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Bush Administration Joins NAHB Efforts on Behalf of Zero Downpayment MortgageA proposal announced at the International Builders’ Show on Jan. 19 for the Department of Housing and Urban Development to begin offering a zero downpayment mortgage received the enthusiastic support of the nation’s home builders. “NAHB has long advocated an FHA-insured zero downpayment mortgage as a significant tool for expanding the ranks of the nation’s home owners,” said Jerry Howard, the association’s executive vice president and CEO. “We are grateful that the Bush Administration recognized the value of such a program to help working families realize the American dream of owning a home of their own by removing a significant financial barrier to achieving that goal.” The proposal to eliminate the statutory requirement for a minimum 3% downpayment for FHA-insured single-family mortgages for first-time home buyers “addresses the single biggest obstacle” facing families aspiring to become home owners, Federal Housing Commissioner John C. Weicher said in making last week’s announcement, and would be especially helpful to minority households. “This is the most significant move by the FHA in more than a decade,” Weicher noted, and complements the American Dream Downpayment Act, which was recently signed into law. Weicher estimated that about 150,000 families a year would take advantage of this new opportunity and that about 100,000 of those would not otherwise be able to purchase a home. Home buyers would be required to pay a 2-1/4% premium for the loan upfront, compared to the 1-1/2% that is required for an FHA single-family loan with a 3% downpayment, Weicher said, and 75 instead of 50 basis points for the first five years of the loan. Buyers would be required to qualify for the monthly payments under normal underwriting guidelines and would also be required to complete a homeownership counseling program. Monthly mortgage payments on a $100,000 home would be about $50 more than for a regular FHA loan. The program will be proposed as part of the President’s budget for HUD, in which case it would be considered by the Congress late in the year, or it could be enacted as a free-standing authorization bill, Weicher said. Howard said that the zero downpayment legislative proposal would be a top priority for NAHB this year. “As the nation’s builders focus on expanding affordable housing opportunities for teachers, police offers, firefighters and other moderate-income workers who represent the heartbeat of any community, the zero downpayment mortgage will help close the housing affordability gap, and we will work tirelessly to ensure that this soon becomes a reality,” said Howard. Building News Coast To CoastAs Retirement Nears, More Are Moving Up to LuxuryThe number of active-adult communities for retirees in the Washington, D.C., metropolitan area has surged from less than four in 1995 to 30 today, with many more on the way. U.S. Home Corp. regional Vice President Jerry Berman notes that these developments are in high demand, and builders with little experience in such communities are jumping on the bandwagon. Senior home buyers generally want smaller properties with fewer maintenance tasks; no stairs so they can age in place; and plenty of upscale amenities, which means they are taking on more debt to afford the luxury lifestyle. In fact, units in age-restricted communities in some counties in Maryland and Virginia cost more than $500,000. A growing number of retirees are obtaining mortgages, cash-out refinancings and home-equity loans, which AARP's John Gist believes is unwise when medical expenses and the potential for serious illnesses are on the rise. Julie Martin, research director at the University of Virginia's Weldon Cooper Center for Public Service, attributes the popularity of luxury retirement homes to the desire to disprove the common belief that seniors are poor. Meanwhile, municipalities continue to approve age-restricted projects because they generate tax revenue and do not burden schools and other public services. The Average U.S. Bathroom Has Tripled in Size in the Past DecadePrior to 1980, most homes had just one bathroom; but by 2000, according to the NAHB, 35% had two-and-a-half bathrooms or more. Moreover, NAHB notes that today's bathrooms are three times larger than those built during the 1990s to accommodate whirlpool tubs, showers, dual sinks and toilet stalls, among other features. Some homes even have his-and-her bathroom suites and full baths for each secondary or child's bedroom. Research by American Standard suggests that U.S. consumers desire additional bathroom space. Making a Grand Entrance Can Create a Strong First ImpressionMany homes built in the 1950s lack front entrances; and though home owners generally prefer the convenience of side doors, architects believe that front doors improve a home's appearance. According to Elmhurst, IL-based architect John Belcher, they "create a warm and welcoming vestibule to the house." "Patterns of Home: The Ten Essentials of Enduring Design" author Murray Silverstein notes, "Much of the character of a house is determined by the experience of coming and going at every scale." Experts insist that a front entrance enhances a residence's curb appeal, sets it apart from others in the neighborhood and makes it more valuable to prospective buyers. According to Belcher, home owners can easily jazz up the front entrance with lead windows, a porch, landscaping, lighting and/or a bright-colored door. Tree Houses Put Home Owners Out on a LimbHome owners can live out their childhood fantasies by building tree houses on their properties, shelling out anywhere from $3,000 for a do-it-yourself project to $300,000 for a multi-story structure with plumbing. Many tree houses are built onto an existing residence and used for meditation or recreation areas, guest rooms or home offices. Upscale tree houses might have plumbing, electricity, bedrooms, fireplaces and even kitchens — although most are just 250 to 300 square feet in size and sit as much as 16 feet in the air. Affluent home owners typically purchase tree houses like they would motor homes or sailboats, but less wealthy individuals have been known to tap into their home equity to fund such projects. 