Nation's Building News Online: October 20, 2003Print All Articles Text Version |
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Alternatives to CCA-Treated Lumber Raise Corrosion ConcernsAs lumber pressure-treated with CCA (chromated copper arsenate) continues to be phased out under an Environmental Protection Agency (EPA) initiative, home builders are beginning to hear concerns that the alternative chemicals for preserving pressure-treated lumber may accelerate the corrosion of metal connectors and fasteners. Manufacturers voluntarily reached an agreement with the EPA to phase out by the end of this year CCA-treated lumber for such residential applications as fences, decks, sill plates and playground equipment. The biggest fear was that small children could be exposed to arsenic poisoning on playground equipment constructed of CCA-treated lumber, although no link between the two has been discovered to date. Several alternatives to CCA have been used in other countries for a number of years, including ACQ (ammoniacal copper quat), CBA and CA (copper azole) and SBX (borate oxide). Builders will recognize lumber treated with these alternatives in such product lines as NatureWood, Wolmanized Natural Select, AdvanceGuard and SmartGuard. While corrosion of connectors and fasteners used with pressure-treated lumber, including CCA, has always been a concern, laboratory tests have found higher corrosion rates for lumber treated with ACQ, CBA and CA. Part of the problem is that fasteners and connectors are being used with treated lumber other than products made of stainless steel or hot-dipped (not electroplated) galvanized steel, contrary to the recommendations of manufacturers. Although it is expensive, stainless steel is effective in combating corrosion from ACQ, CBA and CA. If galvanized steel is used, thicker coatings will probably be needed. How much more these alternative chemicals will increase the corrosion of galvanized steel connectors and fasteners is not fully known because many factors are involved, including the thickness of the galvanizing, the species and moisture content of the wood, the chemical treatment used and the exposure of the materials. The American Wood-Preservers' Association (AWPA); the International Staple, Nail and Tool Association (ISANTA); and members of those two groups are researching this issue and working to develop improved fastener and connector products. Standards for these products are also being reviewed and updated for their use with the chemical treatments that are replacing CCA. NAHB staff is currently evaluating guidance on this issue for builders, and the information will be made available to all NAHB members when the evaluation is completed. Until then, builders who are using lumber treated with alternative chemicals should check with the connector or fastener manufacturer for guidance. For further information, e-mail Jeff Inks or call him at 800-368-5242 x8547. Building News Coast To CoastHome Redesigns for Retirement YearsThree-quarters of Americans say they hope to spend their retirement years right where they are, living out a full and independent existence in their own homes. Most of their dwellings, however, are not equipped to meet the needs of aging seniors. Therefore, home owners would be wise to incorporate senior-friendly designs into their residences now — such as during a remodeling or renovation project — to prepare them for elderly life down the road. Widening doorways and halls, for example, will accommodate a wheelchair that may be needed later in life. Other recommended changes include installing kitchen appliances at such a level to avoid bending too low or reaching too high; and also replacing standard doorknobs, cabinet handles and faucets with easy-to-grip and easy-to-turn models designed specifically for older people. Finally, even if home owners do not feel ready to add such features as benches and grab bars in the bathtub, they still can take steps — such as reinforcing the walls now — that will make adding these accessories later a snap. The Great American UpgradeHome owners spent an average $36,200 on kitchen upgrades in 2000, according to the National Kitchen and Bath Association, and many have transformed their kitchens into living rooms. Today's families use this room as a place to eat, work, relax and entertain, making multi-functional accessories the latest trend. Home owners prefer islands that can be used for food preparation, seating and storage as well as fixtures that look like furniture with carved moldings, glass panels and feet. Though stainless steel appliances continue to be fashionable, many home owners are concealing their refrigerators, dishwashers and ovens behind wood panels and hiding exhaust hoods within fireplace-mantel enclosures. These high-end upgrades most often are seen in custom dwellings; but many subdivision builders are beginning to incorporate such amenities as granite countertops, moldings, built-in accessories, islands and butler pantries in homes with $400,000-$600,000 price tags. Builders Encouraged by Rising Tide of RentersAccording to NAHB, the rental apartment market should improve over the next six months. Low interest rates in recent years prompted many renters to purchase homes, softening rental demand and construction activity. Despite today's weak demand, NAHB Multifamily Leadership Board Chairman Ron Terwilliger says apartments are more profitable than other real estate investments. Though calls from potential renters and monthly rents are both on the rise, the high-end apartment market remains sluggish. Furthermore, the average apartment vacancy rate has jumped from 6.3% to 7.9% in the last year. Seniors Choosing to Live in 'All Age' AreasWhile most older Americans hope to live out their golden years in their existing homes, frequently those who do move shy away from seniors-only housing in favor of rental communities occupied by residents of all ages. In fact, research from the nonprofit National Investment Center for the Housing and Care Industries shows that about a third of U.S. seniors aged 90 and up rent within the general population. That compares to just 5% who rent in age-specific developments. While some older Americans avoid senior housing because of the higher costs compared to the general rental market, others simply abhor the connotations — such as being infirm — that often are attached to the term itself. Once seniors are exposed to senior-focused housing, however, they usually become more receptive to the idea; and those living in age-specific homes typically are happier than those living in all-ages neighborhoods. Their willingness to explore this option is likely to grow, meanwhile, as developers increasingly strike the words "retirement" and "seniors" from advertising language in order to wipe out negative connotations. Business of Building Townhouses Is BoomingTownhomes, a longtime staple of housing markets such as New York and Chicago, are popping up all over Florida as large plots of land become scarce. "This is an important development everywhere in Florida and other states," declares William Friedman, president of New York-based Tarragon Realty Investors. "The increased price of land is a contributing factor. You use up less land with townhomes than with single-family." In Pinellas County, for instance, over 15 such communities are currently in the works. Townhomes command more than $400,000 in some areas, which indicates that they now appeal to more than just first-time buyers or those priced out of the single-family home market. These developments appeal to first-time buyers, singles, childless couples, empty nesters, vacation-home buyers, seasonal residents and others who desire a downtown lifestyle and want to forego the maintenance tasks that accompany single-family dwellings. Keeping a Lid on ItHomes located on busy streets or near train tracks often sell for hundreds of thousands of dollars less than those in quieter neighborhoods. Innovative noise-reduction techniques allow buyers to take advantage of these price discounts. Dual-paned windows, stone walls, high fences, waterfalls and fountains are just some of the ways that builders can block out noise. Others incorporate U-shaped designs to close in the backyard; install