Data Analytics Helps A Home Builder Build Profits

By building data analytics capability, one home builder plans to increase profits and productivity. Since completing their first home in 2005, they now build over 600 homes a year. Expecting an industry slowdown in 2019, they began a journey to understand their financial performance, construction processes and customer behavior, and become a data driven culture.

Situation

Each department had their own data, but the company needed help to understand what they could and should do with it in a more integrated way. By 2017, they’d begun building a data warehouse, and a new process to manage all the IT project requests! Their needs were clear, the path forward was not.

Analysis

Data2Profit Consulting combined construction management, home buyer option selection, customer demographics and financial (sales/cost/profit) data into one comprehensive analysis. For the first time, management saw the impact that option selection timing had on customer closing dates and profits. Changing demographics drove a tend to smaller homes, also impacting profits.

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Insights & Outcomes

  • Surprising Range of Variability in revenue, cost and profit became visible (see chart above)

  • Over 12 months, profits were 1.2 million lower due to declines in profit per sq. ft. and home sizes

  • 45% of Option Selections occurred past the mid-point of construction

  • 50% of home closings were delayed more than one month from original target

  • 3 Point Plan provided a prioritized approach to integrate findings into future business results

Regular business reviews monitor results, but deep down do you understand why you’re generating those results? Unlock the power of your data and contact Data2profit today by calling 920-948-3355 or email Lynn at lcorazzi@data2profit.net.