This presentation is an introduction to the NHQA its implementation, management and the application process.

1. Steps to Performance Excellence:Steps to Performance Excellence:
National Housing Quality AwardNational Housing Quality Award
Denis Leonard

2. NHQA 25+ yearsNHQA 25+ years
• Survive and THRIVE
• Customers’/competitors’need to
change
• Effectively and efficiently achieving
organizational strategic goals
• Coordinate and align improvement
tools and projects
• Improve performance and profits

3. IMPACTIMPACT
• Of the NHQA Builder recipients
97% still in business today

4. COST OF QUALITY COQCOST OF QUALITY COQ
• COQ across industries 2.6-4% of sales revenue
• Construction industry
70% Failure costs
25% Appraisal costs
5% Prevention
• Failure cost includes Rework in construction
rework is 2-20% of total project contract amount

5. COST OF REWORKCOST OF REWORK
• Cost of rework in commercial
construction 12.4% of total contract cost
• In residential construction 4.1%
Mills, Williams & Yu, Int. Journal for Housing Science,
Vol.34, No.3 pp. 207-220, 2010

6. DEFECTS IN HOMESDEFECTS IN HOMES
• Data captured by Quality Built field
inspectors on 31,995 completed homes and
condominiums across 27 U.S. states for the
12-month period ending October 1, 2005.
• Single-family homes averaged $5,398 in
corrected defects per home in 2005
• Multi-family homes and mixed commercial
use construction averaged $4,556 in
corrected defects.
Nation’s Leading Risk Management Company Releases Top Builder Defect Data for
Construction Industry
Quality Built® Data Shows Builder Top Risk Issues Are Preventable Media Kit :
Orlando, Fla., Jan. 11, 2006 — (International Builders’ Show)

7. Cost of ProvidingCost of Providing
Quality ManagementQuality Management
• Cost of correcting deviations from
spec is 12% of total construction
project cost
• Cost of providing Quality
Management 1-5% of total
construction project cost
(Xiao & Proverbs, 2002)

8. Pheng, L.S & Ke-Wei, P (1996) A Framework for Implementing TQM
in Construction, The TQM Magazine, Vol 8 No 5, pp 39-46

9. CONTINUOUS QUALITYCONTINUOUS QUALITY
IMPROVEMENTIMPROVEMENT
Step 1: Identify Opportunity
Step 2: Current Situation
Or Conceptual Design
Step 3: Analysis
Step 4: Implement
Proposed SolutionsStep 5: Results
Step 6: Standardization
Step 7: Future Plans
Act Plan
Study Do
Quality Control
Total Quality Management
Quality Assurance
Strategic Quality

10. Energy
efficiency
Trades
co-authoring
scopes of
work
Safety
Customer
satisfaction
Improving the
warranty
process
Customer
surveys
Focus
groups
Insurance
Defect
reductions
Cost
savings
Value
Engineering
Trade
Councils
Improving
Trade
relations
Liability Construction
process
Specs and
Scopes of
Work
Checklists
Green
building Builders
Challenge
Quality
Management
PATHWAYS TO QUALITY

11. THEMES IN COMMONTHEMES IN COMMON
•Some tools, metrics & processes in
place
•Begun to move to achieve real time
metrics
•With data, HOW to improve?
•HOW to implement?

12. LEADERSHIP
BUSINESS RESULTS
LE STRATEGIC PLANNING
P
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13. LEADERSHIP
BUSINESS RESULTS
LE STRATEGIC PLANNING
P
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Scenario
Planning
Employee
Satisfaction
Defect
Reduction
Supply Chain
Management
Communicate
Mission
Act As
Role Models
Process
Improvement
ISO9000
Six Sigma
etc
Customer
Relationship
Management
Balanced
Scorecard

14. STEPS TO EXCELLENCESTEPS TO EXCELLENCE
Honorable
Mention
(Special Cases)
An outstanding
practice.
Process Results
Bronze
Systematic
approaches, no
major gaps in
criteria.
Silver
Industry leaders
in most
Categories.
Refined
practices, good
results.
GOLD
Performance
Excellence
National
Benchmark in each
Category.
Quality fully
integrated,
sustained
performance.

15. OPPORTUNITIES FOROPPORTUNITIES FOR
IMPROVEMENT (OFI)IMPROVEMENT (OFI)
• Discuss your scores and what the strengths and
OFIs were
• Come to a consensus score for each category
and total score
• The real value is agreeing on the top OFIs
• CREATE PRIORITY LIST OF OFIs
• IMPLEMENT !

16. NHQA RECIPIENTSNHQA RECIPIENTS
• 15 - 800 employees
• 15 - 20,000 homes
• $150k - $1.7M home price range
• Custom, Production
Build on Your Lot
ANYONEANYONE CAN APPLY !CAN APPLY !

17. THE VALUE OF THETHE VALUE OF THE
FEEDBACK REPORTFEEDBACK REPORT
• Apply for the award process
• Feedback report on how to improve.
• A value of $8,000.
• If you receive a site visit this report
including the site visit represents a value of
$22,000.