intercoms to play music throughout the home; and build the master bedroom as far from the source of the noise as possible. A Second Story, Delivered and InstalledProduction of manufactured housing units is down by 50% in recent years following implementation of tougher mortgage financing rules for mobile homes. Unaffected by this contraction is the modular housing sector — which involves installing residential systems, from plumbing and wiring to cabinetry and floors, in the factory before the home is shipped to the property site. Modular housing instead is enjoying a growth spurt; in fact, it is growing at a faster clip than stick-built dwellings; and Gopal Ahluwalia of NAHB says that prefabricated components now are used in 85% of U.S. homes. Most modular units are sold to individual builders to use to put together new homes, but they also have a small following among home owners who want to expand and remodel small ranch houses and ramblers, as factory-made "pop-tops" can quickly and easily add a second level to a residence. Advocates of modular construction say the advantages include not only the rapid installation process, the lower costs compared to a conventional project and the sturdy, factory-inspected quality of work. Kibbles & GlitzA growing number of builders and remodelers are catering to pets, and pet-friendly designs and upgrades are even being incorporated into model homes. Many home owners are simply adding space to their laundry rooms for pet beds, and some communities are setting aside land for dog parks. Others are undertaking more extensive projects, such as pet doors hidden behind cabinetry; wider windowsills; nooks for pet beds, litter boxes and supplies; and dog houses with showers and air conditioning. Natural Insulation ProductsSoy-based polyurethane foam is becoming a popular natural insulation product; and while it is more costly than traditional fiberglass insulation, it is cheaper than other foam insulators. Comprised of soy oil, the foam is resistant to moisture, mold and mildew and does not settle, attract rodents and other pests or require a chlorofluorocarbon- or hydrochlorofluorocarbon-based blowing agent. Recycled denim, cementitious foam, a combination of wool or flax and potato starch, and insulation made from recycled newspaper also are touted as natural alternatives to traditional fiberglass application. These environmentally friendly products differ from conventional insulators in that they conserve energy; possess a lower embodied energy; and are nontoxic and derived from renewable plant or animal sources. Meanwhile, fiberglass insulation is undergoing a green makeover with the addition of recycled glass and the replacement of the standard formaldehyde-based binder with an acrylic one. Research indicates that consumers will continue to demand natural products, but limited availability could prevent their widespread adoption. New Law on In-LawsIn California, local governments can no longer hold public hearings when approving or rejecting applications for in-law or granny flats. According to Con Howe of the Los Angeles Department of City Planning, cities must okay all applications that meet municipal standards for parking, setback, architectural review, lot coverage and maximum size, among other requirements. Supporters of the law, including the California Association of Realtors® and the California Rural Legal Assistance Foundation, believe it will boost the stock of low-cost rentals and allow home owners to meet their mortgage payments with the rental income. Moreover, Shorewood Realtors agent Candice Carpenter says home values can rise 10%-20% with the addition of a second dwelling unit. Meanwhile, League of California Cities legislative representative Dan Carrigg opposes state control of land-use issues. Others believe these units destroy neighborhoods by creating parking and noise problems, paving the way for absentee landlords and driving down home values. Burbank city planner Art Bashmakian does not expect a deluge of secondary dwelling units as a result of the law, especially since many cities are in the process of tightening the rules that govern such units. However, state lawmakers have crafted a bill that would eliminate maximum sizes, tenant income requirements and rent restrictions, as well as other unreasonable standards. Close to a CommuneCo-housing projects involve a group of people who pool their resources and hire contractors to build a community to their specifications, incorporating both private units and shared spaces. Today, a number of private developers are breaking into the market. Bethesda, MD-based developer Donald Tucker recently completed the $12 million, 43-unit Takoma Village in Washington, D.C., and currently is working on the 56-unit Eastern Village in Silver Spring, MD. Tucker has found co-housing to be a profitable sector, basically because the units are pre-sold and he makes the final decisions regarding design, materials and landscaping. Even so, Tucker takes into account the ideas put forth by the buyers. In fact, Tucker will install a high-end geothermal heating and cooling system and alter plans for a rooftop green space to include flower beds, a gazebo and a hot tub for his Eastern Village buyers. Tucker — who expects a $2 million profit from the project — has similar projects in the works in Annapolis and St. Louis. On the Printer TrailThere are a number of printers on the market that can help small businesses cut costs and boost productivity. The most sophisticated laser printers produce photo-quality images at lightning speeds, allowing smaller firms to save money on outside printing services or meet the entire office's printing needs with just one machine. Moreover, many of the newest offerings are priced under $200, such as Lexmark's E220. Not only is the E220 affordable, but it is also light-weight and compact. Among the more costly printers are Xerox's Phaser 6250 and HP's LaserJet 9500, priced at $2,499 and $6,700, respectively. The Phaser prints lengthy word processing documents in less than a minute, while the LaserJet offers a number of folding and sorting options and can print as many as 24 pages per minute. Picking a ProviderMore than half of the nation's households continue to use dial-up Internet services instead of broadband, mainly because broadband costs about $40 per month more than dial-up. However, many are now considering broadband because it offers a wider range of services and is declining in price. In addition, consumers are now recognizing the technology's benefits, such as always-on connections and faster downloads. Before they can make the switch, they must choose between cable and digital subscriber line (DSL) services. The two types of broadband are essentially the same; but telephone companies offer DSL for around $30 per month, compared to monthly charges of $40 to $45 for cable. However, cable services are generally faster than DSL, which could make a big difference for those who download videos or PowerPoint presentations. PCs Should Not Be Used as ServersIntel has embarked on a worldwide campaign to convince small and medium enterprises (SMEs) to embrace servers because SMEs tend to use their desktop personal computers as if they are servers. SMEs sometimes use PCs as a central unit for storing customer databases, supplier records and other business information. Accessible to multiple users, PCs employed in such a manner could produce huge losses for SMEs if they break down. Moreover, SMEs are using PCs to handle Web sites, access to the Internet and receive e-mail; thus, overwhelming them with a wide range of tasks and huge amounts of information. According to Ricardo Banaag, country manager for Intel Microelectronics Philippines, servers offer added protection, dependability and the ability to handle multiple tasks simultaneously, which is more conducive for business productivity and growth. Intel has unveiled the Intel Xeon processor, which is designed for server use. Servers with the new processor will be more efficient in handling SME applications. IBS Early Registration Extended Through Oct. 22Early registration for the 2004 International Builders' Show in Las Vegas has been extended through Wednesday, Oct 22. To register now and save, click here.