'Mother-in-Law' Rooms to Go LegalOfficials in North Port, FL, may soon amend a law that bans so-called "mother-in-law" apartments, or separate residential units within single-family homes — generally in the attic or garage — for aging or sick relatives. To avoid overcrowding neighborhoods, however, Commissioner Barbara Gross believes the city should continue to prohibit rental units to non-family members. According to Commissioner Joseph Fink, many home owners caring for their parents are forced to build such units illegally without the appropriate inspections. Unclear Future for Home Building StocksHome builder stocks posted significant gains in 2003, and many analysts expect healthy returns during the coming year due to the improving economy and still-low interest rates. They do not foresee a slowdown in construction activity, even though mortgage activity is on the decline. "We think that housing represents for many people a stable investment at a time when there is a lot of stress about equities," notes Kenneth Reid, editor of The Spear Report. However, some watchers are worried that the sector will weaken with a significant jump in interest rates; and Thomson Financial believes that insider selling at many of the nation's builders is a strong indicator of that. It's 10 A.M. Do You Know Where Your Workers Are?Even with an increasing number of workers performing their jobs from the privacy of their homes, employers can monitor their activities. Companies can take advantage of new technologies to track their phone calls and Internet usage, deny them access to certain Web sites, make sure they are working in specific applications and take note of every keystroke. Employers can even monitor workers whose performance is not easily measured, concentrating on finished tasks or employing collaboration software to make sure the job is progressing as planned. Research shows that telecommuting can boost productivity and improve job satisfaction by eliminating distractions, and companies that implement Web-monitoring tools can experience additional productivity gains. Oklahoma-based Chaparral Energy, for instance, saw the time employees spend online decrease from one hour to under 15 minutes per day after the company began tracking their Internet activities. Though companies benefit from tools that gauge performance and restrict Web usage, experts note that spying on employees can hurt morale and hinder productivity. Home Builders Top Forbes' Best Managed Companies ListUnderpinned by attractively low interest rates, home buyers have kept residential builders busy against the backdrop of an otherwise bleak economic landscape. It may come as no surprise, subsequently, to find home builders leading the yearly list of America's best-managed firms, as compiled and released by Forbes magazine. In fact, home builder NVR Inc. of McLean, VA, topped the list, followed in the No. 2 slot by Denver-based builder M.D.C. Holdings. Also making the top 10 list was No. 4-ranked D.R. Horton of Arlington, TX. Realtors Cut Home Price Appreciation EstimateIn light of the recent rise in mortgage rates — which subsequently curtailed sales activity toward the end of the year — the National Association of Realtors® has scaled back its projections for residential price growth for 2003. The trade group now believes that appreciation likely hit 8% for the year, as opposed to earlier estimates of 9.1%. As such, its previous calculation of $172,600 as the median price of an existing home in 2003 has been revised downward to $170,800. However, the growth from a median price of $158,100 in 2002 still reflects the biggest annual gain since appreciation surged 12% in 1980. The actual median U.S. home price for last year will be officially announced in an NAR report to be released on Feb. 25. Be It Ever So Humble, It Deserves a NameThe practice of naming residential property, not uncommon in other countries, is beginning to take hold in the United States. The trend does not apply only to stately properties, either — even fairly uninspiring homes are being christened by their residents. While some owners create monikers based on a historical reference and developers might bestow a special name on a custom property as a marketing strategy, other names are simply the result of owners who fancy the idea of giving their homes a proper title. Although there is little evidence to support the claim, some say that names enhance the appeal — and possibly even the value — of luxury real estate. In some areas like Florida or New England, or any other area popular among the vacation-property crowd, realty agents have been known to list homes by name only, providing the sale price on request. "A high-sounding name hasn't anything to do with intrinsic value," however, explains Jared Edwards of SmithEdwards Architects in Hartford, CT. "It has to do with associated value." Upwardly Mobile HomesPre-fabricated homes are considered by some to be the forefront of architectural design and by others to be just fancy mobile homes. Pre-fab dwellings are becoming more varied and ambitious and are attracting some big names among young architects as well as some established builders. Upscale designs now represent 10% of the $6.5 billion modular-home market, estimates industry consultant Fred Hallahan, up from just 2% a decade ago. Pre-fab houses can be styled in many ways; but the most popular, according to author Sarah Susanka, seem to be structures that refer to the high-tech building process with a minimalist aesthetic. Mass-produced residences have been around for a long time but have never really caught on; now, say pre-fab architects, things have changed. Pre-fab homes are faster to build and less expensive, and they have more designs and may appeal to upscale buyers. Most are not built until an order is placed, making it less expensive for an architect; and little on-site work is needed. Retiring Close to HomeNAHB reports that more than 50% of the retirees who participated in a recent survey chose to live near their families, rather than escape to Florida or other traditional retirement havens. The group also found that three-quarters of respondents opted for maintenance-free living in a planned community. These developments typically feature pools, spas, television centers, computer and game rooms and spacious kitchens so retirees can gather with and entertain their families. Software and the CityThe most advanced city modeling and simulation software currently in existence is UrbanSim, developed by researchers at the University of Washington in Seattle. The software's developers created UrbanSim to address some of the uncertainties and complexities that other urban modeling tools are ill-equipped to handle, such as the relationship between transportation and land use, the