Collective’s Construction Supply-Chain Part 2: Humble Beginnings, Big Plans

Isaac Lidsky
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The homes built on Collective benefit from a wealth of world-class homebuilding experience. I wrote about what makes our supply chain uniquely excellent – and a key asset for Collective investors like you –  in Part 1. I’ll now share a bit more about the history behind that supply-chain—the history of the companies I co-Founded twelve years ago.

In June 2011, my Harvard roommate Zac Merriman and I purchased a small, struggling residential construction contractor in Orlando called ODC Construction. We had studied the residential construction industry, and we were astounded by the lack of coordination across the many contributors to a project, by the rampant  waste and delay that ensued, and by the utter lack of regard for the smallest and least powerful players in the process, the subcontractors who provide the actual labor to do the difficult work demanded in the field. We conceived a new kind of contractor, one that would create and leverage new coordination logistics technology to optimize efficiency, beginning from the “bottom”—the workers in the field—and incorporating everyone all the way up to the “top,” the ultimate homebuilder.

The technology we built was a game changer. A suite of Enterprise Resource Management (ERM) tools, ODC’s proprietary software platform ensures that everyone on a job is on the same page. From our team to our customers to our subcontractors and vendors, everyone knows the exact status of the job and what needs to be done when and by whom. And everyone has the opportunity to comment, raise issues, or catalog shortcomings where we—up and down the supply chain—could have done better.

Our “everyone does well together” philosophy—as reflected in our organizational structure, procedures and processes—was just as critical to our success. We put the “little guy,” the growing number of small subcontractors upon which we relied to perform work in the field, first, optimizing efficiency and profitability for these most critical constituents of the industry. We did so because it was the right thing to do, and because the advantages in construction times, efficiency, and profitability would flow upstream, we knew.

We made sure not to send subcontractors to job sites that weren’t ready for them. When scheduling work on multiple  sites in a day, we made sure those sites were close to each other. We gave our subcontractors as much notice as possible for upcoming work, and as much detail as possible (including “pesky,” time-wasting things like gate codes, parking requirements within a community, etc.)—all accessible from their smartphones. We paid them weekly and extended cheap growth capital to the best of them. In short, we treated them well, as our equals.

The result was a virtuous cycle: Everyone did, in fact, do better together, from our subcontractors to our customers. Better in build times, better in profitability, better in professionalism. As a result, we earned the loyalty of a now massive construction workforce. Our subcontractors don’t hijack us for more money when the labor market heats up, and they don’t leave us for other contractors who will temporarily pay a bit more. They won’t do it because it’s the wrong thing to do, and it would be a terrible business move for them. Ditto our vendors, customers and partners.

Bigger Plans

ODC Construction began as a subcontractor that built the foundations of new homes for its homebuilder customers. With our success reinventing the business as a construction logistics management company, we took on additional scopes of work, ultimately becoming an end-to-end “shell” contractor. Shell, as in the structural envelope of new homes; ODC builds for its homebuilder customers the foundations, walls and roofs of their new homes. It handles everything that’s structural, leaving things like plumbing and painting for other contractors. Critically, ODC “self-performs” this work; it is the contractor of record and responsible for actually performing the construction in the field (though it relies on subcontractors).

About five years ago, we decided to go even bigger. We created Commence Logistics to offer homebuilder customers end-to-end management of the entire construction process—from designing architectural plans and obtaining construction permits all the way through the construction process to the “Certificate of Occupancy,” the municipality’s declaration that the home has been fully completed according to plan and can safely be occupied. Commence Logistics is essentially an outsourced General Contractor for homebuilders. It leverages the same tools, technologies and workflow processes honed by ODC, working closely together to complete each build. And it honors the same “everyone does better together” philosophy, providing homebuilder customers a transparent accounting of all construction costs, as one example among many. Naturally, as far as the “shells'' of Commence Logistics homes are concerned, ODC Construction is the sole contractor employed.     

We’re glad to present Collective investors access to this impressive supply-chain—with its many synergies—through the Collective projects we’ve currently listed for investment. Join us today!