OSHA Revises Form for Reporting Work-Related Injuries and IllnessesTo avoid confusion, members of NAHB should be aware of recent revisions to the Occupational Safety and Health Administration’s Form 300, on which employers are required to keep a record of work-related injuries and illnesses. OSHA Revises Form for Reporting Work-Related Injuries and IllnessesTo avoid confusion, members of NAHB should be aware of recent revisions to the Occupational Safety and Health Administration’s Form 300, on which employers are required to keep a record of work-related injuries and illnesses. Companies that use computers to compile this data may have to update their software because the order of columns for reporting “days away from work” and “on the job transfer or restriction” has been switched. OSHA considers the addition of a column for occupational hearing loss as the biggest change on the form. Other changes include:
OSHA says that the changes were made in response to public suggestions to make the forms easier to use, although the decision to change the form was not announced and no public comments were sought as part of the revision process. Employers are being advised that they must begin to use the new OSHA Form 300 on Jan. 1, 2004. On the new form, the revision date — rev. 1/2004 — appears next to the form number. Injuries and illnesses for years prior to 2004 should continue to be recorded on the appropriate form for that year. For the new form, click here. For forms for 2002 and 2003, click here. Please note that OSHA's recordkeeping requirements provide a partial exemption for employers with 10 or fewer workers the previous calendar year. However, if you are an employer with 11 or more employees, you need to post the new OSHA 300A Summary fo Work-Related Injuries and Illnesses. Additionally, employers should use the old OSHA 300A Summary Form to post as required in February 2004. The form does not contain a hearing loss column, which will appear in a new 300A form that should be used to post starting in February 2005. Hard copies of the new OSHA 300 form will be available next month and can be ordered by clicking here, or calling 800-321-OSHA. For more information, e-mail Rob Matuga or call him at 800-368-5242 x8507. Housing SnapshotThe cost of framing lumber continues to decline slowly; it fell to $323 per 1,000 board feet last Friday, down from $326 a week earlier, according to Random Lenths. Prices for 15/32-inch, 3-ply CDX Southern Westside plywood fell $5 to $545 per 1,000 square-feet at the end of last week, while 7/16-inch OSB North Central was unchanged at $465. Although the rapid run-up that began in the spring appears to have ended, prices are far higher than a year earlier: $240 and $162, respectively, for the two Random Lengths indexes. Mortgage interest rates were creeping up again last week for the second week in a row, but with prospects for inflation remaining low, Freddie Mac Chief Economist Frank Nothaft and Research Director Buchi Ramagopol are predicting that rates will range from 6%-6.25% on average through the first half of 2004. They expect single-family originations to drop 40%, from $3.3 trillion this year to $1.9 trillion in 2004, as refinancings decline. Refinancing is expected to account for about 65% of new loan applications this year and decline to about one-third next year. Mortgage Interest Rates30 Year Fixed Rate: 6.05\% Housing Starts: Sep. 2003Total: 1.89 million\% New Home Sales: Aug. 2003 *1.15 million Existing Home Sales: Aug. 2003 *6.47 million * Seasonally Adjusted Annual Rate Momentum Solid for Home Building in SeptemberHousing production continued its solid performance in September, with a 3.4% increase to a seasonally adjusted annual rate of 1.89 million units, the Commerce Department reported last Friday. This was the fourth consecutive month in which starts of single- and multifamily homes were above an annual pace of 1.8 million, which NAHB President Kent Conine called “truly remarkable.” A small decline in long-term interest rates provided momentum for home building last month, Conine said, along with strong household formations and an accelerating U.S. economy. The average rate on fixed-rate mortgages was just over 6% in September. The Commerce report signals “a very healthy housing market that is clearly in high gear heading into the fourth quarter,” said NAHB Chief Economist David Seiders. Single-family starts rose 3.1% during the month to a seasonally adjusted annual rate of 1.52 million units and multifamily starts rose 4.5% to a 368,000-unit rate, their highest level since last August’s 381,000-unit pace. September housing starts rose 15.1% in the Northeast, 8.1% in the Midwest and 4.2% in the West. They declined 1.3% in the South. Seiders said that housing production this year “should easily surpass last year’s very healthy 1.71 million units and will likely approach the 1.8 million-unit mark, a level last seen in 1986.” He added that single-family starts could equal or surpass the highs of the late 1970s.