effects of public policies at the street level and discrepancies between the choices households are likely to make and the choices they actually make. One of the things UrbanSim project director Paul Waddell wanted the tool to provide was a level of resolution that could clearly simulate the land development process as it takes place on individual land parcels, comprising grid cells of 150 by 150 meters that detail local populations, housing, business and real estate prices; the UrbanSim model is also designed to present clear, explainable data with real-life representations of people, objects and actions. The software simulates four central agents — households, businesses, developers and governments — whose interactions are represented by land usage and development, which can be extrapolated for several decades because the agents make the same decisions on an annual basis. One of the chief values of UrbanSim is its potential to resolve disputes and promote consensual collaboration between the different people and advocacy groups involved in city planning. The fine-grained detail furnished by UrbanSim can be problematic: the bigger the city to be simulated, the more calculations needed to determine agents' choices. UrbanSim may also not be viable in many regions because available data is insufficient to provide the necessary level of detail. The UrbanSim project, which resides at the University of Washington's Center for Urban Simulation and Policy Analysis, has received over $5 million in funding from the National Science Foundation. Seven Steps to Success for BusinessOffice productivity can increase through small changes in the office; changes that can also promote better business results, say Xerox Corp. experts. These include protecting information through virus protection and operating system updates, securing confidential data on digital copiers and other devices, and possibly storing critical files in an off-site repository. Adding color to written materials can attract new customers and make an impression; reduce clutter by scanning papers into electronic files or e-mail. Upgrading technology for document handling can save money, and unreliable or outdated equipment can be replaced by more economical models. Web sites should have current information that is easy to navigate and print. Using energy-saving features and shutting things off at night can also save money. Xerox and the Information Work Productivity Council offer more information on increasing workplace productivity. Computer Security Gets Tougher, More Urgent for Small CompaniesComputer security can be a major challenge for small businesses because they generally lack the staff needed to handle viruses, hackers and other threats. They face the prospect of lost revenue and productivity if important files and systems cannot be maintained. Tech companies are responding by releasing a multitude of products for small businesses. An antivirus service from Network Associates, for instance, automatically downloads the updates necessary to ward off the newest viruses. Meanwhile, Cisco Systems has developed a firewall that protects against hackers, and Websense Inc. has rolled out new software that keeps employees off Web sites that could contain malicious programs. Cutting the Office Phone CordThe new CS50 Wireless Office Headset System from Plantronics is a big improvement from old Plantronics headsets that had to be connected to phones with wires. The wireless headset system includes a hands-free headset, a base station where users can re-charge their headsets and an optional handset lifter. The $300 system offers users freedom from the previous restrictions of using a headset with an attached cord. Wireless-headset users are offered the same mobility as wireless phone users, but Plantronics' headset system offers up to 300 feet of range, in which users can wander without losing reception. Although the sound-quality of the headset is slightly worse than that of a regular phone, users say the wireless headsets have helped them improve their communications and productivity. Builders' Show Coverage Beginning Next WeekRead about what you might have missed. Nation's Building News Online will feature extensive coverage of the International Builders' Show in Las Vegas beginning next week.
Initiative on Model Green Home Building Guidelines Launched at Builders' ShowGreen building guidelines that will provide a nationally recognized baseline for determining minimum Initiative on Model Green Home Building Guidelines Launched at Builders' ShowGreen building guidelines that will provide a nationally recognized baseline for determining minimum thresholds for resource-efficient, cost-effective home building will be developed by NAHB and the NAHB Research Center, it was announced on Jan. 21 during the International Builders’ Show in Las Vegas. “The Model Green Home Building Guidelines will take ‘green’ to the mainstream,” said Ray Tonjes, NAHB Green Building Subcommittee chair and a home builder from Austin, TX. “We will ensure that all home builders, not just a few niche builders, better understand green building techniques and technologies,” Tonjes said. “The home building community around the country can use them for their own specific, regionally distinct green home building efforts.” The guidelines will provide criteria for land development, site planning, resource efficiency, water conservation, indoor air quality, energy efficiency, operations maintenance and home owner education. NAHB and the NAHB Research Center will provide technical expertise in the guideline development process and serve as a forum for builders to exchange green building ideas, initiatives and opportunities for potential collaboration. “Our intent with this initiative is to collect, assess and disseminate what constitutes the best of the best in residential green building today,” said Michael Luzier, president of the NAHB Research Center. “Members of the stakeholders group will represent all aspects of home building, designing and developing, and will provide an essential base of expertise for this project’s development.” Responding to growing demand for more cost-effective, resource-efficient housing,“home builders began using environmentally responsible and energy-efficient construction methods and materials, now referred to as ‘green building,’ more than 30 years ago,” Tonjes said. “Now, through this effort, new homes today are twice as energy-efficient. NAHB members and all home builders will benefit significantly because all builders will have