How Systems-Built Construction Protects Grant Financing

One of the most basic advantages of systems-built construction versus stick built, of course, is the way it cuts time on the jobsite. It almost goes without saying that this has tremendous impact on virtually any project; if you can reduce the costs incurred by extra days on the site, the likelihood that a project will be profitable goes way up. It’s an essential element in the value of modular construction.

But there are jobs for which the advantages of systems-built construction are even more pronounced. Sometimes performance-based standards require that rigorous timely milestones be met. And systems-built construction – especially as delivered by Deluxe – can have a direct, positive effect on the funding of any such project.

Here’s an example. At the North End Gateway housing project in Hartford, Conn., a venture in which Deluxe took part, fast and predictable construction was central to the project’s success. Our bonded performance on timeliness was required to maintain the $12.5 million project’s funding at full levels.

The developer, Carabetta Brothers of Meriden, Conn., contracted for North End Gateway (NEG) as a low-income housing tax credit (LIHTC) development of 57 units, of which 45 offer reduced rents subsidy and 12 are market-rate rentals.

It’s an exceptionally attractive apartment complex, four stories high and including a number of features and amenities that might not be associated with other low-income housing. Tenants can choose from two-, three-, and four-bedroom units. Two elevators and a 16-camera security system with controlled visitor access serve the complex. The larger apartments feature two full baths. All units include washer/dryer hookups; gas and electric service is individually metered. There’s covered parking for about half of the residents. North End Gateway’s design is handsome, and it’s convenient to downtown - less than a mile away. For the available apartments, hundreds of applications have already been received.

Though it’s a private project, NEG relied heavily on grant funding from state and federal tax credits (Carabetta was chosen for the project by the Connecticut Housing Finance Administration and the state Department of Economic and Community Development.)

That heavy reliance on grant money helps explain why timeliness was so important. Among the terms of the grants were requirements to adhere to a rigorous construction schedule. There was a lot at stake here. If these performance standards were not met, part of the grant funding would be lost. As we know, timely construction is vital on any apartment project. For obvious reasons, the grant elements of the job made it even more crucial this time around.

Carabetta’s selection of Deluxe reflected their recognition that we could do what was needed, both in terms of engineering prowess and manufacturing capabilities.

Before anything could move forward, Deluxe had to provide a $5.5 million performance and payment bond. We entered into a contract to build the project last December, and got production cranked up in late April 2008. Placement of the boxes started in mid-July; they were all set by September. “Substantial completion” criteria for the project were satisfied by early October, and occupancy will begin in December, within weeks of this writing.

Deluxe nailed every target under the grants’ timeliness requirements. Completion was achieved on schedule and the project’s grant funding was fully maintained.

To manage this would have been a challenge with even a very basic structure, but the NEG project involved details that were out of the ordinary for a modular installation. For instance, half of the building is on an elevated structural frame that creates the parking space. This imposed extra design and engineering demands that could not have been met on time without Deluxe’s exceptional engineering and manufacturing capabilities.

The essential reality here is that systems-built construction saves jobsite time. On any job, that can mean enhanced profitability. At North End Gateway, this advantage was doubly important. With the full value of supporting grants at stake, rapid construction became absolutely critical – and Deluxe delivered what the client needed right on time.

Building in Quality from the Start

If there’s one thing quality assurance managers know, it’s that trying to inspect in quality is doing it the hard way, and all too often, the ineffective way. That’s not to say inspections aren’t important; they are. Regular, carefully conducted inspection programs carried out to correct standards are an important part of any QA program.

What doesn’t work is trying to start with inspections – and unfortunately, there was a time when many manufacturers across the industrial spectrum tried to do it that way. It’s much more effective – and also a lot more cost-effective – to plan and execute a quality program that identifies and avoids quality problems before they get built into the product and the process.

One way we manage this at Deluxe is by acquiring real-world installation feedback. We have a standing arrangement with our site-services affiliate, Deluxe Construction Services (DCS). They gather detailed information at the installation site and transmit it to quality assurance, engineering, and manufacturing managers back at the plant. Careful analysis of this data provides important opportunities for continual process and product improvements.

The more essential quality goal, continuous improvement at every level from the beginning of the design process to the end of installation, involves everyone in the company. Supervisors are quality coaches, group leaders are quality captains, and every employee is responsible for quality performance. Of course, a cadre of dedicated quality assurance inspectors is critically important, too.

Part of our quality work on any project is a regular series of intensive quality-focused meetings. Right from the start of any job, high-intensity planning spotlights what is unique about the project and reveals the quality challenges we’re likely to encounter. Many companies are just dusting off a set of standard specs at this point. Not DBS: we produce customized, detailed documentation submittals that show what will happen at every step of the project. Our customers are involved right away, reviewing this work and discussing it with us before we get the production go-ahead. And the results reflect a bottom-up quality strength.

In recent years, we’ve learned to harness information technology to improve quality on the shop floor. Think about this - our manufacturing line is a quarter-mile-long, and the manufacture of a single building involves thousands upon thousands of individual construction actions. It’s easy to see that good information contributes critically to good quality. Today, the line incorporates 18 “cap” stations, where manufacturing employees can track the quality/inspection history of the project and see what’s next in terms of quality requirements. Drawings are accessible electronically in real time whenever needed. Our engineers, line workers, and inspectors always have immediate access to the most current version of every drawing. The positive consequences of that reliable information speak for themselves.

We also make sure to exchange information that influences quality at regular weekly meetings. These start at the opening of the project and go on to the end. Everyone involved in the project is involved in the meetings - transportation, purchasing, sales, service, manufacturing, and of course, QA. Many problems are nipped in the bud or prevented altogether.

Of course, there’s a lot about systems-built construction that’s inherently better from a quality point of view than stick-built. Here’s a study in contrast that’s worth thinking about. If you choose systems-built construction for a wood-framed job, the framing is out of the weather for the whole construction period. In our factory, it’s kept at 20 percent moisture the whole time, and it’s under roof as soon as it gets to the site. It’s protected.

On the other hand, if it’s lying exposed on a job site, it may fall prey to warping, rot, mildew, and insect infestation. This is just one example of many I could cite. All too often, the quality of stick-built projects is measurably degraded even before they’re completed.

Customers who go with systems-built construction get the benefit of coordinated work across all phases of the job. Quality performance is enhanced accordingly. The stick-built alternative involves a group of subcontractors who operate to their own timetables and standards, too often at cross purposes. No wonder quality can suffer.

From start to finish, it’s clear that building in quality is the preferred method to “inspecting it in” – and our results bear that out. Feedback from our customers proves that costs go down and satisfaction goes up when the work of inspectors is essentially to confirm that quality standards are being met – not to fix problems when they’ve already gummed up the process.