One of my earliest customers used to sell homes for a “stick” builder. His interest in a modular home for his family was motivated by two things: faster construction time and better cost controls. However he wasn’t yet convinced that modular homes were better built. And he doubted they were less expensive, at least to start. But from his past experience, a stick home always took longer, which cost more money, and often created sizable cost overruns.
Turning Gray into Black for the Builder
I of course agreed with his points about speed and cost overruns, and asked him to tell me more. He surprised me with a brief anecdote that I’ve never forgotten and often shared with others.
“Let me tell you about my boss. About once a month we’d have a sales meeting and he’d almost always find an opportunity to tell us that our job was to turn gray into black for the company. He never tired of explaining that there were gray areas in his customers’ contracts. It was our job to turn these gray areas into black. The more gray areas the better, since change orders made him most of his money.”
Turning Gray into Red for the Customer
My customer added, “What my boss would never say aloud was what this magic meant for his customers. By turning his contracts’ gray ink into black ink for his bottom line, he busted his customers’ budgets with red ink. I’ll be damned if that’s going to happen to me. Since building a modular home forces you to specify everything in advance, there’s not much chance of being surprised by last minute change orders.”
Turning Gray into Black for the Modular General Contractor
My customer was definitely right about modular homes. (Here is how modular homes help you avoid costly, unbudgeted surprises.) However, as I explained to him, there’s plenty of opportunity for a modular general contractor to write his contract in gray ink for the foundation, site work, button-up work, and construction of site built structures.
Eliminating Gray for the Customer
The real issue is not the type of construction, it’s the type of documentation. Whether you build a stick, log, panelized, or modular home, the only way to avoid the damnable red ink is have your builder fully document the scope of work, specifications, and costs. He should do this by itemizing every detail, and he should specify which items are excluded and which are priced as allowances.