6
Discussion of PATH Goal I—Remove Barriers and Facilitate Technology Development and Adoption

PANEL MEMBERS’ OPENING COMMENTS

MR. SPEAR: By way of introduction, my name is John Spear; I am a Houston-based housing architect, real estate investor, and broker. I am a member of the American Institute of Architects (AIA) and participated in the 2002 Assessment and in the group that planned today’s workshop. For this panel we are pleased to be joined by David Hattis, who is an architect and president of Building Technology, Inc. Mr. Hattis was responsible for the April 2005 PATH report entitled Overcoming Barriers to Innovation in the Home Building Industry. We are also joined by David Conover, who is senior advisor for the International Code Council. Our nation’s building codes and regulations are generally perceived, not necessarily correctly, as a major barrier to housing innovation. Our third panelist is Bulent Kastarlak, who is a seasoned housing architect from Palm Beach, Florida. He is representing the American Institute of Architects national housing committee. Mr. Kastarlak will comment on identifying and removing barriers from an architect’s perspective and on how AIA can work with PATH’s other partners to pursue this goal.

Before we proceed, I would like to make my own brief comments on the draft strategy, program plan, and metrics that are before us today. I think the draft demonstrates that PATH’s staff did indeed listen to and understand NRC’s 2002 assessment recommendations. Although the draft has some inconsistencies, the goals are accurately communicated and many of the proposed activities and measures should be effective if there is enough money to fund them.

I continue to wonder how PATH can achieve its mission in light of its severe budgetary constraints and the continuing uncertainty about its very existence. For those who may not be aware of the history, the current administration has been zeroing it out of the administration’s proposed budgets every year since 2001. Congress has taken the initiative to reinstate it each year, but at steadily decreasing funding levels. As we have learned this morning, PATH’s budget is now $5 million.

The PATH budget is set forth in some detail in the last part of the operations and management section of the draft. Suffice it to say that the barriers goal activities are only a small part of the PATH budget. For FY 2005 it is $330,000, which is less than one-third of the ToolBase budget alone. Nonetheless, as suggested in the 2002 NRC assessment report these activities are an important part of the program.

Especially in the context of these funding uncertainties, it appears to me that the draft strategy and operating plan fail to convey a sense of priority among PATH’s goals and related activities. I would prefer to see a clear statement of the relative importance of the proposed activities. Prioritization is particularly important because it appears that PATH is trying to do a wide variety of things that may or may not be possible given budgetary constraints.

On a more reassuring note, we should keep in mind that the four and one half to six full time equivalent (FTE) staff that HUD assigns to PATH activities are not funded out of the PATH appropriations because they are funded from HUD’s general funds. So there is somewhat more to the program than just the $5 million appropriated for program activities.

To help start our discussion, I would like to read brief parts of the draft PATH strategy. The inclusion of “barriers” as an inherent component of technological change is critical to PATH’s new



