Tuesday, November 12, 2019

Who is Responsible for Poor Service in Modular Construction?

Nobody has ever built the perfect new home. We have gotten close but in the end it usually becomes a Blame Game.



Today's modular home buyer is no different than home buyers 200 years ago. They want perfect, will accept some imperfections but will always keep contacting you about something they "just found" in their new home.

When the end consumer buys something, anything, they expect it to be as advertised. They have an assumption of practical use which simply means that what they purchase will actually work for their needs without problem.

Nobody buys a new car assuming that it will be back to the dealership within a couple of days because multiple things either were missing, broken upon delivery or needed repairs within 3 days.

Same thing with televisions, corn flakes and just about anything else you can think of, with the possible exception of a new home or marriage.

When someone buys a new modular home they are excited, not only to begin the process but also to the day they receive the key to their new home, close the door, look around and smile knowing that it is really their new home. What a great feeling.

But like most adventures, building a new modular home, or any home for that matter, is not a journey for the faint of heart. So let’s take a look at what happens when someone decides to actually buy a custom modular home.

Modular homes are sold through a network of factory authorized independent home builders that have home offices, showrooms and in some cases, model homes.

The buyer walks into the builder’s office believing that like just about everything else sold in the US, that builder will stand behind his/her product. 100%! And that is what happens in the vast majority of the modular homes sold.

What is happening behind the scenes is an entirely different story however. Things go wrong and “placing the blame” is an age old problem in the modular housing industry.

I did not write this article to point fingers at any one person or company. I wrote it to show that problems are inherent with all types of construction and the longer a problem goes without being resolved, the more antagonistic all sides become.

There are 6 main culprits when it comes to pointing out and/or assigning blame.
  1. The modular home factory
  2. The set crew
  3. The builder
  4. The Subcontractor
  5. The Customer
  6. The inspector

Here is a closer look at each and how they intertwine sometimes making a simple oversight into a huge problem that only gets solved after a lot of time, money and energy is expended.

The Modular Home Factory

This is where the first part of the actual assembly of the house begins. Drawings, quotes, redrawing, requoting and finally the drawings become approved and plans stamped, the quotes become a contract between the builder and the factory and things begin to happen to turn the house plans into reality.

Like anything in life, if things go wrong, they tend to go wrong at the most inopportune times and in the most inappropriate ways. Special order parts and materials must be ordered and arrive in time to be placed in the module as it goes down the assembly line. Plans that were approved and stamped may get adjusted at the last moment by the customer and the revised ones don’t reach the production floor in time. Hundreds of component parts and pieces must be assembled in the proper way and on and on and on it goes until all the modules are built, wrapped and ready to ship.

The modular factory stands behind all of the materials and construction in those modules. If something didn’t arrive in time, was assembled slightly different than called for in the plans or just about anything else the factory was responsible for is screwed up, the factory has an obligation to fix, repair or replace.

How many homes built in a factory have ever arrived at the jobsite in pristine condition with every part and component in perfect condition. Please don’t say you’ve seen this happen because the chances of this actually happening are astronomical. Buy a Powerball ticket if you have.

The Modular Home Set Crew

The first people to touch your house when it arrives at the job site is the set crew. They unwrap the house, hook it up the crane, guide the modules into position, raise the roof sections and shingle them and if they are contracted to do more like attach dormers and other optional ship loose items, they should have a 4 module set and weather tight in one day.

But here is where problems begin for the factory and builder as any of the following things often could and do happen:

  • The crane is late
  • The crane can’t set up properly
  • The crane is too light
  • The modules can’t get into the right position
  • Not enough ‘pick points’
  • Roof lines don’t match up
  • Electrical drops in the wrong position
  • Rain or snow happens and nobody brought tarps
  • Unclear instructions in the set crew’s contract with the builder
  • Builder not on the jobsite, homebuyers are
  • Modules don’t line up
  • Foundation not square
  • And on and on.

I don’t know of any set crew that shows up to house set with the idea of shorting the builder on what they contracted to do. The first problem facing the builder is that their contract with the set crew is vague or the builder underestimated the cost and told the set crew not to do certain items, that he would do them.