Fall Construction Forecast Conference Coming Wednesday Sign up for the Fall Construction Forecast Conference on Wednesday, Oct. 22, at the NAHB National Housing Center. Learn what's on the horizon for the housing industry at this semi-annual gathering of the country's premier economists and finance experts. Get the latest forecasts on housing starts, project budgets and other economic bellwethers of the housing industry. Click here for more information. Small Decline in Mortgage Rates Stokes Builder ConfidenceThe confidence of single-family home builders this month rose to the highest level in almost four years, according to NAHB’s Housing Market Index. The index, which is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years, rose four points to 72 in October, matching the level recorded in December of 1999. The increase, said NAHB President Kent Conine, “clearly demonstrates how sensitive the housing market is to changes in interest rates.” The index eroded some following the first week in September, when 30-year, fixed-rate mortgages averaged 6.44%, their most recent high, he said. But by the first week in October, “they had dropped back down to 5.77%, fueling a rebound in builder sentiment.” The prognosis for single-family housing remains “very good,” said NAHB Chief Economist David Seiders, and an improving economy is expected to sustain “robust” levels of housing market activity even though mortgage interest rates will be “somewhat higher” than the record lows of earlier this year. All three components of the index rose in October. Its gauge of current sales conditions rose six points to 79, the highest level since December of 1999; sales expectations for the next six months rose to 82, the highest since November of 1999; and the traffic of prospective buyers rose two points to 53. Any number over 50 indicates that more builders view sales conditions as good than poor. Debate Over Fannie Mae, Freddie Mac Opens in the SenateAs the debate over improving the regulation and oversight of housing’s Government-Sponsored Enterprises (GSEs) expanded to the Senate last week, NAHB called on Congress to maintain mission oversight of Fannie Mae and Freddie Mac at the Department of Housing and Urban Development (HUD) and to create a strong, independent regulator to ensure their financial safety and soundness. “The Administration’s insistence on shifting new program approval authority for these GSEs from HUD to a new regulator would undercut the mission and erode the effectiveness of what has truly become the best housing finance delivery system in the world,” said Jerry Howard, executive vice president and CEO of NAHB. As the Senate Banking Committee opened its hearings on the issue, NAHB reiterated its conviction that the ability of Fannie Mae and Freddie Mac to develop new products and to spur innovations that provide liquidity and mortgage credit toward the goal of providing home owners and renters with decent housing at the lowest possible cost would be placed in jeopardy if their mission authority is removed from HUD. HUD is the one Cabinet-level agency that has a thorough understanding of, and extensive involvement in, affordable housing and the financial barriers that are faced by many home buyers and renters. “It’s really quite simple,” said Howard. “Program authority is first and foremost a housing issue rather than merely a financial consideration, and oversight belongs at HUD as part of its full mission. “We don’t disagree with some in the Administration who say that the approval process may need to be improved or strengthened. So strengthen it — or at least make that attempt — before shifting important responsibility over to another regulator where it doesn’t belong.” Noting that the Administration’s top housing goal is to increase the number of minority home owners by 5.5 million before the end of the decade, Howard said it was “puzzling” that the White House would entrust setting its affordable housing goals to HUD while stripping the agency of the program oversight needed to address those goals. “It is difficult to see how a plan that would undermine the effectiveness of HUD can come anywhere close to meeting this goal,” he said. “NAHB believes that it is imperative that any GSE reform bill ensures that HUD retains its current status as the mission regulator for Fannie Mae and Freddie Mac,” he said. Senate Bill Would Spur Apartment Construction in High-Cost AreasIn a move that would spur apartment construction in such major metro markets as Boston, San Francisco, New York, Los Angeles and Chicago, the Senate Banking Committee last week approved legislation that would raise FHA multifamily loan limits in high-cost areas. Largely through the efforts of longtime housing champion Sen. Jon Corzine (D-NJ), a slightly modified version of his recently introduced legislation, S. 1714, was incorporated into S. 811, the “American Dream Downpayment Act.” S. 811 would authorize $200 million annually in grants to assist low- and moderate-income home buyers with downpayment and closing costs. Sen. Wayne Allard (R-CO) also assisted in winning acceptance of the Corzine amendment. On Oct. 7, the House passed similar legislation, H.R. 1985, introduced by Rep. Gary Miller R-CA) and Rep. Barney Frank (D-MA), which would increase the new limits for loans in high-cost areas from the current 110% above the base limit to 170% above the limit. The chamber also passed its version of the American Dream Downpayment Act bill (H.R. 1276) on Oct. 1. The FHA multifamily mortgage insurance program is an important source of financing for affordable multifamily rental housing. A top legislative priority for NAHB’s multifamily builders, the bill would enable developers in high-cost markets who are presently unable to take advantage of the loan program to utilize the FHA-backed loans, which offer lower interest rates and a longer payment period than conventional loans. NAHB also supports the American Dream Downpayment Act, but would prefer to see the initiative funded as a stand-alone program, rather than under the auspices of the HOME Investment Partnerships Program, which is the largest federal block grant program for state and local governments to provide funding for the development of affordable housing. It is anticipated that the full Senate will consider S. 811 by next month and the measure would then go to a House-Senate conference for final approval. Effective Hiring Procedures Pay Big DividendsSystems are only as good as the people who use them. You can have the world’s best customer service and warranty programs, back-office procedures and production schedules, but they won’t benefit your business without dedicated, hard-working employees to implement them and strive for constant improvement in every part of your operations. Selecting the right people for the right jobs goes a long way towards boosting company profitability and increasing employee productivity and retention. Effective hiring procedures enable you to attract qualified candidates, interview them and bring them aboard without tearing your hair out or running afoul of the law. Here are some pointers on hiring smart:
BuilderBooks.com Offers 'Job Descriptions for the Home Building Industry, Third Edition' Even if you only have one employee, you’ll want a copy of "Job Descriptions for the Home Building Industry, Third Edition." It contains 40 job descriptions for home building industry employees, plus sample company organization charts, job description forms, electronic documents on CD and other tools to help you with your hiring procedures. To view or purchase this publication, click here, or call 800-223-2665 to order. BuilderBooks.com also offers a variety of other publications about business management. To view or purchase these publications online, click here. Want More Information About Effectively Managing Your Business? NAHB’s Business Management Department offers a variety of online resources to help you run your business better and more profitably. Click Business Management Tools for articles about human resources, financial management, sales, production, technology, customer service and other business-related topics. In addition, visit the NAHB Software Users Network Discussion Forum (SUN) to ask technology consultants and other builders what they think of various software packages and applications. 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, click here on the members only side of www.nahb.org. University of Housing Offers Courses on Customer Service and Business Management The NAHB University of Housing offers a course on business management designed to help builders improve their business and profitability. For a list of current offerings, click here. Escalation Clauses Can Help Control Damage from Rising Plywood PricesAlthough economists now believe that home builders have weathered the worst of the run-up in the cost of oriented strand board (OSB) and plywood, prices remain at relatively high levels and the market is not entirely predictable. NAHB’s Building Products Issues Committee is providing association members with sample escalation clauses that can help protect the bottom line against unexpected surges in the cost of panelized lumber. Under the two options provided, builders can include in their construction contracts language establishing that the home buyer will pay for unanticipated increases in the cost of the materials. Builders are advised to have their own legal counsel review the sample language before actually incorporating it into their contracts. For further information, e-mail David Crump or call him at 800-368-5242 x8491, or e-mail David Jaffe or call him at x8317. ESCALATION CLAUSE FOR PANELIZED LUMBER