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 23
Proceedings of a Workshop to Review PATH Strategy, Operating Plan, and Performance Measures 6 Discussion of PATH Goal I—Remove Barriers and Facilitate Technology Development and Adoption PANEL MEMBERS’ OPENING COMMENTS MR. SPEAR: By way of introduction, my name is John Spear; I am a Houston-based housing architect, real estate investor, and broker. I am a member of the American Institute of Architects (AIA) and participated in the 2002 Assessment and in the group that planned today’s workshop. For this panel we are pleased to be joined by David Hattis, who is an architect and president of Building Technology, Inc. Mr. Hattis was responsible for the April 2005 PATH report entitled Overcoming Barriers to Innovation in the Home Building Industry. We are also joined by David Conover, who is senior advisor for the International Code Council. Our nation’s building codes and regulations are generally perceived, not necessarily correctly, as a major barrier to housing innovation. Our third panelist is Bulent Kastarlak, who is a seasoned housing architect from Palm Beach, Florida. He is representing the American Institute of Architects national housing committee. Mr. Kastarlak will comment on identifying and removing barriers from an architect’s perspective and on how AIA can work with PATH’s other partners to pursue this goal. Before we proceed, I would like to make my own brief comments on the draft strategy, program plan, and metrics that are before us today. I think the draft demonstrates that PATH’s staff did indeed listen to and understand NRC’s 2002 assessment recommendations. Although the draft has some inconsistencies, the goals are accurately communicated and many of the proposed activities and measures should be effective if there is enough money to fund them. I continue to wonder how PATH can achieve its mission in light of its severe budgetary constraints and the continuing uncertainty about its very existence. For those who may not be aware of the history, the current administration has been zeroing it out of the administration’s proposed budgets every year since 2001. Congress has taken the initiative to reinstate it each year, but at steadily decreasing funding levels. As we have learned this morning, PATH’s budget is now $5 million. The PATH budget is set forth in some detail in the last part of the operations and management section of the draft. Suffice it to say that the barriers goal activities are only a small part of the PATH budget. For FY 2005 it is $330,000, which is less than one-third of the ToolBase budget alone. Nonetheless, as suggested in the 2002 NRC assessment report these activities are an important part of the program. Especially in the context of these funding uncertainties, it appears to me that the draft strategy and operating plan fail to convey a sense of priority among PATH’s goals and related activities. I would prefer to see a clear statement of the relative importance of the proposed activities. Prioritization is particularly important because it appears that PATH is trying to do a wide variety of things that may or may not be possible given budgetary constraints. On a more reassuring note, we should keep in mind that the four and one half to six full time equivalent (FTE) staff that HUD assigns to PATH activities are not funded out of the PATH appropriations because they are funded from HUD’s general funds. So there is somewhat more to the program than just the $5 million appropriated for program activities. To help start our discussion, I would like to read brief parts of the draft PATH strategy. The inclusion of “barriers” as an inherent component of technological change is critical to PATH’s new

OCR for page 23
Proceedings of a Workshop to Review PATH Strategy, Operating Plan, and Performance Measures strategy and goals because it directly confronts the real and the perceived reasons for the lack of housing technology innovation. In previous studies, scholars and industry analysts described the “barriers” both as having ambiguous sources and as being incredibly insurmountable. In either case, no real causality was proven and no policy enacted. This acceptance of the industry’s market and production realities is a major shift toward full analysis and pragmatic “barrier” reduction. The NRC report Promoting Innovation: 2002 Assessment of the Partnership for Advancing Technology in Housing (2003) makes repeated reference to barriers to innovation and removal of barriers to innovation; in fact, it suggests that PATH be charged with removing barriers and facilitating technology development and adoption. After listing the barriers the draft 2005 PATH report goes on to disqualify most of the commonly identified barriers, such as the cyclical nature of construction, the dominance of small firms, the lack of integration of the industry, heavy reliance on subcontractors, and diverse building codes, as having no empirical support or being beyond evaluation. The draft strategy identifies seven barriers that “… are such a part of the homebuilding industry that their resolution involves strategic planning of what can be done in the short-term with regard to circumventing their influence on the innovation process, and what can be done in the long-term to reduce or eliminate them.” The barriers of this magnitude that were identified include: Building codes that prohibit innovation. Risk and liability involved in developing or adopting new technology. Insufficient financial incentives for generating and adopting innovation. Poor skills and training in every profession and vocation of the homebuilding industry that prohibit innovative thinking and experimentation. [With the exception of architects, of course!] Multiple preconstruction parties that intervene between innovators and adoption decision-makers, such as vendors, suppliers, and retailers, e.g., Home Depot. Post-construction parties that determine how the final consumer values the innovation. These are appraisers, private home inspectors, financiers and lenders, and insurers. Significant economic cycles with highs and lows that are not conducive to innovation. We will learn more about these barriers and the counterintuitive conclusion from the 2005 PATH overcoming barriers study from another panel member in a minute. The draft background document concludes that “as described, each of these barriers (is) inscribed into the method of producing and selling homes in the US—in fact, they are institutionalized. Because there are few parallels between these phenomena and other industries, unique and focused strategies must be undertaken for each.” Goal I has three objectives; first, to identify current and potential barriers and to measure their impact. The metric for this objective is the number of identified barriers that are studied. The second objective is to develop practical methods to overcome current barriers. The metric for that is the PATH effect on the cost and the amount of time innovators spend on addressing barriers. The third objective is to develop alternative future processes to eliminate barriers. The metric is PATH’s effect on eliminating barriers. MR. HATTIS: I have to start by saying that my comments may not actually answer the question that we were asked. We all know the question asked by the tourists on 42nd Street in New York City—how do I get to Carnegie Hall? The answer to that question is—practice really hard. However, that is the wrong answer if the tourist is looking for directions. I will start with a brief overview of the overcoming barriers study and its recommendations. I will also try to tie them back to the original questions about the HUD draft. The overcoming barriers study was not strictly a research project, but more accurately, a collection of anecdotal information and experiences with barriers to innovation in housing. The study included discussions of three expert panels on the three categories of barriers described in the NRC report. There are multiple barriers in each category. For example, in the risk category, risk to whom—