The next problem is when key parts to the house needed by the set are either missing or built wrong at the factory. The set crew may need to stay another day to finish the work if this happens, then the dilemma is who pays the additional costs; the factory or the builder?

Occasionally the set crew will cause the problem. A broken door, improper connections, failing to do something required in the contract. Who pays for that? It certainly shouldn’t be the factory or the buyer but I’ve seen these little problems become major blowups.

The Modular Home Builder

This is the most difficult of all the parts in the delivery of a good home to the customer. Not only do all the problems from their customer and the local inspectors fall on their shoulders, all those factory and set problems roll uphill to bite  them in the butt.

When the factory is the party making the mistake and nobody from the factory is present at the set (and can actually make decisions), then the factory needs a ton of details and pictures. A factory can’t send out a service truck for small problems that could be better done by the builder or a subcontractor. However, the decision by the factory to handle a service call this way opens the floodgates to who is going to do the service work, how much will the factory allow for it and when will the factory reimburse the builder?

And after the repairs are completed, who stands behind them, the factory that paid for the repairs, the builder or the subcontractor?

What should a factory do when the problem is obviously the builder’s and the builder wants the factory to pay for the repair or at least the materials? And who is responsible for water damage caused by a sudden storm because the builder didn’t bring any tarps to the set...the factory?...the set crew?

The Modular Home Subcontractor

A modular home builder fortunate enough to find a good subcontractor is like buying a single lottery ticket and winning one of the big prizes. They become a valuable member of the team.

But alas, that is the exception to the rule when you are always looking at price as your determining factor in choosing a sub. Cheap wine and cheap subcontractors both turn sour quickly. They not only put a sour taste in your mouth, they have a tendency to leave one in your customer's as well.

Every sub from the electrician, plumber, siding. flooring and even excavator will probably be talking to your customer more than you will over the course of finishing the home. The customer actually wants to talk to these people, to learn what they think of their new home and you, the builder.

That's when the wheel can and usually falls off the cart. Yell at the sub in the morning for not showing up for three days and your customer will hear about how they hate working on one of your modular homes in the afternoon. The sub will not only point out problems they have encountered, they will make it their mission in life to show your customer things they feel the customer should bring to the builder's attention, imagined or not. That'll show that mean old builder!

When a sub does terrible work, breaks something or doesn't do the work he contracted to do, who pays the bill? The builder. There is no going back to the factory for this unless you can prove beyond a preponderance of a doubt that the factory was to blame for the repair.

The Modular Home Customer

Oh how we love our customer! Oh how we wish they didn’t have selective hearing!

How many modular home builders have been stung with added expense simply because the customer simply knew they would be getting something extra and they were specifically told they weren’t and it wasn’t in the contract.

When backed into that kind of corner, some builders, not many but some, actually try to throw this off on the factory saying that “I told the factory but they forgot to put those gold plated faucets in the house.” Now the customer AND the builder are on the factory’s butt to produce things that were never part of the contract. That is called human nature.

And how many times have your customers walked through the house while nobody else was there and noticed things that would probably have been corrected or finished by you, the builder, but instead of calling the builder, they called the factory to tell them they needed to come and ‘fix’ the problem. Then the factory calls the builder to tell them not to let the customer call them and the builder knew nothing about it. Yeah, that never happens.

The Local Inspector and/or Hired Home Inspector

I remember years ago I had just finished a home for a lovely young couple and their 4 year old son. I had checked out everything before I called for the final inspection. When the code officer arrived, she spent an hour going through the house and wrote me up for only one thing...an electrical recept with reversed polarity. I told her I would fix it right then and there but she insisted I call my licensed electrician to do it and would return either later that day or the next day. It cost me a fine and return visit fee totaling $35 and $85 for the electrician. Thank goodness my sub came right over and she returned two hours later without calling me first. Who do I bill for the $120 I needlessly spent?

The final person that can throw a wrench into the works is a Home Inspector. Some lenders actually still require an independent Home Inspector to do a complete walkthrough of the home with their report being added to the mortgage file.