the necessary tools to build greener." Housing SnapshotLast week was a good time to buy a home, with mortgage interest rates at their lowest levels since early and mid July. And home sales were brisk, with the Mortgage Bankers Association reporting that the volume of mortgages to purchase a home hit a new record high. On the job front, which remains a source of concern even amidst convincing evidence that the economic expansion has at long last moved into a period of healthy growth, new applications for unemployment insurance fell during the week ending Jan. 17 for the second week in a row. News from the lumber markets, however, was disappointing. According to Random Lengths, the price of framing lumber continued to advance, rising to $354 per 1,000 board feet. Prices for both 15/32-inch 3-ply CDX Southern Westside plywood and OSB seem to be moving up quickly from lows reached towards the end of last year. The former rose to $420 per 1,000 square feet, compared to $240 a year earlier, and the latter, which sold for $169 a year earlier, jumped to $400. Mortgage Interest Rates30 Year Fixed Rate: 5.64\% Housing Starts: Dec. 2003Total: 2.088 million\% New Home Sales: Nov. 2003 *1.082 million Existing Home Sales: Nov. 2003 *6.06 million * Seasonally Adjusted Annual Rate Home Builders Applaud Bush State of the Union AddressPresident Bush’s State of the Union address last week, in which he outlined a series of initiatives designed to keep housing and the economy moving forward, received a positive response from the nation’s home builders. “NAHB looks forward to working with the Administration to advance energy legislation, class action reform and association health plan coverage through Congress and to find new ways to reduce federal regulation to allow the American economy to produce more jobs and maintain a healthy growth rate,” said Jerry Howard, the association’s executive vice president and CEO. The President noted in his speech that homeownership rates are currently at their highest level ever, but in order to help the White House achieve its goal of 5.5 million new minority home owners by the end of the decade, NAHB is urging the Administration to renew its support for homeownership tax credit legislation that will make it economically viable for development to go forward in inner cities, struggling suburbs and isolated rural areas. “With 43 senators now supporting either one or both of the Senate homeownership tax credit bills (S. 198 and S. 875) and House support for companion bill H.R. 839 now standing at 242 members, we call on President Bush to elevate priority for the tax credit in the 2004 budget process,” said Howard. “Passage of this vital housing bill would increase homeownership opportunities by helping to bridge the gap between what it costs to build homes in lower-income neighborhoods and the price that buyers in those neighborhoods can afford to pay,” he said. In laying out his jobs and growth agenda in his Jan. 20 address to the nation, the President said there was a need to “help small business owners and employees with relief from needless federal regulation, and protect them from junk and frivolous lawsuits.” NAHB supports these efforts, and is urging the Senate to follow the lead of the House and to pass the “Class Action Fairness Act of 2003,” legislation that would give federal courts greater jurisdiction over class action cases in an effort to help reduce the soaring cost of litigation. On the critical issue of health care, which is also directly related to the cost of doing business, the President said: “Congress must act to address rapidly rising health care costs. Small businesses should be able to band together and negotiate for lower insurance rates, so they can cover more workers with health insurance.” Specifically, Bush called on Congress to pass association health plan (AHP) coverage. AHP legislation passed in the House last year with broad bipartisan support; a Senate companion bill, S. 545, is currently pending. “A majority of the 43 million uninsured Americans are working and employed in small businesses. NAHB looks forward to working with the Administration and Congress to reduce the number of uninsured workers in the country by moving AHP legislation forward in Congress,” said Howard. Housing Construction in 2003 Hits the Highest Level in 25 YearsThe pace of new home construction continued to intensify in December, bringing total production for 2003 to 1.848 million units, an 8.4% increase over 2002 and the highest level in 25 years, the Commerce Department reported last week. Last month’s housing starts climbed 1.7% to a seasonally adjusted annual rate of 2.088 million units. “Builders completed an extraordinary year and remain upbeat about the strength of the market for the year ahead,” said 2003 NAHB President Kent Conine, as they continue to meet “a robust demand fueled by low interest rates and solid house-price performance.” Single-family starts increased 13.6% in 2003 over the preceding year to a seasonally adjusted annual rate of 1.664 million units. This was only 0.6% below the all-time high that was reached in November. December’s yearly rate of multifamily home building was 424,000 units, 20.1% above the pace of a year earlier and 11.6% above November’s pace. “Housing’s strength in 2003 was concentrated in single-family starts, while condominiums in multifamily structures gained ground as the year progressed,” said NAHB Chief Economist David Seiders. “As a result, the homeownership rate rose to record levels in 2003.” Home building was down in the Northeast and Midwest in December, while the South and West posted gains. For the year as a whole, production was up 3.8% in the Northeast, 6.6% in the Midwest, 7.2% in the South and 13.9% in the West. Vehicles in Work Zones Present Many HazardsEmployers need to pay special attention to safety concerns if they have workers who are in highway work zones or other areas where they can be exposed to the risk of injury, or even death, from the movement of construction vehicles and equipment and passing motor vehicle traffic. Workers who operate construction vehicles or equipment can be injured by overturns, collisions or being caught in running equipment. And flaggers and other workers on foot are exposed to the risk of being struck by passenger traffic or construction equipment if they are not visible to motorists or equipment operators. Falls, electrical, struck-by and caught-between are common hazards for workers in highway work zones. More than 40,000 people are injured each year in