2005 Media Releases & Alerts
NAHB Research Center Launches NHQ Certified Builder Program Nationwide
Landmark Quality Management Program for the Home Building Industry Provides
Third-Party Certification; Increases Productivity, Profitability, Customer
Satisfaction
January 14, 2005, Orlando, Fla. - Today, the NAHB Research Center proudly
announced the national launch of its NHQ (National Housing Quality) Certified
Builder program at the 2005 International Builders' Show. NHQ certification is
presented to builders who have documented and implemented a quality management
system, and participated in a rigorous annual review of the implementation of
that system. Certification requirements ensure that all elements of the
company's quality assurance system are incorporated to provide greater customer
satisfaction. Participation in the NHQ Certified Builder program is designed to
foster consistency, quality, and customer satisfaction in building practices.
The NHQ Certified Builder program began in summer 2003, when KB Home Las Vegas
and Pulte Homes Las Vegas asked the NAHB Research Center to develop a pilot
program for builders after witnessing the increased productivity and jobsite
synergy realized by their NHQ Certified Trade Contractors. Grayson Homes of
Ellicott City, Md., Veridian Homes of Madison, Wis., and D.R. Horton's Central
Carolina division soon joined the pilot.
Driving Forces Behind NHQ Success
Three factors have driven the NHQ Program's significant growth over the last six
years. First, more knowledgeable consumers are demanding better products and
better service. Second, some areas of the country have experienced a
significant rise in construction defect litigation. Third, general liability
insurance has decreased in availability and increased in cost for most home
builders. Builders who have achieved certification, and those currently in
training are realizing operational efficiencies, greater profitability, and
increased customer satisfaction.
NAHB Research Center president Michael Luzier said, "I am excited to bring this
management tool to builders across the country. It will change business of home
building and the quality of new homes. NHQ Certification means proactively
identifying and addressing recurring problems, requiring accountability for and
documentation of quality management procedures, and building homes right the
first time."
NHQ Certified Builder Program Requirements
Before a builder can request a certification audit from the Research Center's
quality experts, the company must implement a quality assurance system for at
least three months. The NHQ Program requires utilization of the
Plan-Do-Check-Act model, where builders plan to understand and meet customer
expectations; execute their plan; check to see if plan is completed; and act to
continually improve by identifying and addressing recurring issues. These
requirements must be met in at least three areas-construction, sales, and
customer service.
During the on-site audit process, Research Center quality experts look for
practices and procedures that demonstrate the builder's adherence to such
quality principles as developing cooperative partnerships with trade
contractors, fostering job-ready conditions, and organizing training programs
to prevent and address recurring problems. Both the length of the audit process
and the cost of NHQ certification depend upon several variables, including the
size of the organization and the time needed to complete the audit.
NHQ Certified Builders Begin Realizing Results in Year One
Three home builders achieved certification in 2004 as part of the NHQ pilot
Certified Builder program. They are: Grayson Homes of Ellicott City, Md.; KB
Home Las Vegas; and Veridian Homes of Madison, Wis. These builders have already
documented significant increases in productivity and profitability, as well as
increased customer satisfaction rates as reported in customer feedback surveys.
Cindy McAuliffe, president of Grayson Homes, said, "The NHQ Program … has given
us a roadmap for improvement of our business results. The process is very
worthwhile; definitely an exceptional return on investment of time and assets."
Grayson Homes has recorded early positive data to validate its participation in
the NHQ program. Willie Sickel, director of marketing and sales at Grayson
Homes, said, "As a result of implementing our quality assurance program, gross
operating profits increased 55 percent in three years. Over the same period,
net profits as a percentage of sales increased 9 percent. [Participation in]
the NHQ Certified Builder program is a large reason behind our success."
Leah Bryant, regional general manager of KB Home, said, "Building on our
stringent quality processes, KB Home's participation in the NHQ Certified
Builder program sends a powerful message to our customers. So far, as a result
of program implementation, [the Las Vegas division] has seen a four-day
improvement on our build time with the confidence that we and our trade
partners are building with a consistent commitment to quality."
David Simon, president of Veridian Homes of Madison, Wis., said, "The builder
certification process has enhanced the quality of our homes and improved
customer service - while identifying opportunities for improvement in
operations and with our trade partners."
Quality Assurance-Bringing Solutions to the Industry's General Liability
Insurance Crisis
In 2004, while most of the home building industry was in the throes of a
liability insurance crisis, NHQ Certified Builders became eligible for general
liability insurance discounts. In mid-September, HBW Insurance Services, LLC, a
managing general agent with underwriting authority from several insurance
companies to underwrite commercial general liability insurance for residential
home builders, announced that it is offering discounted insurance for NHQ
Certified Builders, and those builders who require all or a portion of their
critical classes of trade contractors to become NHQ Certified Trade
Contractors.
In a letter to the NAHB Research Center, Bruce Harrell, CEO of HBW said, "HBW
has become very familiar with the NHQ certification requirements, and the
significant positive impact successful implementation of the requirements can
have on the technical quality of the home building industry."
Stephen R. Mysliwiec, partner at Piper Rudnick LLP in Washington, D.C. said,
"The last several years have seen an explosion in construction defect claims
and lawsuits against builders and trade contractors. One of the principal
defenses that builders and trade contractors mount to such lawsuits is that
they do quality work and care about the quality of the finished home. The fact
that a builder or trade contractor has devoted time and energy to become NHQ
Certified would provide powerful evidence in support of these defenses. In
addition, the quality assurance procedures that must be in place to earn such
certification will certainly result in high-quality work and fewer construction
defect claims in the first place."
Some NHQ Certified Trade Contractors have already seen the effect of quality
system implementation on their liability insurance premiums. Sean Cavanaugh,
general manager of Gypsum Construction in Las Vegas, said, "Three years after
becoming certified, our liability insurance premiums have stabilized instead of
increasing 300 percent to 400 percent as they had in the past."
The NAHB Research Center has organized an educational session at the 2005
International Builders' Show that addresses the connection between quality
assurance and risk mitigation. On January 13th, Ric Glover, senior vice
president of the national construction practice at MARSH, Inc., and Jim
McErlean, director of national risk management and marketing for HBW Insurance
Services, will present "Insurance Availability and Affordability-What's the
Key?" The presentation will be held in Room W306 in the Orange County
Convention Center from 1:30-3:00 p.m.
Continual Improvement Requires Continual Education-NHQ Industry Outreach
The NHQ Program is reaching out to industry partners in a variety of ways. For
example, at the 2005 International Builders' Show, the NHQ Program is offering
three quality-related educational sessions, and organizing an NHQ builder
orientation. The orientation will be held on January 15th from 8:00 to 10:00
a.m. in Room 224H of the Orange County Convention Center. Additionally,
quality-related presentations from other conventions and industry shows are
available on the NHQ Program's website, www.nahbrc.com/quality.
The NHQ Program also offers a free, monthly electronic newsletter,
Quality Matters, that provides timely news and resources for builders,
trade contractors, and building product manufacturers. Since its inaugural
issue in November 2004, over 300 subscribers representing all segments of the
home building industry, as well as other industries, have signed-up to receive
the newsletter. To subscribe to Quality Matters, visit www.nahbrc.com/qualitynews.
Builders and trade contracting companies interested in starting on the path to
quality certification can visit www.nahbrc.com/quality, and
use our Contact Us online
form.
01/05
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