What is a Day Worth?

21 Jun 2019
karin
57
0

Based on a document published in March 1998 by NAHB Research Center:

Builders can make real progress in reducing build cycle time by “building it
the right way the first time.” Cycle time reduction is a natural by-product of fewer mistakes to correct, less adjustments to make, and a streamlined
construction process.

To get employees and trade contractors to understand the importance of
cycle time, put it into dollars and cents. Every builder can calculate what a
day is worth by looking at some key factors:

  1. Cost of Money. Whether it is interest on a construction loan or lost
    investment opportunities, it takes money to build. And money costs money.
  2. Contractor Costs. Streamlined production processes allow contractors to complete jobs in less time and to produce more homes with the same crews. While material costs may not change significantly, there are substantial savings in contractor labor costs. Builders can share in the benefits.
  3. Management Costs. As problems are prevented, staffs become more efficient. Streamlined production processes reduce build time without additional management attention.
  4. Sales Opportunities. When the standard build schedule satisfies buyers who need homes quickly, new sales opportunities exist.

What is a day worth to your company? You can calculate this by using the attached work sheet:

Image from: Lantzman Lending https://www.lantzmanlending.com/using-direct-money-lenders-construction-project/

Leave a Reply

Your email address will not be published. Required fields are marked *