18. NHQA IMPACTSNHQA IMPACTS
• Average net income before taxes of 5.1%
gross margin of 18.5%
• Whereas the NHQA builders achieved an
average net income of 11.2% and gross
margin of 25.5%.
NAHB Business Management Committee's
1997 Cost of Doing Business Study
(RC ToolBase, The Bottomline on Quality)

19. Profits (Gross Margins) 12-20%
Revenue 15-100% increases per year
Construction Costs vs Budget +/- 1%
Customer Satisfaction 93-97%
Referral Rates 29%
Cycle Time Reductions 15-50%
Zero Defects at Closing 98%
Defect Reductions 11-75%
Employee Satisfaction 94%
Trade Satisfaction 95%
Customer Endorsements/Thank
You Letters
73%
Warranty Requests
Warranty Costs
1 per every 15.5 homes
0.3% of sales
Based on NHQ Award winners articles featured in Professional
Builder Magazine from 1993 through 2009
the following impacts were cited

20. Improvement In Every Category In One YearImprovement In Every Category In One Year
44
40
38
34
30
33 32
35
53 52
46
48 48 49 50 50
0
10
20
30
40
50
60
70
80
90
100
Leadership Strategic
Planning
Customer and
Market Focus
Measurement,
Analysis, &
Knowledge
Mgmt
Human
Resource
Focus
Process
Management
Business
Results
Overall
PercentofPossiblePoints
2003
2004

21. 42
47
44
36 35
40
36
31
29
33
29
36
29
47
31
35
23
33
27
51
56
54
50
44
48
50
47
45
48
51 50
48
54
47
51
45
53
50
0
10
20
30
40
50
60
70
80
90
100
Item
1.1
Item
1.2
Item
2.1
Item
2.2
Item
3.1
Item
3.2
Item
4.1
Item
4.2
Item
5.1
Item
5.2
Item
5.3
Item
6.1
Item
6.2
Item
7.1
Item
7.2
Item
7.3
Item
7.4
Item
7.5
Item
7.6
PercentofPossiblePoints
2003
2004
Improvement In Every Item in One YearImprovement In Every Item in One Year

22. Wathen Castanos Hybrid HomesWathen Castanos Hybrid Homes
Case StudyCase Study
• Third generation builder started operations in 1983
• High performance green home builder
• Team of 28
• Building 200 homes per year (built over 4000 homes)
• Fresno, California
• Single-family, detached homes
• 1100 - 2348 sq ft
• $129-290k

23. The Goals of WCHHThe Goals of WCHH
•In a ‘ravaged, foreclosure impacted marketplace’
(PCBC)
•Increased focus on quality methodologies to:
•To advance the performance of their homes to
sustain leadership in the market
•Increase efficiency with a small team
•Creating strong strategic planning
•Continuing a focus on their existing culture based
around customers and employees

24. STRATEGYSTRATEGY
• What impact can it have for me
• Having a champion to drive it
• Link quality to strategy, a business tool
• Using NHQA criteria
• Benchmarking
• Everyone involved including the subs
• Using a team focus & creating leaders
• Providing training and development
• Measure before and after (Self-Assessment)
• Minimal resources and effort
• One year period to see impact

25. IMPLEMENTATIONIMPLEMENTATION
• Establishing a Champion, The
Presidents Vision
• Focus on the management team
• Training in basic quality tools
• Self Assessment (annual)
• Strategic planning
• Formation of Work Improvement
Teams WIGs
• WIGs focus on strategic needs
• Application for NHQA

26. HANDS ON TRAININGHANDS ON TRAINING
•Company leaders participated in training first
•Leaders acted as facilitators in all company
training
•Training used to kick start each WIG
•One key WIG used to show how each tool could
be applied
•Training with sub contractors

27. WORK IMPROVEMENTWORK IMPROVEMENT
GROUPSGROUPS
• Home delivery process
• Scope of Work development
• Option processing
• Customer service feedback to construction

28. BENCHMARKINGBENCHMARKING
•Initial visit to NHQA winning builder to see the
value of quality management
•Continued to visit two other builders over the 12
month period
•Toured outside industry company via local ASQ
Section to get new perspectives
•ASQ Design & Construction
Division on Linkedin

29. VALUE OF NHQAVALUE OF NHQA
APPLICATION & SITE VISITAPPLICATION & SITE VISIT
•An integrated and strategic view of quality and
WCHH as a result of the application
•Self assessment and focus on OFIs
•Industry and quality experts providing in-depth
site visit and feedback report used as key input for
strategic planning

30. THE IMPACTTHE IMPACT
• Improvement in performance (Self Assessment) in every
category
• Increased homes built from 200 in 2009 to 300 in 2012
• Reduced defects by 50% in improvement projects
• Doubled the energy efficiency performance of the home
• Won NHQA Bronze in 2010 & Silver in 2011
• National Customer Satisfaction Award 2010
• Energy Value Housing Award Builder of the Year 2011

31. LESSONS LEARNTLESSONS LEARNT
• The implementation of quality tools and techniques
can be achieved in a short time frame
• Results/impact of quality implementation can be
quickly realized with limited resources
• Quality management provides an ideal set of tools
to support and drive the efficiency and effectiveness
of high performance home construction
• A champion, clear strategy, communication of the
value of the tools and their aim, measurement pre
and post implementation and clear results were the
keys to success
• NHQA key in coordination, evaluation and driver

32. THE BEST ADVICETHE BEST ADVICE
ABOUT NHQA…..ABOUT NHQA…..
…..DONT WAIT….…..DONT WAIT….
JUST START NOW!JUST START NOW!
USEUSE
BENCHMARK TOBENCHMARK TO
TAKE THAT FIRST STEP !TAKE THAT FIRST STEP !

33. The point of contact for the
National Housing Quality Award
for more information is
Award Director, Serge Ogranovitch
Serge@Potomack.net
703.980.6565

34. Denis Leonard
(406) 451 9124
DenisLeonard@BusinessExcellenceConsulting.net