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Navigating the New Normal
How to thrive in residential construction

By Jenny Pon

New building codes, green energy codes, mortgage rules, drywall tariffs, changing consumer demographics, technological advancements, and an uncertain trade relationship with the south—clearly, the Canadian residential construction industry is not what it used to be.
To brainstorm solutions to these changes, industry members gathered in Edmonton this February for the annual Grant Thornton Residential Construction Roundtable Dinner. Here are some strategies that emerged that will help you adapt to the new “normal.”

Joining forces
As governments at all levels begin introducing new regulations to help rein in frenzied buyers, tensions in the residential construction industry are rising. However, there is danger in harbouring an adversarial relationship with local, provincial and federal governments. Instead, it is incumbent on the industry to identify common goals, such as the desire to build great cities, and to then take the necessary steps to help governments execute them.
This relationship starts with boosting the reputation of the residential construction industry. Local governments have not always seen home builders and land developers as ideal partners. To rectify this, it is time for builders and developers to form a united front by only hiring tradespeople and suppliers who have the highest work ethics.
Similarly, the industry—along with consumers—should reach out to governments and speak up when it is noted that regulations are not working. Associations, advocacy groups and individuals alike should seek to educate elected officials about how government regulations are impacting local businesses and constituents, and then make sound suggestions to help the government determine alternate courses of action.

Forward thinking
In addition to changing the reputation of the industry, organizations must adopt innovative practices if they hope to adapt to a shifting marketplace. Part of this involves identifying how consumer needs are evolving, and then taking steps to meet those needs.
For example, due to the rapid rise of housing prices, many millennials view homeownership as a pipe dream and are opting for more urban dwellings instead of suburban mansions. Even retirees are vying for more walkable, urban neighbourhoods. Immigrant buyers, who will likely fuel future residential growth, are looking for homes at more affordable price tags.
Builders should pay attention to these changing demands and consider altering their work practices accordingly. In many cases, this means finding ways to operate more efficiently so they can pass savings on to buyers. They can do this by paying trades a flat rather than an hourly rate, or implementing more efficient building processes.
Habitat for Humanity in Edmonton took this to heart by investing in a 60,000-square foot prefabrication shop. By prefabricating walls, decks and stairs, the not-for-profit organization can not only build homes quicker—and safer—but they can also build 365 days a year with zero percent waste. Given that it can now take over 10 months to build a home that used to be built in 60 to 90 days, prefabrication, according to one roundtable member, could be a significant game changer for home builders to reduce the time to completion.

Power in people
With countless factors being out of your control, it is helpful to remember two things you can still manage: your people and your processes. Now is the ideal time to invest in your team and reset your methods to ensure they are aligned with today’s changing residential construction environment.
To strengthen your team, take measures to keep your good employees by benchmarking your compensation packages against industry averages, or offering perks such as more vacation time or better benefits. When hiring tradespeople, remember that if you hire the company with the lowest bid—or if you squeeze on your price—you will often get what you paid for. Consider paying a bit more for experienced tradespeople that really know what they’re doing.
Given the extent of the skilled trades shortage across the country, however, it may be difficult to find tradespeople with the ideal level of experience. In these cases, consider tweaking your processes by taking time to provide more detailed specs and offering more extensive instruction or training to ensure the work is done properly.
Ultimately, by taking a team approach, sharing your vision, and working only with those that share your passion and vision, you can set yourself apart in the marketplace.

Moving forward
With heightened costs and increased regulations, the residential construction industry is certainly facing challenging times. To really succeed in this new normal, businesses across the sector must work together to increase accountability, devise a strong support system, and find new ways to meet the needs of home buyers—both today and into the future.


Jenny Pon is a principal with Grant Thornton in Edmonton. She works with privately held businesses in the residential construction sector.
Jenny can be reached at Jenny.Pon@ca.gt.com or by phone at 780-401-8214.


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