OPTION ONE The house will require approximately ________ square feet of__________ (describe material – plywood, OSB, other). As of the date of this contract, the Builder’s cost of _________________ (describe material) is___________(price) per thousand square feet, based on ________________ _________________(describe basis for determining cost – name of supplier). The stated consideration to be paid under this contract is based on current material costs without margin for fluctuations in the price of ___________ (describe material). The current market for __________ (describe material) is considered to be volatile, and sudden price increases could occur. The Builder does agree to use his best efforts to obtain the lowest possible price from available building material suppliers. But, should there be an increase in the price of __________________ (describe material) purchased after execution of this contract for use in the construction of this house, in order to avoid inequities, the Owner agrees to pay this cost increase to the Builder. Any claim by the Builder for payment of a cost increase, as provided above, shall require written notice delivered by the Builder to the Owner stating both the increased cost and the source of supply, supported by invoices or bills of sale. SPECIAL CIRCUMSTANCES – RIGHT OF TERMINATION
Should there be a rise in the cost of ___________(describe material), exclusive of any other price changes, that would cause the total contract price to increase by more than _____________(%) percent, the Builder shall, before making any additional purchase of _____________________ (describe material), provide to the Owner a written statement expressing both the percentage increase of the contract price and the dollar amount of the increase. The Owner may then, at his option, terminate this contract by providing within ______ business days both written notice of termination to the Builder and payment to the Builder for all costs expended in performance of the contract up to the date of termination, plus payment of a prorated percentage of profits based on the percent of completion. Should both notice of termination and full payment, as provided above, not be forthcoming within ________ business days, the Builder may proceed to purchase the _______________(describe material) at the increased price, and the Owner shall be required to pay the increased cost as provided herein. ESCALATION CLAUSE FOR PANELIZED LUMBER OPTION TWO The house will require approximately ________ panels of__________ (describe material – plywood, OSB, other). As of the date of this contract, the Builder’s cost of ____________________ (describe material) is___________(price) per panel, based on ____________________________ _________________(describe basis for determining cost – name of supplier). The stated consideration to be paid under this contract is based on current material costs without margin for fluctuations in the price of ___________ (describe material). The current market for __________ (describe material) is considered to be volatile, and sudden price increases could occur. The Builder does agree to use his best efforts to obtain the lowest possible price from available building material suppliers. But, should there be an increase in the price of _______________ (describe material) purchased after execution of this contract for use in the construction of this house, in order to avoid inequities, the Owner agrees to pay this cost increase to the Builder. Any claim by the Builder for payment of a cost increase, as provided above, shall require written notice delivered by the Builder to the Owner stating both the increased cost and the source of supply, supported by invoices or bills of sale. SPECIAL CIRCUMSTANCES – RIGHT OF TERMINATION Should there be a rise in the cost of ___________(describe material), exclusive of any other price changes, that would cause the total contract price to increase by more than _____________(%) percent, the Builder shall, before making any additional purchase of _____________________ (describe material), provide to the Owner a written statement expressing both the percentage increase of the contract price and the dollar amount of the increase. The Owner may then, at his option, terminate this contract by providing within ______ business days both written notice of termination to the Builder and payment to the Builder for all costs expended in performance of the contract up to the date of termination, plus payment of a prorated percentage of profits based on the percent of completion. Should both notice of termination and full payment, as provided above, not be forthcoming within ________ business days, the Builder may proceed to purchase the _______________ (describe material) at the increased price, and the Owner shall be required to pay the increased cost as provided herein.
BuilderBooks.com Has Business Management Publications to Help Improve Your Profitability BuilderBooks.com also offers a variety of publications about business management. To view or purchase these publications online, click here. Want More Information About Effectively Managing Your Business? NAHB’s Business Management Department offers a variety of online resources to help you run your business better and more profitably. Click Business Management Tools for articles about human resources, financial management, sales, production, technology, customer service and other business-related topics. In addition, visit the NAHB Software Users Network Discussion Forum (SUN) to ask technology consultants and other builders what they think of various software packages and applications. 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, click here on the members only side of www.nahb.org. University of Housing Offers Courses on Customer Service and Business Management The NAHB University of Housing offers a course on construction contracts management designed to help builders avoid future litigation. For a list of current business management offerings, click here. EnergyValue Housing Awards Selection UnderwayJudges will be meeting at the end of this month to choose the winners of the NAHB Research Center’s ninth annual EnergyValue Housing Awards. The awards program honors up to 24 home builders each year who voluntarily incorporate energy efficiency into the design, construction and marketing of new homes. One of the finalists is then selected as Builder of the Year. Over the past eight years, award winners have built more than 32,000 homes. This year’s panel of judges includes: Thomas Farkas, manager of residential programs for the Edison Electric Institute; Michael Lubliner, who provides expertise to the U.S. Department of Energy's Building America and ENERGY STAR programs; Richard Morgan, a leader in sustainable building and residential energy efficiency; Paul Norton, a senior engineer at the National Renewable Energy Laboratory; W. Orlo Stitt, president of Stitt Energy Systems; and John Tooley, an innovator in building science technologies. The judges and winning applicants will be on hand at a dinner and awards ceremony during the International Builders’ Show on Jan. 19 at 7:00 p.m. in the Last Vegas Hilton. For more details on the awards program, click here. For further information, e-mail Karin Victorio, the manager of the program, or call her at 800-638-8556 x6277. Know What to Do When an OSHA Inspector CallsWhen an inspector from the Occupational Safety and Health Administration (OSHA) calls, home builders should know the general procedures that will be followed and how to respond. OSHA has historically considered construction a high hazard industry. While in the past it concentrated its inspections on commercial contractors, residential builders are today being routinely inspected by the agency. Employers will not receive advance notice of an inspection. They do have the legal right to demand a search warrant before allowing OSHA to inspect the job site. However, the agency almost always returns with a warrant in fairly short order, and in some cases the warrant may allow the inspector to stay on the site for several days. Demanding a warrant is a decision that is best made with advice from legal counsel, according to NAHB. To ensure that things go smoothly during the inspection, the association recommends the following:
If you receive a citation, it must be posted at or near the site of the violation for three working days or until it is corrected, whichever is longer. If you decide to appeal, you must notify the OSHA area director in writing within 15 working days after receiving the citation. This notification, called a Notice of Contest, must clearly state what is being contested — the citation, the penalty, the abatement date or any combination of these. If the Notice of Contest is properly filed, the area director will forward the case to the Occupational Safety and Health Review Commission (OSHRC), which is a federal commission independent of OSHA. (Similar state commissions exist in states with their own OSHA plans.) The commission assigns the case to an administrative law judge who will hold a public hearing and may uphold, modify or eliminate any citation or penalty. Upon your request, the area director is also authorized to enter into settlement arrangements that will revise citations and penalties to avoid prolonged legal disputes and to correct hazards. This can often be accomplished during the “informal conference” that takes place before the 15 days allowed to contest the citation has passed. Builders may also request an informal conference with the OSHA area director to discuss any issues related to the citation. For more information from OSHA on the inspection process, click here. For information from OSHA on employers' rights and responsibilities following an inspection, click here. Entering Design and Marketing Awards Competitions Is Worth the EffortEverybody loves a winner. But winning an award isn’t just food for the ego — it’s also a powerful and effective business marketing tool. A company that wins awards for its projects, its employees or its management is likely to attract better customers and better employees. Of course, you have to enter before you can win. But entering is just the first step. What goes into an entry — and what doesn’t — determines whether it’s going to end up a winner or an also-ran. Jamie Gorski and her marketing team know how to produce winners. They’ve prepared dozens of entries that have won national design and marketing awards. Among the company’s recent winners is Alban Towers, which took the award for Best Rehabilitation or Repositioning in last year’s Pillars of the Industry awards from NAHB Multifamily. Gorski is vice president of marketing for Archstone-Smith, one of the country’s leading developers, owners and managers of rental properties. She graciously agreed to share with the readers of Nation’s Building News some of her department’s accumulated wisdom on the subject of preparing prize-winning entries. Q: What’s the most important, make-or-break part of an awards entry? A: Photography. You have to start with terrific photography. We plan to have our photos taken well in advance of any awards deadlines. A too-tight schedule could find you with only one chance — or no chance — to get it right. And a day, or a week, of bad weather can be deadly if that’s the only time you have to photograph. You can say great things about your project in the entry, but if the photos don’t live up to the description, the judges will have to go with the photos — the evidence they can see with their own eyes. Q: Isn’t photography also the biggest expense? A: Good photography is never going to be cheap, but you don’t have to pay the top rates, the $3,000-$4,000 a day rates for the big-name photographers. We generally pay between $500 and $1,500 for a full day of photography. There are good photographers out there who are willing to work within our budget. And that price buys us full rights to the pictures — lifetime rights to everything, including the Internet rights. That way, we can use the photos in all our marketing: brochures, mailers, displays in our leasing centers, stories in the press, images for our Web site and computerized virtual tours. We also try to share the fees — and the photos — with our partners. The architects, landscapers and other vendors often are happy to help absorb some of the cost of photography in exchange for the ability to use the relevant photos in their portfolios and marketing efforts as well. We get a lot out of each photo. We’ve found that if we want to market effectively, we absolutely have to have great pictures. And we don’t just shoot a project once and forget it. Every time we upgrade, add an amenity or refresh one of our properties, we shoot additional images to reflect that. We try to pick the best season to photograph. Some communities show best in the spring, with the blooming flowers, while others look best in the fall with colorful foliage. Sunrise and sunset shots can work well. And we’ve found that it’s worth taking night shots — these are good for either garden or high-rise communities. If your outdoor lighting shows off an inviting entry area, or you can see the lights of the city skyline in the background, that can be very effective. And a night shot can hide things like electric wires or a less-than-attractive nearby property that might detract from the same view taken during the day. Q: But there is more to an awards entry than great photos. There are a lot of pieces to be pulled together. A: Right, and we make sure that there’s one point person for that — an in-house project manager. That manager starts with the basics: reading the rules and making sure that we know the competition’s expectations. It makes no sense to put together an entry and find out at the last minute that you didn’t do something important, or you did include something you weren’t supposed to. The place to get creative isn’t in interpreting the contest rules. The manager also coordinates getting input from everyone who has to contribute information to the entry. We generally designate a copywriter to handle the essay sections of the entry, and the manager works with the architect and the development team to identify the important things that should be mentioned in those descriptive sections and get that information to the writer. Q: Is this something you have to build into your marketing budget? A: Competitions are an important part of our marketing effort, so we budget for them. But if your company doesn’t have a lot of staff to work on an entry, and if you’re located near a college or university, you can contact its marketing department and find out if you can get an intern to work with you. That sort of project is something that students can take on, and the finished product is something they can make part of their portfolio when they graduate and look for work. And if it’s time, not money, that’s the issue, there are lots of good public relations firms who would be glad to help you prepare an entry on a fee basis. But it’s important for someone in your company to have ultimate control of the process and to make sure that everyone who needs to be consulted, is consulted. Q: So once the manager pulls everything together, what happens? A: All the people who contributed information read the finished entry, and they read it more than once. The writers may have missed an important detail or misunderstood a crucial point. It’s so important to get everything right — it’s all the judges have to go by, and if there’s something in the entry that doesn’t make sense, they can’t give the project an award. One area that we’ve found has a big impact — and that some companies overlook — is letters of endorsement and recommendation. We include letters we get from people such as the mayor of Washington, D.C. or the mayor of Chicago praising our projects and talking about the ways our work has helped revitalize neighborhoods. It’s a simple thing to include, but it makes a big impact. Once everyone involved has signed off on the entry, it’s ready to submit. Q: The process sounds like a lot of work. You must plan that time into your department’s schedule. A: If you’re going to spend the money on an entry, you should also be ready to spend the time to do it right. It always takes more time than people expect, so we try to give ourselves a head start. When we have a project that we think we’re likely to enter, we collect the relevant information throughout the planning, construction and marketing process and have it ready. And we don’t enter every project — only the ones we think might win. We focus on projects with exceptionally good design or projects that solved a particularly challenging problem in a creative way. For marketing, we only enter campaigns that are effective, but also truly innovative, because that’s what the judges are looking for. We don’t enter every competition, either — only the national awards competitions, like Pillars. Many local associations also have awards competitions, and those might be a good place to start. But you can just as easily enter national awards if you make a commitment to do it right. It’s better to concentrate on one good entry than three or four that are mediocre. Q: What if you don’t win? A: Just going through the process is worthwhile. The photos, as I said, are used for lots of other purposes, so they’re valuable whether you win or not. And the work of thinking through what makes a community special informs our marketing efforts and helps us focus on what’s important for our future projects. Q: And if you win? A: When we win, we tell everyone! First we let our employees know. We put it in our annual report and on our Web sites. We publicize it to our investors, to our residents, our associates and our vendors. People are proud to be associated with a prize-winning project and a nationally honored company. They’re excited for us! We make sure the local press knows, as well. That can turn into stories in the local newspaper’s real estate section. The process of entering and winning awards has brought tremendous value and great benefits to our company. It’s certainly worth the effort.
