30 Aug 2012
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How to Find the Lowest Total Cost Lumberyard

Most of us have been tempted (particularly these last few years) to leap at promises of low, low prices - from energy providers to car insurance and everything in-between. So how do you know if you are getting a good deal when it comes to lumber and building materials?  Isn’t it just all the same ole’ commodity stuff?  Well . . . not exactly! Initial bid price is certainly important, but it is just one of many factors to consider in choosing and maintaining supplier relationships.  According to Scott Sedam, an expert in the adoption of Lean Operating principles into the home building industry, we must “operate by defining and measuring lowest total cost of operations.  Using bid price alone is fiscally and operationally irresponsible. . . . Builders who purchase labor and material on bid price alone are guaranteed only that they will never operate by lowest total cost.”

To wisely compare lumberyards, you really need to know 3 basic things that impact your Total Job Cost:

1.     Lumber Quality - How much of their delivered lumber will be usable for the desired quality of home – waste factors vary based on wood species (SPF/Doug Fir/SYP), lumber grade, and mill quality standards.  Cheaper piece price may not help if you must order and cull through more of them to get a straight wall. You pay for what goes in the dumpster twice – when delivered and when hauled to the landfill.

2.    Per Piece Prices - What is the current price of one 2x4 16’ #2&Btr. SPF, one 4’x8’ sheet of 7/16” OSB and one each of other commonly used items compared to the other lumberyard – it must be the same species, grade and quality of mill to be a fair comparison.  This allows you to get an apples-to-apples price comparison, when estimate totals at the bottom of the page do not!  Takeoffs and estimate totals can be manipulated, but direct piece prices of specified comparable lumber items cannot.

3.     Service - Are they going to help me with on-time deliveries, billing accuracy, overall good service and advice (adding value), or will they hurt me with delays, mistakes, safety issues and broken promises (adding costs)? 
A wise builder looks beyond those “low-ball” initial estimates to the long-term Total Cost of their suppliers.  “The bitterness of poor quality lingers long after the sweet taste of initial low prices goes away.”

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