Bovis clear out failing sub contractors.Housebuilder Bovis Homes has announced that poor productivity and poor quality of work is forcing it to review and replace a substantial number of sub contractors across its sites. Bovis said that replacing poor performing sub contractors had pushed building costs up 8% in the last 12 months. Bovis said several of its trade sub contractors have been struggling with skills shortages and this has impacted on productivity.
All sub contract companies will be struggling to find sufficient individual workers to meet the ever increasing levels of production required by the big housebuilders. What will give them an edge will be the rates it is able to pay. As with everything, you get what you pay for! Bovis have tried the cheapest and they have been found wanting. However, the actual trade individuals working on Bovis sites, those producing the poor quality work, will find jobs with the new replacement sub contractors (possible on higher wages) as they look to increase their workforce to meet production targets.
Chief executive David Ritchie said that Bovis was now also working closely with a group of select groundwork contractors to ensure faster starts on new sites to speed up production rates. The deals are similar to housebuilders' favoured national agreements for material suppliers, which most plc housebuilders use to ensure guaranteed availability and reduce costs.
Having a background in accountancy, Ritchie clearly has no idea about housebuilding production and output. Hiring a large groundwork contractor will enable new sites to push on quickly, constructing roads and excavating plot foundations. But completions will always be limited to the slowest trade. It could be that a scaffolding contractor holds up the bricklayers, or a roof tiler unable cover roofs for internal trades. Most production delays occur from inadequate numbers of plumbers and dryliners. So unless of course Ritchie wants to report hundreds of housing "starts" in the figures for the firm's financial accounts, a good groundworks contractor will not increase completions.
Ritchie said:
"We have seen double-digit labour inflation in certain occasions, impacting both our own construction staff as well as labour from our key trades. We have incurred some additional costs where we’ve replaced subcontractors on sites either to ensure we hit the production rates that we’re required or to hit the quality that we’re required on site."
Mistakes are costly and it will cost more in the long run to change sub contractors on a live site. Ritchie should be setting quality standards, not aiming to
"hit the quality we’re required to on site" presumably warranty standards. He said Bovis Homes was now assessing contractors much more vigorously and checking they have access to sufficient labour to deliver the production targets required. Surely this is just good management, part of the management process to scrutinise prospective sub contractors, ensuring they can hit both production and quality requirements?
With 142 consented sites, Bovis Homes says it is on track for the estimated 150 sales outlets needed to deliver its annual completions target. Perhaps Ritchie, if he is serious about quality and not just the numbers, would do well considering paying the 150 site managers additional bonuses, based on say £10,000 for winning a NHBC Quality Award and a further £10,000 bonus for hitting key performance targets for customer care. This would only cost a potential £3million, with every likelihood that this would be recouped by reducing both reputational damage to the brand and the cost associated with paying maintenance contractors to attend to defects that the individual tradesmen on site should have sorted out, at their own cost, before the home was completed. It is the site manager’s responsibility to route out individual rogue tradesmen producing poor quality, defective work and ban them from their sites. Changing sub contract companies will not improve quality per se.
Ritchie added:
"Our site at Wellingborough obtained revised planning consent in December for 3,650 plots which supports the start of housebuilding on site during 2016. Overall, around 8,000 plots of the strategic land bank have planning agreed. In a number of cases, development partners are being identified for these larger sites, in line with the group’s aims for capital efficiency."
As always, it's about the money and numbers. When will he and others learn, it is more cost effective to build better quality new homes, getting it right first time, than suffer delays, reputational damage and additional, unnecessary cost of remedial works, which either delay completion, or divert already sparse resources on site after customers have moved in. The key is in motivating the site managers to properly manage the individuals working at site level and not release payments until their works are to the required standard.
Read the original report here
