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The views expressed in these articles are solely those of the author and do not reflect the views of EEBA staff, officers, or board members. EEBA welcomes guest articles from qualified authors, and we offer these articles as a service to the high-performance housing industry as a way to encourage discussion and collaboration between industry professionals on relevant issues.

Posts From November, 2018

How QA Earns More Than It Costs

The numbers are in. Quality Assurance really does reduce liability costs for high-performance builders.
How QA Earns More Than It Costs

It's no surprise that builders with formal Quality Assurance programs report fewer warranty claims. For instance, Professional Builder magazine interviewed builders, National Housing Quality Awards judges and QA consultants around the U.S. for an August 2017 article and found that while most builders lack such programs, those who put who them in place get a quick return on their investment. One builder interviewed for the article reported a 70 percent reduction after just a couple of years.

But while quality gains are the obvious purposes of such programs, they can offer the added benefit of lowering insurance rates.

That's according to Nathan Kahre, High Performance and Healthy Home Manager at Thrive, a 250 home-per-year Denver builder. At a seminar he taught during EEBA's annual Summit in October, he said that within two years of launching its QA program, the company was rewarded with a hefty reduction in liability premiums—more than enough to pay for the program.

"After creating the QA department, we brought it to our insurance agent," he says. "They shopped it to several providers and came back with a great deal."

Thrive was given two choices: $5 million in liability coverage for slightly less than they were paying for their current $4 million policy, or the same $4 million in coverage for 44 percent less. They took the former. In addition, Thrive had been paying a yearly premium for the seven-year tail needed to cover Colorado's eight-year implied warranty. Because of the QA program, the insurer gave them the option of buying the entire tail upfront for 8 percent less.

In all, the company saved around $150,000 in insurance premiums. Kahre also credits the QA program for reducing variance costs by $1,000 per home—another $150,000 in annual savings—and for slashing cycle time by 27 days.

Other builders have gotten similar results. Glenn Cottrell, Managing Director of IBACOS, a Pittsburgh-based consulting firm that helps production builders create and implement QA programs, co-taught the seminar with Kahre. He told the audience that one of his clients had reduced its warranty accruals by 12 percent over a five-year period, a total of about $5 million in savings. Another had seen a 25 percent increase in its customers' willingness to refer. Those numbers are typical.

While these savings are certainly impressive, insurance wasn't the main motivation for Thrive's program. Construction defect litigation had been increasing statewide, and they knew that having a documented process for eliminating defects and improving quality would reduce the chance of being targeted by opportunistic lawyers. "By lowering warranty claims, we stay off of their radar," he said.

The fact that the company collects and saves data on each individual home also makes it harder for lawyers to aggregate units, a process in which defects in a sample of homes are assumed to be present in all units. In effect, the data collected by the QA department has made the company a harder and less appealing target.

Kahre and Cottrell both stressed that while a formal QA program can benefit any builder, it's critical for those building high-performance homes.

The big issue is water management. Today's highly engineered homes have less of what's called Hygric Buffer Capacity, or the ability of building materials to suck up moisture then release it. In older homes, wood, stone, brick and plaster absorbed lots of water, and the airflow through their leaky wall cavities helped that moisture dry out before it caused problems. Older homes may have been energy pigs, but as building scientist Joe Lstiburek puts it, "they were durable pigs."

By contrast, newer homes use lightweight materials that absorb less moisture, and they place those materials in a highly insulated, airtight shell. Even a small leak can cause big problems over time.

It should be a no-brainer that builders of these homes need a process for ensuring the works gets done right. The good news is that with a formal QA program, a knowledgeable high-performance builder can craft new homes that are just as durable as those older ones.

So how do you go about getting these benefits? According to Kahre, it took about a year from the time the company decided to launch its QA program until it was fully implemented, then another year before they had collected enough data to make useful analysis possible. The analysis part is important because an effective QA program is proactive: it includes an inspection to catch and correct errors, but the real goal is to eliminate those errors going forward.

The details of an effective program are too much to go into here. However, the August 2017 Professional Builder article cited above—Best Practices for Quality Assurance—is a good introduction to the subject.

 

EEBA Summit Showcased Building's Best

The organization's annual meeting introduced the winners of three prestigious industry awards

The mission of the Energy and Environmental Building Alliance (EEBA) is to help industry pros design, build and sell well-crafted high-performance homes. Since great examples are great teachers, EEBA is always honored to showcase the best work of high- performance builders and designers.

For the first time ever, this year's annual Summit, held in October in San Diego, hosted three prestigious awards programs. The U.S. Department of Energy's Housing Innovation Awards and the Environmental Protection Agency's Indoor airPLUS Leader Awards recognized accomplishments of industry leaders. The Department of Energy's annual “Race to Zero” competition showcased the best designs created by student design teams from around the U.S.

