In 1998, a homebuilder in Atlanta grew from 300 homes to over 1500 homes a year over a two-year period.
They had a severe subcontractor shortage…
This Atlanta homebuilder quickly came up with an idea, what if we used daily task payment with the subcontractors as a competitive advantage?
So, he went to the subcontractors who were working for other homebuilders and asked, "I won't ask you to quit the homebuilders you are currently working for, but if you come work on our projects first, I will pay you as often as five days a week, pay you within 24 hours of completing a task, and deposit the money directly into your company checking account."
Well, needless to say, his contractor problem went completely away. He now had the subcontractor capacity he so desperately needed, and had these subcontractors showing up on his project at the earliest possible time to complete their task.
Construction cycle times shorten significantly when subcontractors show up as soon as their task is ready. Why? the sooner they start the sooner they get paid.
Even quality improves. This Atlanta homebuilder also had better quality work because the subcontractor would send their very best crews. Why? The subcontractor didn't want to have any issues exist with the completed task that might prevent payment the next day.
When this Atlanta homebuilder started daily task payments, he became a hero to his subcontractors.
And this Atlanta homebuilder would often be asked, “Why don’t the other homebuilders pay us like this?”
And he would respond...
"Unless they have the infrastructure of predefined purchase orders, daily scheduling and daily payment approval, the other homebuilders can’t pay you like this.”
You too can be a hero to your subcontractors! As well as having the subcontractor capacity you need for your projects, along with the subs showing up as the earliest opportune time, thus shortening your project cycle times.