Teaming Up In A Quest To Ignite Homebuilding Data's Real Power
Investopedia defines "scale" this way.
The ability of an organization (or a system, such as a computer network) to perform well under an increased or expanding workload. A system that scales well will be able to maintain or increase its level of performance even as it is tested by larger and larger operational demands.
The concept of scale, this explanation notes, is ...
closely related to the term economies of scale, in which a company is able to reduce its production costs and increase profitability when it produces more of a given product. In effect it is spreading production costs over a greater number of units, making each of them less expensive to produce. By contrast, if increased production leads to greater costs and lower profits, that's known as diseconomies of scale."
These diseconomies of scale go far toward recognizing why the U.S. is currently short 1.7 million, or 3.8 million, or 4.4 million, or 6.5 million, or 7.3 million homes for its already-formed and still-forming households.
Diseconomies of scale in ground-up development and redevelopment of housing, arguably and controversially, trace to a dynamic of crisscrossing and interwoven root causes:
- operational inefficiencies – wasting money, time, materials, and labor – in the development and building lifecycle
- site-related anomalies
- available financial and human resources change
- localized regulatory choke-points and burdens
- customer-related personalization demands
- others
Experienced homebuilder, developer, investor audiences know only too well which of the six mentioned above exerts the greatest impact on marginal costs per new home.
Still, it's also widely believed that deviation of any sort, variability of any sort, or anomaly of any kind is the enemy of the kind of precision, repeatability, and reproducibility it takes to secure and sustain economies of scale.
Standardization – sameness – is practically the only path in most people's minds to the kind of economies of scale necessary to bend cost curves and raise payment capability to a point where that housing crisis might move through its worst throes toward gradual improvement.
Standardization — sameness – however is a known non-starter. People want "their" home. The dirt requires its site specific adjustments and deviations. Local governments demand design guidelines. Budget change. Supply chains break, etc.
This is why a press announcement today matters.
Higharc, the intelligent homebuilding platform for design, sales, and construction, today announced a strategic investment to accelerate the adoption of its generative design technology and help transform the homebuilding process. The investment was made by Standard Investments, the investment arm of global industrial company Standard Industries; Home Depot Ventures™, the venture capital fund managed by the world's largest home improvement retailer; and Carl Bass, former president and CEO of Autodesk, Inc., who joins Higharc as an advisor."
We'd written earlier here of a prior Higharc partnership announcement, suggesting...
Durham, N.C.-based Higharc, a tech and data platform that threads value from a consumer in a digital through-line back along the build-cycle to sales, construction, design, and land optimization, announces two new financial investors who'll also weave directly into Higharc's operational build-cycle ecosystem."
Today's unveiling, Higharc co-founder and ceo Marc Minor tells us, adds both financial and operational adrenaline to the platform's trajectory. This investment boosts Higharc's total capital raised to over $40 million.
Carl Bass, a CAD industry icon, and former ceo of Autodesk during an era of explosive growth, diversification beyond AutoCAD that included the acquisition of Revit, means Higharc's got deep pedigree in bringing enabling AEC technology to market.
As for Standard Industries – parent of GAF, the largest U.S. residential roofing company by marketshare – and Home Depot Ventures, Higharc's Marc Minor says:
The partnership of these leaders reflects a broad goal that we have of unlocking the power of homebuilding data for other parts of the value chain, outside of drafters. What Higharc does so well is it takes a plan and it acknowledges that the most important information about a home is locked away inside this plan. And the plan is often wrong or unclear. We make sure that it's accurate and then we automatically extend the usefulness of that data to non-technical users.
For homebuilders, that means sales and marketing professionals, but especially, it means purchasing and estimating professionals. Having this tight feedback loop between what is the home that's supposed to be built, and what are its parts and pieces? How much do they cost? How do we place an order for them? That has never been possible before."
What homebuilders and their partners need to know about the confluence at Higharc and the financial, relationships, and operational momentum it signifies comes through in a way that ties back to our opening thought about the fallacy of economies of scale requiring repetition, sameness, standardization:
Builders perform hundreds of manual processes and paper-based tasks to design and build homes. Higharc’s intelligent data model simplifies home design data and construction documents using automation, creating a more efficient and cost-effective approach to building homes at scale."
Marc Minor speaks directly to the role of generative design and harnessing data to achieve both scale and at least a manner of personalization.
We create like power tools for builders. That's the way to think about it. You know, our software lets them do the kinds of things they're trying to do much more easily and more powerfully. We're not going to make up options that a builder doesn't want to offer. Buyers are going to be exposed to whatever range of freedom that the builder wants to enable. We just make it really easy and less costly for a builder to do that. What we're seeing is that the kind of tools we provide help you understand the options that are really going to make a difference. Where buyers traditionally might have passed on certain hard-to-visualize options, now because we visualize them and we reflect that choice at every point of the business – 2D drawings of the home, construction documents – they all actually show those choices. It creates confidence to move forward with more expensive high-margin options. And for builders to rethink their options programs because it's, it's a lot easier to promote a custom option to a real standard option. You can get rid of custom options altogether and still offer a lot of choice and get yourself a lot more efficient. So those are some of the things I think are more useful with our product in the long run."
Builders currently deploying Higharc's platform – including Fayetteville, Ark-based Buffington Homes and 55-plus franchise neighborhood builder Epcon Communities – have become evangelizers based on their experience with the capability.
Epcon vp of marketing Rob Krohn views Higharc as a customer experience value creator insofar as it bridges design, marketing, sales, and construction tools into an integrated, relational platform.
It's the embodiment of something I had been looking at for a while and really haven't seen anybody else doing it, because it's not just the marketing and sales assets. It's the construction team can work off the same single source of truth. That's why I was I've been so high on our investigation work with and adoption of Higharc."
Buffington Homes president Ted Brock concurs. He also fastens on to the critical notion of efficiencies of scale within the context of adapting plans and designs to meet his customers' ideas of their dream home.
Homebuilding is going more and more towards less choice and less personalization, as as a way to deliver production homes at a reasonable price," says Brock. "We want to go the other way. We want to offer more flexibility and moour confidence in being able to offer all the different choices and not having to say we can't do we either have to do one optionre personalization to our buyers, but still keep our production home mindset and our cost control and our item level take-off and detail for every option at the same time.
One of the hardest things in homebuilding purchasing is intersecting options and layering options, and kind of the exponential number of take-offs. When you start intersecting options like offering an optional cabinet and an optional second laundry room, that cabinet can come in one-to-five levels and you can have one-of-five levels of countertops. People want that second laundry room and you're adding five different cabinets with five different countertops, you'll end up with an exponential number of options, each one having to be taken off individually. This allows the system to do the takeoff. It'll do that for us based on the plan that that our sales consultants put together with the buyer selecting one of those options. Higharc will capture those options and give us the takeoffs. That raises our confidence in being able to offer all the different choices and not having to say we can't do what our customer's looking for."