Have many of you seen one of their reports without at least 3 things that need attention? They think they are on a mission to find something wrong and they rarely pass up a chance to ‘show off’ what they learned at the 4 day ‘wonder’ training course that cost them about $1,500.

When either of these inspectors finds a problem in the closing hours and something needs repaired or replaced, the builder has to decide who caused the problem in the first place; the factory, the set crew, their customer, one of the subs or one of his crew. Nobody comes out a winner in this scenario.

Presenting the new home buyer with the home they paid for is the most important thing the modular housing industry can do but who ultimately pays when the wheel wobbles or falls off the cart? You guessed it, the builder.


7 comments:

Anonymous said...

Never understood why factories refuse to acknowledge their role in correcting shortages/backlog items in a timely manner. Builders should not have to wait weeks or months for items that the factory acknowledged on QC or shipping docs as their responsibility. Factory defects in workmanship need to be identified within a timely 7-10 days ow the on site QC by the builder is worthless. Issues arising during set or install should be properly addressed with the set crew unless the site conditions themselves contributed to the issues. Modular builders also need to accept that like their on site competition the resolution and costs are their burdens to bear in completing the home.

Anonymous said...

Coach.

Excellent article. And why we (a manufacturer) are grabbing more and more of the work for ourselves. On every project we're at least the manufacturer and the set crew. And on a growing percentage of projects we're the manufacturer, set crew, and the builder. And a few a year we're the manufacturer, set crew, builder, and the client (ie, spec builds).

Benefits of such;

1) This gives us more control over our product and brand.
2) We can increase our sales without taking on any additional clients . . . And I think we can all agree that fewer clients = better :)
3) it's a better process for our clients. They have one point of contact / questions / answers for their entire project.
4) we reap 100% of the rewards for our efforts. No training builders that jump ship. No warrantying builder errors to protect our brand. It's all our responsibility. It's all our reward.

Honestly. I think our industry would shake most of it's historic negative image if the manufactures (let's start calling them "Building Companies" ) owned more of the process and were responsible / tied directly to their Product.

I also think the States (specifically Massachusetts) are going to start to push the manufacturers to own more of their product. Certainly starting with factory (or factory certified) set crews.

My two cents on this Tuesday afternoon.


JW
Huntington Homes, Inc

Anonymous said...

Coach,

I have a different theory, maybe the problem is that we don't work together. It is like a choir with no director!

Maybe the factory needs to train the set crews and builders before handing off the home, Maybe the factory needs to consider the builder as a partner and work together. Maybe the industry needs to reconsider the relationship with inspectors.

From my perspective, we should be working together as one team, and not blaming each other for the problems.

thanks

Anonymous said...

Mod Coach -
Your articles are so negative and a disservice to our industry. Please change your focus with a move toward the positive. I am sure you will claim you are just reporting the facts, but highlighting the negative should be discontinued.

Anonymous said...

I agree with the last comment! This is a topic of discussion for a focus group meeting or industry event and not something that should be highlighted as a in a public forum. This article does nothing to improve the image of our industry to anyone from the outside that my be considering building their new home by utilizing modular construction. This article makes it appear that this is a major issue within our industry.

Coach said...

Two things are missing from your comment.

First, I do highlight the good side of modular construction as much as I can. Unfortunately there is little to report from either the factories or the builders. No news and pictures of nice homes and projects. My email is always full of negative things from both the factory and builder side of our industry. Sharing them would make anyone wonder why to go modular.

Secondly, there is no other source I have found that not only presents the other side of our industry but also offers suggestions and help on how to improve it. If you know of any blog besides mine that even attempts to bring everyone all the news and problems facing our industry, please let me know.

Every industry needs advocates and critics. Advocates are rays of sunshine portraying our industry as well run, well managed and growing exponentially while critics shine the light on what is happening behind the scenes, both good and bad.

Sorry I offended you but if all I wrote were sunshine and lollipops, the industry would never know any other side of the story.

You're Welcome

Builder Bob said...

Anonymous wrote "This article makes it appear that this is a major issue within our industry."

There are a lot of major issues in the modular housing industry. I have been to many modular events and focus groups over the past 30 years and I must say that many of the topics recently were problems brought up by Gary in his blog.

You got my vote Gary