 

DOE Housing Innovation Awards

The Department of Energy's Housing Innovation Awards honors forward-thinking builders who take innovative approaches to zero energy ready homes. This year's awards paid tribute to “Grand Winners for Innovation” in six categories.

Affordable Homes

For Profit: Thrive Home Builders, Denver Colo.

Nonprofit: Kalamazoo Valley Habitat for Humanity, Kalamazoo, Mich.

Custom Homes (for Buyers)

High Performance Homes, Gettysburg, Penn.

Custom Homes (Spec)

Dwell Development, Seattle, Wash.

Dwell Development in Seattle won the top Housing Innovation Award in the Spec home category for a 3-story, 3700 square foot net zero energy home on Lake Washington. The company builds one-of-a-kind net-zero homes designed and detailed to compete with code-built homes.

Dwell Development in Seattle won the top Housing Innovation Award in the Spec home category for a 3-story, 3700 square foot net-zero energy home on Lake Washington. The company builds one-of-a-kind net-zero homes designed and detailed to compete with code-built homes.

Multifamily Homes

Revive Properties and Philgreen Construction, Fort Collins, Colo.

Production Homes

Thrive Home Builders

Most Homes Certified

Thrive Home Builders

For more information on the Housing Innovation Award winners please go to https://www.energy.gov/eere/buildings/housing-innovation-awards

 

Indoor airPLUS

The U.S. Environmental Protection Agency's Indoor airPLUS Leader Awards recognize builders who lead their markets in creating safer, healthier, and more comfortable indoor environments for their homebuyers.

This year's awards recognized eight organizations with Indoor airPLUS Leader Awards, including two Leaders of the Year, cited for their ongoing commitment to building healthier homes.

2018 Leaders of the Year

Home Energy Rater:  Energy Inspectors Corporation, Las Vegas, Nev.

Home Builder:  Fulton Homes, Tempe, Ariz.

Phoenix-area Fulton Homes built 650 Indoor airPLUS labeled homes in 2017, earning it the Leader of the Year award. The company has made the Indoor airPLUS label a major part of its marketing message.

Affordable Builder Winner

Thrive Home Builders, Denver, Colo.

Small Builder Winners

C&B Custom Homes, Cottonwood, Ariz.

Charis Homes, North Canton, Ohio

Large Builder Winners

Fulton Homes, Thrive Home Builders, and Mandalay Homes (Prescott, AZ)

Rater Winners

Energy Inspectors Corporation, E3 Energy, LLC, Flagstaff, Ariz.

Steven Winter Associates, Inc., Norwalk, Conn.

For more information on the Indoor airPLUS Awards winners please go to https://www.epa.gov/indoorairplus/indoor-airplus-leader-award-winners

The value of these award programs is that they show builders and design professionals how to craft healthy, zero-energy homes while making a profit. “I found it enlightening and inspiring to learn about the amazing homes being offered by EEBA builders at market rates," said Brett C. Singer, Staff Scientist and leader of the Indoor Environment Group at Lawrence Berkeley National Laboratory. "They are demonstrating not only that high performance homes are possible, but also that they can be built at competitive prices."

 

The Race to Zero

Another highlight of this year’s Summit were presentations by seven winning teams that participated in the 2018 U.S Department of Energy “Race to Zero” Student Design Competition. The program's goal is to inspire students to become the next generation of building science professionals through a design challenge for zero energy ready buildings.

On the Summit’s final day, EEBA staged a special session where “Race to Zero” students delivered brief, but compelling overviews of their winning projects. The winners were as follows.

Grand Winner, Urban Single-Family Housing

Prairie View A&M University

A team from Prairie View A&M University in Texas was Grand Winner in the Race to Zero Student Design Completion for its "FlyFlat" urban single-family home design. A full project profile is on the Race to Zero Website.

Suburban Single-Family Housing

1st Place: The Pennsylvania State University

2nd Place (2 winners): University of Missouri-Columbia and Ball State University

Attached Housing

1st Place: University of Waterloo

2nd Place: Miami University

Small Multifamily Housing

1st Place: Miami University

2nd Place: Illinois Institute of Technology

Elementary Schools

1st Place: Middlebury College

2nd Place: Virginia Polytechnic Institute and State University

For more information on the Race to Zero Awards, including a description of this year's winning projects, please go to https://www.energy.gov/eere/buildings/2018-results

 

Next Year's EEBA Summit will be from October 1-3 at the Embassy Suites in Downtown Denver, Colo. Registration will open in January. For more information, visit http://summit.eeba.org. Visitors to the site can also subscribe to EEBA’s newsletter and blog.