crashes in these areas. Project managers can use an internal traffic control plan (ITCP) to coordinate the flow of construction vehicles, equipment and workers who are operating in close proximity within the activity area, so that the safety of workers can be ensured. The project supervisor can evaluate the effectiveness of the temporary traffic control setup by walking or riding the job looking for skid marks, damaged barricades and other evidence of near misses. Temporary traffic control devices — such as signage, warning devices, paddles and concrete barriers used consistently throughout the work zone — can also help reduce injuries. These should be set up within a reasonable time before construction begins so that motorists don’t become complacent and ignore warning signs and devices when the work does begin. Motorists should be given plenty of advance warning of upcoming work zones, and the messages on the warning signs should be simple and brief. It is also effective to provide flaggers with devices that increase their visibility to passing motorists and construction vehicles. In residential construction, large vehicles on small lots present special hazards for workers and home owners, especially during remodeling or making additions. A ground guide should help move big vehicles that have limited views. Following are safe practices that workers should follow when they are working near vehicles:
Regulations of the Occupational Safety and Health Administration (29 CFR 1926, Subpart O) address operation of vehicles and equipment within an off-highway job site not open to public traffic. However, Subpart O is not exhaustive in its coverage of machinery types or safety equipment, and it does not address work practices, traffic control plans or shift work. Flagging and signaling practices are discussed in general terms in Subpart G, which covers signs, signals and barricades. Subpart G defers to the Federal Highway Administration’s Manual on Uniform Traffic Control Devices on matters relating to hand signals, barricades and traffic control devices. OSHA’s jurisdiction over interstate motor vehicles is limited to those operated in the workplace and not on public roads. The Department of Transportation has jurisdiction over interstate trucking on public roads and over all transportation of hazardous materials. For sources of more online information on this topic, click here. For information on this and other issues related to construction safety, e-mail George Middleton at NAHB or call him at 800-368-5242 x8590. Are You at Risk? Protecting Yourself From FraudThe second in a series about preventing fraud from affecting your business. There are many scrupulously honest, dedicated and loyal employees who would never dream of defrauding their employers. But, unfortunately, there are far too many frauds committed against innocent business owners by employees who are “wolves in sheep’s clothing.” The following information will help you become more knowledgeable so that you can begin to protect yourself. Why Are Small Businesses So Vulnerable? Lack of financial expertise. Individuals typically start new businesses by converting years of advanced skills and industry expertise into marketable products and services. A small business owner generally has abundant technical skills (to provide a product/service) and people skills (to sell the product or service). But rarely does he or she have the financial expertise to run a business. Most business owners are happiest when they are producing or selling and would prefer to have someone else handle the financial side of the business. Many owners are uncomfortable working with numbers, or are not interested in investing valuable time to learn how to understand or structure their financial information. Lack of risk awareness. Business owners are usually hard working, honest, positive and upbeat individuals who project the same attributes on others. Because they are risk-takers with a certain sense of invulnerability, they are not typically suspicious and often fail to create even the most basic financial controls or safeguards for their companies.
Limited information and resources. Information about fraud risks and controls is not common knowledge or readily available. CPAs, internal auditors and security officers are trained in common risks and controls, but this specialized information is not regularly distributed to the public. Because small-business fraud is seldom prosecuted and because small businesses don’t have human resources departments to properly investigate applicants, embezzlers are often free to move from business to business. Business owners often believe that fraud can’t happen at their companies or that the additional work required to implement the controls is too costly or time-consuming, given their current staff. (Too often, they implement fraud controls only after a large fraud has been discovered.) Additional Construction Industry Stressors More than most businesses, the construction industry is susceptible to financial control weaknesses. On the financial and accounting side, home builders:
On the operational side, owners are exceptionally busy handling the numerous phases of construction projects. Extra-busy owners have little time to dedicate to the financial side of their business. They also have a tendency to delegate heavily (especially on the financial side), and may also spend a great deal of time in the field away from the office. All of these factors contribute to a loose financial control environment and higher risk of fraud. Fraud Quiz ― Part 2 Here is the second half of the quiz initiated in this series’ introductory article. Ask yourself the following questions to assess your knowledge of fraud risk areas (answers are at the end): 1. Employees who commit fraud often do so because (choose all that apply):
2. Small business owners who discover that an employee has committed a relatively small fraudulent act are likely to (choose the best answer):
