Building Boom

A hot market causes trade contractor problems for a Houston remodeler, but he saves the project and betters the company’s systems as a result.

September 30, 2000



Before and After: Expansive windows and glass doors open the house to backyard views. Roof lines and exterior finishes harmonize with the existing house to avoid the added-on look.


Stephen Hann, CGR, GMB, chalks up the Moody remodel in the winnerÆs column, though it was seared with problems that melted down his profits. Those problems make Nancy Moody sizzle even now, two years later.

Acting on lessons driven home in the Moody project, Stephen K. Hann Custom Builders overhauled numerous project management and production systems. Besides, adds Hann, the Moody remodel is a beautiful project, the clients are happy, and the job has spun off at least four major projects in the area.

But at the time the Moody project rolled in, HannÆs company -- along with the entire Houston home building and remodeling market -- was suffering from growing pains.

When Wright and Nancy Moody bought their midtown house in 1990, they were excited to gain a foothold in the prime Houston neighborhood with its top schools. The 1962 house was in pretty good shape and had a huge backyard pool. But the houseÆs deficiencies soon surfaced. For one thing, the house felt small. At 3,500 square feet, it was 1,300 square feet smaller than the MoodysÆ previous home. Like owners of similar Houston homes, the Moodys turned the formal living room into a dining area and converted the small dining room into a family room. The Moodys and their baby daughter basically lived in the tiny family room, which shrank in floor space as baby gear accumulated. When a second daughter was born, there was no doubt the Moodys needed a big, new family room. They also wanted a bigger master bathroom and began thinking about other improvements.


The sunny front porch connects to a formal entry, which features a slate floor and broad openings to the dining room and living room.


An architect sketched out a family room addition, but it looked like an add-on. The Moodys wanted a more integrated look. They began shopping for a bigger house to buy, scanning the city for years before concluding that the best solution was to expand the house they had.

By now their wish list had grown. Having designed several remodels in the area, Houston architect Alan Kent, AIBD, of Kent & Kent drew up an ambitious makeover they loved. It created two rear wings, revamped the floor plan and updated the kitchen and entry.

Plans in hand, the Moodys called contractors. Of the three remodelers who submitted estimates, only one -- Hann -- came at the suggestion of a real estate agent friend of the Moodys. "I told [the friend] that integrity and honesty were very important to me," says Nancy Moody. Without hesitation he recommended Hann. Though 85% to 90% of HannÆs work is design/build, Hann bid on the pre-designed job because he welcomed a project in the MoodysÆ elite neighborhood and because he values his working relationship with the real estate agent.



Basically a clipped 'L,' the original four-bedroom house with detached garage was claustrophobic. Architect Alan Kent designed two rear wings -- one housing an airy family room and pool bath, the other a spacious master suite -- that embrace the backyard swimming pool. The house gained 1,135 square feet.


HannÆs estimate exceeded the low bid by $14,000. To narrow the difference, Hann says he squeezed his margin tighter than he should have. "We wouldnÆt accept a job at that margin today," he says. The new estimate was still several thousand dollars higher than the low bid, but the Moodys chose Hann because they liked him and the quality of his work. They moved to a rental house a few blocks away, and the remodeling began in February 1998.

These days HannÆs company has a lead-carpenter system and staff carpenters to enable it to maintain close job supervision, consistent work quality and optimum efficiency. But at the time the Moody project kicked off, the company was using subcontractors for all phases of construction. Project managers orchestrated production on several jobs at a time.

Sometimes this worked; sometimes it didnÆt. From the get-go, the system foundered on the Moody project. One problem: "We were at the front end of a boom, and everybody was just buried with work," says Hann. Scheduling the best trade contractors was hard enough; keeping them on the job was even harder. Another problem: HannÆs project managers were spread thin, juggling multiple jobs and struggling to keep tabs on every project detail.


When the Moodys first moved into the house, they converted the dining room into a makeshift family room and used the living room as a dining area. The remodeled home includes a formal dining room.