OCR for page 23
Proceedings of a Workshop to Review PATH Strategy, Operating Plan, and Performance Measures the owner, the code enforcement official, the builder, or the supplier? Risk is a barrier for all participants but a different barrier for each. Another category was industry participant preferences. We heard earlier today that consumers are not concerned about innovation, and builders, with a few exceptions, are not looking for or concerned with innovation. The perception of the panel participants was that a common barrier is the lack of information. Each panel met for a day and a half or two days to develop a set of observations on the assigned category. The panels developed nine recommendations. Some of them relate directly to the issue of communicating the barriers goal. The first recommendation is that there is a need to raise consumer awareness of the importance of improved performance, not the importance of innovation. The innovation is there to improve performance. If the consumers are not aware of the importance of performance or how to measure it, then there is a need for a program to raise awareness and provide measures. The PATH mission has not been communicated to or adopted by consumers. The second recommendation was to find ways to mitigate risks—builders’ risks specifically, but also risk to others. It was found that builders generally do not adopt an innovation that entails significant additional risk. They are not in the business of innovating or advancing the state of the art. They are trying minimize the risks to their profitability. The third recommendation was that small manufacturers need special assistance to overcome barriers. Apparently larger manufacturers know how to overcome barriers. It was noted that some of the requirements that are sometimes considered to be barriers are there for a purpose, usually to reduce some risk. BTI together with McGraw-Hill is currently undertaking a survey of how manufacturers develop and commercialize innovations to identify the differences between large and small manufacturers. The fourth recommendation talked about the need for a better understanding of the supply chain of successful innovations. Understanding the supply chain is crucial to getting new products from manufacturers to the ultimate customer. Even though there is no set list of supply chain participants, I would say that they are not adequately represented at this workshop. For example, we mentioned Home Depot as a supply chain element for consumers, but it is not a principal supply chain participant for production builders. The supply chain is evolving in that the concept and function of dealer is changing. They are beginning to undertake some of the functions traditionally done by builders and manufacturers. PATH is sponsoring a program at Virginia Tech to look at the relationship of the supply chain to the diffusion of innovation. The fifth recommendation is related to supply chain in that it concerns partnerships with subcontractors’ associations. Providing every stakeholder with the information they need is a PATH goal, that is, everybody from the product manufacturers to the regulators, to the builders, through the subcontractors to the consumers. The essential information needed by each stakeholder is not always available. Skipping the sixth recommendation for now, the seventh recommendation was that innovators, particularly small enterprises, need help to understand the building regulatory system. I should note that regulatory barriers were not part of the scope of this project. The focus was non-regulatory barriers. Nonetheless we found that the small enterprises do not understand how to navigate the regulatory system and there is no clear and consistent guidance. They are told that they need to go to the evaluation service at some point in the development. They are also told that they need to go to the American Society for Testing and Materials (ASTM) to develop standards. They are told that they need to go to the code hearings and try to get something into the building code. Nobody explains to them and those actions are related and sequential decisions. The eighth recommendation is related to something mentioned by Dr. Slaughter, which was creating demand and using large-scale procurements to help remove barriers to innovation. For example, if the Air Force uses a new technology for a project consisting of a thousand houses, then that project becomes a demonstration for that technology that can be a source of information about that innovation. The ninth recommendation is about improving education for the construction industry. Most high