2004 NAHB Multifamily Pillars of the Industry Conference & Awards Gala Don’t miss the Multifamily Pillars of the Industry Conference and Awards Gala, the premier educational and networking event of the year for the multifamily industry, in Palm Springs, CA, March 28-30. Explore both the current and future state of the multifamily industry. Click here for more information. Structural Insulated Panels Bring Savings and Efficiency to the Job SiteIf you’re a movie buff, you might remember the classic career advice from “The Graduate” in which Dustin Hoffman is told to get into plastics because “plastic is the future.” My tip to everyone in the construction industry is to get into SIPS because “building with Structural Insulated Panels (SIPs) is the future.” And here’s why. To be a successful general contractor these days, you have to be able to coordinate many subcontractors and make sure they do what you want, when and where you want it to be done. You have to make sure materials are delivered when and where you need them, and that they are the right product in the right color to the right specifications. There are lenders to please, clients to please, and you still have to get the job done in a timely manner. As if all that weren’t difficult enough, we face these additional challenges:
If there were one change you could make to your construction process that would ease these seven challenges, wouldn’t you want to know about it? Here’s how SIPS can accomplish just that:
Building with SIPS is a simple solution and one that is ideally suited to responding to the unique challenges and demands of today’s residential construction industry. Donna Shirey, CGR, CAPS is the president of Shirey Contracting, Inc. in Issaquah, WA. She is a member of the Remodelors™ Council Board of Trustees and previously served as the chair of the CGR Board of Governors in 2002. Shirey is the January 2003 recipient of the Professional Remodelor Magazine Achievement Award for Built Green.
BuilderBooks.com Offers Remodeling Publications BuilderBooks.com offers a varity of publications about remodeling. To view or purchase these publications online, click here. Building Systems Councils SHOWCASE 2003 Coming Soon For a complete view of the future of the building systems industry, including the most innovative ideas and exciting trends, don't miss Showcase 2003 from Nov. 2-5, in Hot Springs, VA. Click here for more information. University of Housing Offers Courses and Designation Programs The NAHB University of Housing offers a variety of business management courses and professional designation programs that set builders and remodelers apart from the competition. For a complete list of current offerings, click here. Brochures Provide Tips for Home Buyers and Remodeling CustomersHome builders and remodelers can step up their service to their customers by giving them pocket-sized guides from BuilderBooks.com that provide tips and checklists for avoiding common problems. “Buying Your New Home” is easy to read and provides consumers with the assurance that the process can be relatively simple and enjoyable once they have all the facts. The guide helps home buyers find the perfect house, select the ideal location and move into their new home. Topics also include: designing the home, budgeting for the purchase, paying for the home, signing the contract, building the home and preparing for closing. “Remodeling Your Home” provides home owners with information on finding a professional remodeler, selecting and designing a project, signing the contract, packing and preparing the home and more. The two brochures are sold in packs of 10 for $25. To order them, click here for the home buying guide and here for remodeling. NAHB members receive a discount.
BuilderBooks.com Offers Remodeling Publications BuilderBooks.com offers a varity of publications about remodeling. To view or purchase these publications online, click here. University of Housing Offers Sales and Marketing Designations NAHB’s Institute of Residential Marketing (IRM) offers designation programs specifically for sales and marketing professionals. For more information, click here, or call 800-368-5242 x8EDU. Good Design Is a Termite’s Worst EnemyThey are the bane of home buyers and the scourge of builders, but with a little foresight and careful construction, termites won’t be a menace to your property. A new research paper by the Log Homes Council Technical Committee provides design and construction tips to prevent and control termite infestation. The key to preventing termites, the paper says, is to minimize moisture around the home, provide a barrier that will either halt activity or make it visible, and keep any wood separate from grade. Architects and builders can avoid problems with termites by planning ahead during the home design and construction processes. Among the committee’s suggestions:
To view the full document and other Log Home Council technical papers, visit the Log Home Library. For more information about the Log Homes Council or the Building Systems Councils, call 800-368-5242 x8676.
