|
Six Performance Yardsticks — and How to Measure Them
 There are six areas of your business operations that will accurately measure your company's performance.
All six are internal measures — they don't benchmark your performance against other home builders. Instead, these yardsticks enable you to measure and evaluate your company's effectiveness.
They include:
- Efficiency and Productivity
- Sales and Marketing
- Quality
- Schedule
- Construction
- Customer Satisfaction
CPA Steve Maltzman, president of SMA Consulting, a firm that offers financial and operational management consulting services to the construction industry, offers the following formulas for accurately measuring your company’s performance:
Efficiency and Productivity
- Productivity ratio — Total sales revenue ÷ number of full-time-equivalent employees
- Work-in-Progress turnover — (Total direct cost of sales – land cost) ÷ average work in progress
- Average number of days each warranty service request is open
- Direct cost variance from budget as a percentage of total budgeted direct cost
- Total number of variance purchase orders
Sales and Marketing
- Referral rates — Total sales or traffic ÷ number of customer referrals
- Advertising cost ÷ number of traffic units
- Advertising cost ÷ number of sales contracts
- Fallout ratio — Cancellations ÷ sales
- Product sales matrix percentages (pre-sale versus speculative, by plan type)
- Conversion ratio — Traffic ÷ sales
Quality
- Quality of service — Open service requests ÷ number of homes under warranty
- Quality of product — Total service request items ÷ number of homes under warranty
Schedule and Construction
- Time of construction — Measure consistently from point A to point Z
- Weekly/monthly measurement of annualized production gain — Measure by location, crew, etc.
Customer Service
- “Would you recommend?” ratio
- Satisfaction scores (scale of 1 to 5) on:
- Salesperson and process
- Construction manager and process
- Selections process and personnel
- Plan flexibility and availability of plan styles
- Financing process and people
- Home owners manual
- Warranty
- Performance
Benchmarking your business operations with these interal measures will help enable you to make more accurate management decisions and increase your ability to grow and improve.
For more information, e-mail Maltzman, call him at 909-420-0200, or visit the SMA Consulting Web site.
NAHB Has More Than 250 Resources to Help You Run Your Business More Profitably
Go to NAHB's Business Management Tools Web pages (available to members only) for instant access to more than 250 timesaving, moneymaking and cost-cutting business resources to help you run your business more profitably. Get guidance on accounting and financial management, business strategy, computers and information technology, customer service, human resources and more.
Resources are added weekly, so bookmark www.nahb.org/biztools to go directly to these vital business management resources.
Local and state home builders associations can link directly to www.nahb.org/biztools from their Web site and give their members instant access to these resources. It will make your HBA's Web site the place to go for the information and guidance that members need to succeed.
Subscribe to NAHB’s Business of Building e/Source
NAHB’s Business of Building e/Source is your monthly electronic guide to the hot issues and emerging trends in home building business management. You’ll find practical advice, tricks of the trade and sound business guidance — all delivered monthly, straight to your desktop, in a quick and easy-to-read format. Business of Building e/Source is available free to NAHB members and their employees.
To subscribe, visit www.nahb.org/BoB on the Members Only side of the NAHB Web site.
 NAHB Technology Solutions Directory Now Online
NAHB’s Technology Solutions Directory — an easy-to-use directory that enables builders, remodelers, contractors and other industry professionals to find information on software and IT solutions and services for their businesses — is now online. The directory is sponsored by the Business Management & Information Technology Committee.
Software and technology solutions providers interested in being listed can sign up for:
- Enhanced Listing — Listing includes company name, URL, e-mail address, mailing address, phone number, company/product description, company logo. Click here for more information.
- Standard Listing — Listing includes company name and phone number. Click here for more information.
For more information, e-mail Wil Heslop at NAHB.
The Technology Solutions Directory is solely for educational and informational purposes. Nothing in the directory should be construed as policy, an endorsement, warranty or guaranty by the National Association of Home Builders of the listed software, IT service or the software/IT vendor. The National Association of Home Builders expressly disclaims any responsibility for any damages arising from the use, application or reliance on any information contained in this directory.
|
