3 Ways Lean Design Can Help Home Builders Recover Margins

BY TODD HALLETT, AIA NOVEMBER 21, 2022

Skyrocketing material and labor costs followed by sharp interest rate increases have worsened the current housing affordability crisis. These factors have forced home builders to reduce pricing, and therefore profit margins, to maintain sales velocity. 

A Lean design and construction approach is the best way forward for home builders to reduce waste (and costs) without sacrificing amenities or marketability of their product..

What Is Lean Design in Home Building?

Lean Design is a tool builders all over the country use to reduce costs. A common misconception about Lean Design is that it’s just an updated version of the old chestnut, Value Engineering. Not at all. 

In fact, value engineering in construction became a vehicle to strip away important amenities and aesthetics that make homes exciting and attractive. 

While the goal of Lean Design is to eliminate waste, the product that results from Lean Design is superior when it comes to aesthetic design, innovative planning, and increased amenities. 

Lean Design employs the use of a structured collaborative process that involves key building team members in collaboration with trades and suppliers. The goal is to optimize home efficiency and effectiveness for increased sales velocity at the best possible profit margins. Lean Design never cheapens the home or reduces its value; instead, it increases focus to provide only that for which the customer will knowingly and willingly pay.

Starting the Lean Design Process: Field Walk

The best way to start the Lean Design process is to get out in the field. But first, you want to establish your Lean Team, including members of the construction, purchasing, estimating, design, and sales teams. 

Then, take the team out to the field and visit a home in the frame stage. Take a close look at your headers over doors, windows, and fireplace openings. To this day, I have yet to walk into a house that doesn’t have considerable excess lumber that can easily and safely be eliminated.