Author Topic: Bovis Shares Crash and Burn - Poor Quality and Failed Customer Service  (Read 1504 times)

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    Bovis shares crash and burn as company admits failed customer service and poor quality homes.

    "Bovis - It's as good today as it's always been... No wait a minute that’s Hovis."
    Said a joker commenting on one of the many national news stories about Bovis Homes.
     
    Bovis Homes are the worst performing listed housebuilder by a country mile. Rated just three stars by its own customers in 2015 and 2016 it's hard to see that improving this year, even in a survey conducted by the industry itself. You can be sure that Bovis already know its customer 'satisfaction' rating for 2017 and it probably won't be good!

    So it looks like Bovis have decided to get all the bad news out of the way in one go with the publication of the Group Final Results for the year ended 31 December 2016.

    The company has been forced to admit shortcomings in its 'operational procedure's' which have led to lower profits. Indeed profits are 3.3% lower than last year at £154.7million on a turnover, 11% higher, of £1,054.8million.
    The news wiped £100million of the market value of the company yesterday as shares crashed 10% to 757p also on the news that it would cost (at least) £7million to fix the defective homes Bovis completed in the last two years and "to rectify a limited number of homes with more significant issues and associated compensation costs."

    After taking over from David Ritchie who "resigned" on 9 January 2017, interim CEO Earl Sibley said he would make remedial works to customers' homes the "absolute operational priority". He said Bovis had experienced more snagging issues on new homes than it would normally expect and had been conducting a "thorough and detailed review".

    He said:
    Quote
    "Our customer service proposition has failed to ensure that all of our customers receive the expected high standard of care,” Sibley said. “We are fully committed to putting our customers back at the centre of everything we do and to delivering a much improved level of customer service.”

    We’ve had to go back into our customers’ homes too many times after they’ve moved in – it’s an awful lot easier to get it right first time."

    You don't say?
    Why are these highly-paid Bovis executives only just realising what the man in the street and their beleaguered buyers have known for years - it's cheaper and better to do it right first time!

    After admitting Bovis Customer service "fell materially short" and had "been declining for sometime", it remains to be seen if his "end to end review" and "customer service task force" will have a positive effect.

    It should be pointed out that this has been said before. Twelve months ago Bovis announced that poor productivity and poor quality of work was forcing it to review and replace a substantial number of sub contractors across its sites.

    Bovis now state their "Priorities for 2017" include building 10% to 15% FEWER new homes!

    Below are the company's intentions for 2017.
    It is full of corporate speak and buzzwords but lacking in any real detail as to exactly how Sibley and his company are going to achieve this other than throwing money, all £7million of it, at the problem.

    Quote
    Resetting the business
      Operational challenges understood
      • Putting the customer back at the centre of everything we do:
      • Commitment to delivering the highest quality homes to programme
      • Strengthen regional management teams and functional leadership
      • Refreshed culture establishing consistent best practice across the Group
      • Strategic and structural review during 2017

      Developing to programme
      • Proactive management of  root causes of build delays
      • End to end review of our build process
      • Strengthen senior  operational resource
      • Investment in our build  management system

      Transforming customer service
      • Customer task force in place
      • Increased investment in and resourcing  of our customer service function
      • Overhaul of our customer service  procedures and controls:
      • Improved customer service training  for all staff
      • Enhanced quality assurance process  prior to hand-over
      • Improvements in customer  responsiveness and communication
      • Formation of Homebuyers Panel 
      • More effective customer complaints procedures

      Leadership and operational expertise
      • Strengthen regional management teams 
      • Establish functional excellence
      • Group commercial function established in 2016
      • New leadership roles for customer service and development activities 
      • Increased investment in training and developments - Supported by the Bovis Training Centre
      • Review of in-house functions versus outsourcing
      • Benchmarking operational capability both internally and externally to establish consistent best practice across all regions

      Focused on re-setting the business
      Slowing our rate of production to deliver operational priorities with full-year 2017completion volumes 10% to 15% lower than 2016, before a return  to normal industry production levels."   

      Sibley said Bovis' decision to reduce the number of completions by between 10% and 15% in 2017 would be "welcomed" by its supply chain.

      One thing for sure, anyone buying a Bovis new home in 2017 must accept some responsibility for their own actions in buying a new home from a 3 star rated housebuilder that needs to spend £7million rectifying defects in the homes it has built over the last two years, which would be an average of £885 for each and every home built in the 2-year period.
      Their is a choice and their are other, better housebuilders.
      Only time will tell if Sibley is even moderately successful in turning Bovis around.
      I wouldn't bet on it!
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