3. When hiring bookkeepers or internal accountants, most small business owners make their hiring decision after: a. Performing in-depth background and credit checks, discussing the candidate’s skills, work habits and honesty with former employers, and testing the person’s software and accounting skills b. Conducting several interviews, reviewing the candidate’s educational background, formal credentials and resumes, and satisfying themselves that the individual appears to be hard working and honest c. Learning that the individual is the most reasonably-priced applicant available, that he or she seems to be reasonably intelligent, has “bookkeeping experience,” has worked with the existing accounting software and that the person is “willing to work hard and to learn” Answers: 1. a. Most employees who commit fraud truly intend to pay the money back. b. If small errors or obvious discrepancies in the books are undetected by owners or management, it quickly becomes apparent to the bookkeeping staff that no one is paying attention to the financial records. It’s like announcing to the staff that you’re leaving your finances unattended. c. In today’s society it is very easy to live (or aspire to live) well beyond one’s means. And a variety of other financial stresses (e.g., medical costs, divorce, emergencies, family demands, peer pressure) can motivate anyone who is easily tempted. d. When employees are consistently given unmonitored access to assets, only a person of true integrity would not be tempted to “borrow — just a little.” e. Drug and alcohol problems are abundant, and unfortunately, many of the people with those issues are also skilled people-pleasers and masters at hiding their situations. Unless you screen out these individuals during the hiring process, you end up with an employee who is an expert at subterfuge and is also likely suffering from money problems. f. Chances are that only a small proportion of the people who apply to work for you have any kind of criminal background. But if they did, how would you know? How thorough are your background checks? Answer “h” is generally not the primary motivating factor for embezzlement. 2. a. Many employers choose this “parental” approach. You should exercise caution with this as keeping an employee who has committed fraud on staff may void your bonding insurance. b. through e. Although some business owners choose one or more of these options, they are not the typical responses to discovering internal fraud. Why don’t people report fraud? Some of the reasons may include:
f. Although I have seen fraud cases taken to court, court-ordered restitution and fraud perpetrators begin to make restitution, the chance of receiving the lion’s share of embezzled funds is rare. 3. c. The answer should be “a,” but the real answer, based on my experience, is “c.” Diane C.O. Gilson, CPA, CIA, is a Certified QuickBooks ProAdvisor and MasterBuilder ProAdvisor, author, trainer and construction accounting coach, as well as a frequent speaker at The International Builders’ Show and The Remodelers’ Show. Her firm, Info Plus Accounting PC/CPA, offers bookkeeping and support services to help construction companies do more accurate and timely job costing and run better management reports. Contact Gilson via e-mail, or call her at 734-544-7620. Earlier Articles in this Series
'Accounting with QuickBooks Pro®' Available at BuilderBooks.com "Accounting with QuickBooks Pro® for Home Builders and Remodelers," including a CD-ROM with a trial version of QuickBooks Pro®, is available through BuilderBooks.com. From writing payroll checks to generating up-to-date income statements, this book will help you get the maximum benefit from your accounting system. To view or purchase it online, click here or call 800-223-2665 to order. Business management publications available at BuilderBooks.com 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. Search keywords: “Introduction to Business Management.” The NAHB University of Housing offers designation programs for builders and remodelers interested in improving their productivity and profitability. Click here for a list of NAHB designation programs. Make Your Connection With www.nahb.org Make your connection to the latest housing industry news and information with www.nahb.org — the official public and members-only Web site of NAHB. Log in today to register for educational seminars, meetings and networking events; find important economic and housing data; and learn the latest developments in NAHB’s efforts to promote housing. It’s all available to you 24 hours a day at www.nahb.org. Just click the "Member Log In" button to get started. If you are a member and need information about NAHB products and services, use the NAHB Staff Contact Directory to look up the direct telephone extensions for NAHB staff experts. Help Your Customers Deal With Winter WeatherA friendly letter to your customers can help them cope with winter weather and at the same time remind them that they chose well when they decided to do business with your company, according to NAHB’s Business Management Department. Your message can include these home maintenance reminders:
Hundreds of tips on accounting, personnel, customer service, sales and marketing, management, trades, production and design are available in two publications from the Business Management Department: “Management Ideas That Work” and “More! Management Ideas That Work." Each book costs $25 for NAHB members and $31.25 for non-members. To order online from BuilderBooks, click here, or call 800-223-2665. Storm Water Permit Guide Available to NAHB MembersNAHB is in the final stages of preparing a builder’s guide to help association members comply with U.S. Environmental Protection Agency (EPA) and state storm water permitting requirements. EPA has recently stepped up its enforcement of the storm water rules, which it has repeatedly called a national priority. The guide, which will provide information on storm water requirements that affect NAHB members, will be available next month. In addition to information on federal and state storm water permitting programs, “Storm Water Permitting: A Guide for Builders & Developers” contains information on more than 50 of the most commonly used Best Management Practices; sample Storm Water Pollution Prevention Plans; and tips on compliance, including how to handle visits from inspectors. It also features a CD ROM of U.S. EPA and state general permits, Notices of Intent and many other forms and guidance that can be use to help ensure compliance with state requirements. The guide will be free to NAHB members for a limited time only. For more information and to obtain your copy, e-mail Dionne Iyoha at NAHB or call her at 800-368-5242, x8163. Service Reviews Ads for Their EffectivenessAdvertising can spawn a slew of leads and closings, but ineffective ads can merely drain your sales and marketing budget. Members of NAHB can stretch their advertising dollars and save time by taking advantage of the Ad Review Service sponsored by the National Sales and Marketing Council (NSMC). A national network of marketing