Building Systems Councils SHOWCASE 2003 Coming Soon For a complete view of the future of the building systems industry, including the most innovative ideas and exciting trends, don't miss Showcase 2003 from Nov. 2-5, in Hot Springs, VA. Click here for more information. Centex Vice President to Receive Distinguished Service AwardSteve Nellis, vice president of recruiting for Centex, has been selected by the NAHB Student Chapters’ Board of Advisors to receive the 2003 Distinguished Service Award for his outstanding record of service in support of the Student Chapters program and the industry in general. Previous winners of the award include Pulte Homes, Lee Evans and Timberline Software. In his job at Centex, Nellis visits schools and colleges around the country to tell young people about his company and careers in the building industry. He was recruited by Centex upon graduating from Michigan State University’s Construction Management program. A member of the NAHB Student Chapters Advisory Board since 1992, Nellis helped to institutionalize the Residential Construction Competitions at the annual International Builders' Show (IBS). As a member of the Home Builders Institute's (HBI) Board of Trustees, Nellis has worked tirelessly to promote the industry and the Student Chapters program. He most recently led efforts during NAHB’s fall board meeting in Boston to expand NAHB membership to HBI students enrolled in Job Corps. Nellis will receive the award on Sunday, Jan. 18, at the NAHB Student Chapters Awards Ceremony in Las Vegas, HBI Board of Trustees Chairman Tom Mullen announced. Also presented at that time will be the Outstanding Student Chapter Award, sponsored by the National Council of the Housing Industry — the Supplier 100 of NAHB, and the Outstanding Educator Awards, sponsored by Delmar Learning. The ceremony will conclude with the announcement of the winners of the Residential Construction Competition on Saturday and Sunday, Jan. 17 and 18, in which more than 50 teams from high schools, technical schools, colleges and universities will present their proposals for projects in the residential construction field. Four-year schools entering the competition will be looking to topple three-time winner Brigham Young University in their designs for a 115 single-family, detached home project in Blaine, MN. The competition project for high school, vocational and two-year schools will involve drawings of an active-adult, single-family detached home to be built in Ocean City, NJ. At another Student Chapter event at the International Builders’ Show, the Building Careers Job Fair, more than 20 NAHB-member companies will be meeting with qualified NAHB student members who are looking for contacts and jobs within the industry. The fair takes place on Monday, Jan. 19. For information on NAHB Student Chapter activities at the IBS or on establishing a chapter, e-mail Page Browning. Distribution Panels Provide Wide Range of Residential ApplicationsCutler-Hammer’s entry-level distribution panel for telephone and video signals throughout the home uses cost-effective structured wiring that can be installed as a standard feature by builders, developers or electrical contractors. Eaton/Cutler-Hammer is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB. The entry-level StructuredWiringSolutions provides builders with a central location from which to provide basic structured wiring for tract homes, apartments, condominiums, university housing and modular housing. Cutler-Hammer’s mid-level QuickNetwork series distribution panel adds the distribution of data, and allows builders and home owners to add computer networking, high-speed Internet modems, Internet firewall routers, whole house audio, security, satellite television distribution and home automation. Also available are entertainment systems and components, security systems and components, automation systems and components and custom high-end solutions. For more information on Cutler-Hammer, click here. Grant to Boost Business Opportunities in Mexico for NAHB MembersOn Oct. 1, NAHB received a grant of just under $400,000 from the U.S. Department of Commerce in an effort to expand export markets in Mexico and increase trade information and educational resources for association members. Working in partnership with the Commerce Department, NAHB will focus on the Mexican housing market with an eye toward expanding opportunities for business support, networking and opening trade links for U.S. home builders and suppliers. NAHB President Kent Conine said that the opportunity to work with international markets is opening up an opportunity for association members that can create economic benefits both at home and abroad. “We’re honored to work with the Department of Commerce and our members,” Conine said, “to foster the creation of decent, affordable housing in Mexico and other countries.” The grant, which NAHB will be matching on a two-to-one basis, will support trade missions by members to Mexico and trade missions from Mexicans to the U.S. Dubbed “Access Mexico,” the project will also support the development of a consultative group made up of U.S. and Mexican partner organizations, a series of international housing conferences in Mexico and the establishment of an Access Mexico Center at the next three International Builders’ Shows. In addition, the project will create trade support seminars in five major urban centers in 2005; a hub of trade-related information and resources on the association’s Web site, www.nahb.org; and a mentorship program through local District Export Councils in three U.S. states. Housing is a key focus of the U.S./Mexico Partnership for Prosperity initiative of Presidents George Bush and Vicente Fox, and the Mexican president has set a goal of meeting the housing needs of 45 million new Mexican households by 2030. Rita Feinberg, executive director of NAHB’s international efforts, said that the new program will help the association support its members in entering new markets “where U.S. technology and know-how can contribute significantly to meeting pressing housing demands.” “What we learn and accomplish through Access Mexico will have far-reaching implications for markets in other countries as well,” she said. The project got officially underway last week, Oct. 16-18, at NAHB’s First Housing Conference of the Americas in Mexico City. For more information from NAHB on its international activities, click here. Or e-mail Rita Feinberg or call her at 800-368-5242 x8415, or e-mail Matt Monjan, or call him at x8419. NAHB Program Demonstrates Simulation Technology in the ClassroomIn a presentation of its free education program, Building Homes of Our Own, NAHB last week demonstrated the value of using simulation technology in the classroom to math and science teachers attending the Hispanic Engineering, Science and Technology Conference in Texas. An estimated 1,100 teachers and 15,000 students participated in the week-long conference at the University of Texas, Pan American in Edinburg. Established in conjunction with Rep. Rubén Hinojosa (D-TX), the conference featured Secretary of Education Rod Paige. “We are proud of the enormous success of Building Homes of Our Own among middle and high school teachers and their students and are committed to helping educate today’s youth in new and innovative ways,” said NAHB President Kent Conine. The conference brings special emphasis to increasing the number of Hispanics in engineering, science and mathematics at the undergraduate and graduate levels. NAHB and Chicago-based program developers, Media Options, Inc., demonstrated Building Homes of Our Own and discussed the program’s alignment with national learning standards, which is one of the reasons for its enormous success. More than 23,000 teachers are using the software, reaching nearly 1.8 million students nationwide. The program is being used to augment lessons in math, science, social studies, English, consumer economics and technology, and it includes a comprehensive teacher’s guide. Building Homes of Our Own features three levels of play at each of four building sites in urban, suburban, rivers and lakes and coastline settings. Players encounter real-life obstacles and issues that test their skill, patience and resourcefulness. Students can elect to perform lab testing, conduct research or call upon special consultants and engineers to help them arrive at sound decisions that satisfy environmental concerns or nervous neighbors. Attending a virtual town meeting or working within community planning and zoning laws are examples of the many challenges that help students sharpen their higher order thinking skills and prepare for life outside of school. To receive the program, which is available on CD-ROM and is compatible with the Microsoft Windows operating system, click here. It is free to classroom educators and members of NAHB. For more information about the Hispanic conference, click here. IBS Early Registration Extended Through Oct. 22The early registration and housing deadline for the 2004 International Builders' Show in Las Vegas has been extended through Wednesday, Oct 22. To register now and save, click here. IBS will be from Jan. 19-22, 2004. NAHB members may still request housing with their state or local home builders association's hotel block through Wednesday, Oct. 22, as well. Boost Your Marketing Through These Awards ProgramsProud of your work? Show it off and give your marketing efforts a boost by entering one of these awards programs:
Calendar of Events
To view more meetings & events information on the NAHB Web site, click here. |