Nancy MoodyÆs hackles rose early on when she came by and saw the slab being poured without the indent for a walkway. The project manager had the slab fixed, but then the framers put a door opening in the wrong place, says Moody. The trim carpenter messed up, too. To Moody it seemed that every time there was a new sub she found something wrong. Late arrivals and early departures by subs irritated the Moodys even more. When nobody was working on site, the Moodys worried that the project was stalled. When the project manager was not there, it seemed as if the job were not being supervised. "We now do a much better job of setting expectations on the front end of a job," says Hann. Clients are assured that work is progressing even on days when it looks like nothing is happening.

As for the labor problems, Hann pleads guilty -- up to a point.



  • About the project manager: If he could have been there to hear the MoodysÆ concerns every time, "it would have helped," Hann says.



  • The framing carpenter? "We had a track record" with him but discovered that he was spread too thin, says Hann. The carpenterÆs work hours slipped, and he in turn subbed out the cornice work -- with poor results. "We reacted within the week," says Hann, redoing the cornice and completing the framing properly.


    Completely remodeled with angled, granite-top island, custom cabinets and tile floor, the kitchen opens to the breakfast room, family room and backyard views.



  • The trim carpenter? Like the framer, he "was working for several builders and remodelers at once." Hann gave him 48 hours to complete the trim work or bow out; Hann ended up using other crews for the work. But the damage to client confidence had been done.

    At weekly meetings, the company updated the Moodys on job progress and discussed change orders. Often, though, the clients came away frustrated that problems were not faced head-on and that they suddenly had new, last-minute product selections to make. Hann learned a lesson here, too. Weekly meetings now capitalize on the opportunity to keep clients informed about whatÆs going on, what will be done next, what decisions are on the horizon and how problems are being handled.

    Several scorch marks were on the estimating side of the Moody job, too. One of the biggest involved the water heaters. In almost all Houston houses, the water pipes run through the attic. ThatÆs why HannÆs company was surprised to discover pipes in the slab during kitchen demolition at the Moody house. Hann and the Moodys split the $4,000 cost of two gas water heaters and a new circulating system -- and HannÆs estimator no longer assumes where the water lines are.


    The Moodys required a larger family room. The new room, which is adjacent to the kitchen and breakfast areas, is the hub of the home.


    Another estimating flare-up concerned the flooring. Nancy Moody recalls being concerned about the low allowance for hardwood floors in the estimate and the contract. She knew exactly what she wanted -- 5-inch planks from a particular manufacturer -- and she knew the price was not low. When it came time to order the flooring, HannÆs company had trouble procuring what Moody wanted. "I ended up settling for something else" and paying more than the allowance, Moody says. "IÆm happy with what I ended up with" -- pre-finished wood flooring with tile inlays -- but not happy with the process and the extra expense, she says. The problems selecting wood and tile flooring hurt Hann, too, delaying production at least a week and costing extra money for slab preparation. "WeÆve created an eight-page, sales-to-production tracking form" since the Moody job, says Hann. "It tells us to ask about flooring at the foundation stage."

    The tile flooring allowance ran $4,410 short. "We got half of that back," says Hann, but not all of it because he didnÆt write it up as a change order or require an upfront payment in time. Hann now requires project managers to get "change orders signed and paid for before we do the work."


    The master suite encompasses a large, angular bedroom, a walk-in closet that once was a bedroom, and an angled bathroom with wraparound tile, vaulted ceiling and windows that soar to the ceiling peak.


    And Hann was hurt on project details that were missing or not quite right on the architectÆs plans. As Moody puts it, Kent is a wonderful designer who is "not one to give a lot of details." HannÆs estimator priced the job from a demolition plan, which focused on the additions and major changes but did not show other work. "We ended up doing something in every room of the house, even if we just painted," says Hann. That, plus the fact that the roof pitch of the additions needed adjustment, burned HannÆs profit margin.

    Still, Hann is philosophical about the Moody job. The clients love their house and often recommend Hann to friends around town. The project won awards, although the business side wouldnÆt have. Stephen K. Hann Custom Builders emerged from this trial by fire with systems that have since proved practically fireproof.


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