professionals will suggest ways to make your ads more noticeable, persuasive and effective. The service costs just $20 per ad for NAHB members and is free for NSMC members. To request an Ad Review Service form, send an e-mail. For further information, call 800-368-5242 x8095. National Housing Endowment Funds Superintendent TrainingThe National Housing Endowment has awarded the Home Builders Institute (HBI) $20,000 to develop the next level tract of its popular Residential Construction Superintendent (RCS) designation program. At last month’s NAHB Winter Executive Committee meeting in Palm Springs, CA, the endowment’s board of trustees voted to support a grant proposal submitted by HBI Board of Trustees Vice Chairman Jim Sattler on behalf of HBI, the workforce development arm of NAHB. More than 2,000 people have attended RCS designation courses since the program’s inception and courses are already scheduled at six locations this year in Connecticut, Florida, Georgia, Illinois and Texas. The courses are administered through local home builders associations. The next generation of RCS courses is a direct response to requests from NAHB members. "The continuing success of the RCS designation is a sign that the industry sees the value of training geared toward this critical function in the home building process," says Sattler. "We are pleased that the National Housing Endowment agreed to support HBI's proposal to expand training in this area." "The RCS designation fits perfectly with the National Housing Endowment's mission to enhance the professionalism of the industry through training,” says Dale Stuard, the endowment’s chairman. “It makes absolute sense to build on an already successful platform." The funds will aid in the research, development and pilot testing of a new, more advanced series of courses, which are expected to be launched in early 2005. Geared toward budding field superintendents and current site personnel, the RCS designation curriculum is comprised of eight four-hour course modules that cover issues and subjects identified by NAHB members as critical to a field or site supervisory job. The designation is part of HBI’s Residential Construction Academy (RCA), which was formed in 2001 in an effort to bridge a pressing skills gap within the residential construction industry. The academy uses the RCA Series of educational textbooks and multimedia materials for its instruction. Representing the philanthropic arm of NAHB, and founded in 1987, the National Housing Endowment is committed to the future of the housing industry through grants to further scholarship, education, research, job training and the preservation of the industry’s rich heritage. To date, the endowment has awarded more than $4.5 million to housing related programs and projects nationwide. For more information, e-mail Steve Kramer or call him at 800-795-7955 ext. 8925. For more information on the National Housing Endowment, e-mail Julie Wheeler or call her at 800-368-5242 x8483. Sound Absorption Integrated Into Coffer Wood Ceiling SystemOwens Corning's new QuietZone™ACOUSTYLE™Coffer Wood ceiling system provides the rich look of custom millwork with the added benefit of integrated sound absorption — enabling builders to provide quieter and distinctive homes at a fraction of the cost. Headquartered in Toledo, OH, Owens Corning is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB. The Acoustyle ceiling system is crafted in a variety of rich, kiln-dried hardwoods, such as oak, cherry and poplar, and has a look unmatched by other acoustical panels. The system includes an integrated high-performance sound absorber that is installed directly behind the coffer wood panel. The ceiling’s pre-finished mounting and trim pieces can be quickly installed without the use of special tools. Testing by Owens Corning found that a two-person team could install the Acoustyle system over a 500 square foot area in as little as eight to 12 hours, which is significantly less time than it would take to install a traditional custom wood ceiling. The mounting for the system has been designed to “clip” directly on to standard T-bar grid components like those used with traditional suspended ceiling systems. Once the mounting pieces are installed, the coffered panels can be easily dropped into place like traditional acoustical tiles. Coffered panels can be readily adapted to accommodate recessed lighting or typical HVAC grilles and registers and they can be easily removed for access to pipes, wiring and other services. In addition to new homes, the Acoustyle ceiling system is suitable for room additions, basement remodels and other retrofit applications. The QuietZone Acoustyle Coffer Wood Residential Ceiling System is one of many high-performance QuietZone® acoustical products available for new residential construction and remodeling. Owens Corning is a world leader in building materials systems and composite solutions. Founded in 1938, the company had sales of $4.9 billion in 2002. Additional information is available on Owens Corning’s Web site or by calling the company’s toll-free general information line 1-800-GETPINK. This feature is solely for educational and informational purposes. Nothing on this page should be construed as policy, an endorsement, warranty or guaranty by the National Association of Home Builders of the featured product or the product manufacturer. The National Association of Home Builders expressly disclaims any responsibility for any damages arising from the use, application or reliance on any information contained on this page. Building Contractors — Not For WimpsTim K. Garrison - the Builder’s Engine Dear Tim, I understand you were once a general contractor. Why did you give it up? Freddy L, Sedro-Woolley, WA It is true, in the early 1990s, I started a construction company with two other guys — also engineers. Each of us brought a heck of a lot of real-world construction experience and knowledge to the table. If anyone could have made it, it was us. With grand visions and boundless enthusiasm, we started up, bidding anything that came along. I quickly learned that the very thing that allowed us easy entry into the market was a double-edged knife. In Washington State at that time, anyone with a pickup truck, a hammer and a six thousand dollar bond could be a general contractor. There were no testing or qualification programs as in other states. I don’t know how many times we came in second at bid openings. It was awful. Many times, the successful bidder either botched their takeoff, or needed the work so badly, they didn’t mind taking it at zero profit. Call me pompous, but I consider profit a necessary part of doing business and require a certain amount on every job. Living just above the poverty level, I wimped out after two years, spinning off an engineering company. My software company, ConstructionCalc, came along a few years later. But every time I look back on those humble beginnings, I am reminded: being a contractor is a darned tough row to hoe. What’s my point? Business ownership has taught me a few things:
Tim K. Garrison, P.E., is the author of “Basic Structural Concepts for the Non-Engineer” and is the president of ConstructionCalc.com. He can be reached by e-mail. The views expressed in this article represent the personal views, statements and opinions of the author and do not necessarily represent the views, statements, opinions or policies of the National Association of Home Builders. NAHB does not necessarily endorse any of the views expressed by the author and NAHB is not responsible for any direct or indirect consequences arising out of the views expressed in this article. Portland Scholarship Program Incorporates ‘Building Homes of Our Own’The Metro Portland Housing Industry Foundation, the charitable arm of the Home Builders Association of Metropolitan Portland in Oregon (HBAMP), is taking an innovative approach to promoting education in the local community with the development of a scholarship program that incorporates NAHB’s “Building Homes of Our Own.” The association is using NAHB’s interactive, computer-based program to familiarize students with the challenges involved in building a home, while qualifying them to compete for a $2,000 scholarship. Part of NAHB’s ongoing educational outreach initiative, “Building Homes of Our Own” is a CD-ROM-based educational tool that challenges students to work against a schedule and within a budget to design and build a 3-D home, starting with selection of a site and ending with the sale of the home. In the process, students rely on core classroom subjects including math, social studies and economics as they work to collect information, solve problems and make decisions. “We wanted to put together a program that built on the wonderful creativity and interactive capabilities of NAHB's CD-ROM game,” said Dave Nielsen, CEO of the Portland association. “Our staff did a great job in building a complete scholarship program that uses the game, and also incorporates hands-on experience into the application process. The potential for students to really get their feet wet in learning about the construction industry is fantastic, and the response from students and teachers has exceeded our expectations.” Working with a teacher sponsor, students competing for the scholarship are required to complete the “Building Homes of Our Own” program with a score of 70 or better, and forward their score pages with a transcript indicating a minimum grade point average of 2.5. Qualifying students then move on to the final round of the competition, consisting of an essay on one of two selected topics, along with a minimum 16-hour commitment to a Habitat for Humanity project in the Portland area. All applicants have to complete their essays and volunteer projects by March 1. Winners will be announced at the annual Metro Portland Housing Industry Foundation benefit dinner in April, where the top 10 finalists will receive $100 savings bonds. The top two finalists — one in each essay topic area — each will receive a $1,000 scholarship check, and the grand prize winner will receive an additional $1,000. “My students learned a tremendous amount about the home building process, experienced a great deal of frustration along the way and then enjoyed the satisfaction of building and selling a home and even making a profit,” said Portland area teacher Michelle Buczynski. “As a teacher, I found ‘Building Homes of Our Own’ to be an excellent simulation and I plan to include it as part of my curriculum in the future,” she added NAHB members and educators can learn more and order a complimentary copy of the CD-ROM by clicking here. Building Homes of Our Own is partially funded by the National Housing Endowment and Freddie Mac. The program has the support of the National Association of Elementary School Principals and earned a 2002 International EMMA (Electronic Multimedia Award), which recognizes excellence in digital media content creation. The program also won the 2003 Bronze Anvil for best interactive CD-ROM from the Public Relations Society of America. St. Louis Member Recruitment Drive Helps Armed ForcesIn a membership drive last summer and fall, the Home Builders Association of Greater St. Louis raised funds on behalf of members of the U.S. Armed Forces traveling through their area. Members of the association pledged to make financial donations for each new member that was recruited during the campaign. The drive yielded 45 new members and a $2,200 donation to the local USO, which serves military personnel and their families as they travel through the Lambert-St. Louis International Airport. The USO provides free food, access to computers and television and additional services in a home-like environment. The St. Louis association also stays involved with the community through its Home Builders Charitable Foundation. The foundation has donated $324,000 to shelter-related charities since it was established in 1997. Last year, the association formed a St. Louis chapter of HomeAid that will build and renovate shelters for the temporarily homeless in the community. The first HomeAid project, a shelter for homeless pregnant women and their children, will be completed later this year. HBA members are providing monetary support, construction supervision, labor and materials for the project. Calendar of Events
To view more meetings & events information on the NAHB Web site, click here.
Make Your Connection With www.nahb.org Make your connection to the latest housing industry news and information with www.nahb.org — the official public and members-only Web site of NAHB. Log in today to register for educational seminars, meetings and networking events; find important economic and housing data; and learn the latest developments in NAHB’s efforts to promote housing. It’s all available to you 24 hours a day at www.nahb.org. Just click the "Member Log In" button to get started. If you are a member and need information about NAHB products and services, use the NAHB Staff Contact Directory to look up the direct telephone extensions for NAHB staff experts. |