedIn:

“If you are ready to challenge your brain, get out of your well-sealed ‘Builder Box’ and make a huge leap forward in understanding schedule and its impact, come to this workshop and bring a few of your better thinkers.

“The roots of [this] workshop are in Goldratt’s Theory of Constraints, which is at first-blush exceedingly simple, but you can spend years studying the intricacies.  Fletcher puts it all in builder language and forces you to go deep into the impact of our most common builder practices.

“If all builders learned and followed the principles in [a Pipeline workshop™], our industry would take a huge leap forward.  The winners would not be the builders alone, but also homeowners and especially our suppliers and trade contractors.  Fletcher does not know I am writing this, but I strongly recommend his Pipeline workshop™ to everyone who has the will to change for the better.”

Come. Participate.  Learn.

 

Pipeline workshop™ No. 15 will be held March 17-18, 2021, at the Ponte Vedra Inn and Club, in Ponte Vedra Beach, Florida.  The stated attendance fee is still $895.00.  However, the first fifteen (15) attendees will be registered at no charge, and the next fifteen (15) attendees will be registered at a reduced $395.00 per person;  all that is required is proof of room reservations (two nights, single occupancy) at the Ponte Vedra Inn and Club).

Attendance is capped at only 30 attendees, therefore everyone attends at a significantly reduced cost;  there is no early registration;  there is no team pricing.

For more details:  www.buildervelocity.com

 

The Pipeline: A Picture of Homebuilding Production, Second Edition© is available print-on-demand on the publisher website (virtualbookworm.com), as well as through the major book sellers (amazon.com, barnesandnoble.com, and booksamillion.com).

It is almost always carried in-stock on amazon.com.

 

      

Final Vision

Posted December 30, 2020 By Fletcher Groves

In recent years, these words of Oswald Chambers have become the final post of the year on Escape from Averageness®, the encouragement and assurance we wish to share with clients, colleagues, and friends, for the year ahead.

 

December 31, 2020

The Final Vision of the Exalted Lord

Matthew 28: 16-20

By His Ascension, our Lord raises Himself to glory, He becomes omnipotent, omniscient, and omnipresent.

All the splendid power, so circumscribed in His earthly life, becomes omnipotence;  all the wisdom and insight, so precious but so limited during His life on earth, becomes omniscience;  all the unspeakable comfort of the presence of Jesus, so confined to a few in His earthly life, becomes omnipresence, He is with us all the days.

What kind of Lord Jesus have we?  Is He the all-powerful God in our present circumstances, in our present setting?  Is he the all-wise God of our thinking and our planning?  Is He the ever-present God, “closer than breathing, nearer than hands or feet”?

If He is, we know what it means to “abide under the shadow of the Almighty”.

Still Higher for His Highest, Oswald Chambers (compiled by D.W. Lambert, 1970)