OCR for page 23
Proceedings of a Workshop to Review PATH Strategy, Operating Plan, and Performance Measures school students do not see the home construction industry as a viable career option today. The result is the deteriorating quality of the construction labor pool. I began my career as a traditional architect designing buildings, a lot of it housing. I had an opportunity to become involved with innovation and technology through the Ford Foundation Educational Facility Laboratory programs. The program included development of performance-based procurement of building systems to help improve educational programs. They found that if they issued requests for proposals for 30 school buildings at one time, they increased their ability to require the builders to meet certain performance criteria, which naturally led to a number of innovations. The significance of the barriers study recommendations to the PATH performance measures is the need to raise consumer awareness of the importance and value of improved building performance. The emphasis is on awareness of the performance of the product in terms of energy efficiency, durability, disaster mitigation, and so forth. We currently lack the tools needed to adequately describe housing performance. I am not talking about performance measures to assess the program, but rather performance measures that will ensure the program success. The sixth recommendation was to provide stakeholders with the information they need because the information that they now get is generally the information that whoever is selling the product wants to give them. Much of the information that is currently available is intended to increase sales, not necessarily to help potential adopters make informed decisions. The Sweets Catalogue contains the information the manufacturer wants to give us. Builders need consistent, unbiased, dependable information about product applications and performance. I agree that the PATH program appears to have too many objectives and measures for the scale of the resources that are available. More global, intermediate measures that could be communicated and understood might be more effective. There is also a need to link measures to the contributions of PATH partners. For example, if every workshop participant were paid at their normal billable rates for attending this meeting, the cost would probably be between 2 and 5 percent of PATH’s $5 million budget. MR. CONOVER: I will try and briefly answer the four questions listed in the agenda. However, first I would like to comment on an earlier statement from the perspective of an engineer involved in the building codes. The point I want to make is that many people focus on the model code as a barrier. In the past, 50 or 60 years back, there was a crazy quilt of different regulations, but that is not the case today. The impact of the code enforcement process is also a factor. There are 44,000 units of local government in the United States. Unless they are preempted by state or federal government, they have the authority to enforce the code as they see fit. The model code organizations have put forward a single model, but it is still in the process of local adoption. Even after nationwide adoption, there will still be room for local differences in interpretation and enforcement. It is like going into different churches: they sing a little differently; they talk a little differently; some pass the collection plate twice and some just once. Mr. Hattis made reference to the building code regulatory system as a barrier. That may be true from some perspectives, but the regulatory system can also be seen as creating opportunities. This dichotomy relates to whether or not the regulatory activities are undertaken concurrently with technology R&D or after the R&D is completed. For example, the technology for stationary fuel cells is still being developed, yet the regulatory framework has been adopted and is ready for implementation. This is due in part to the foresight of the Department of Energy to create an infrastructure that will accept the technology. In regards to the agenda question, is the goal communicated accurately? I think it would be better stated as facilitating technology development and adoption through removal of barriers. These are two separate items, removal of barriers and facilitating removal. Removal is a means to the end. What PATH is trying to do is facilitate. Codes and standards are considered barriers, but if they are properly crafted and rationally applied, they also provide opportunity and reduce risks. Appliance efficiency standards are an example. I think that was Public Law 94-163 that created federal appliance efficiency standards. It provided a push

OCR for page 23
Proceedings of a Workshop to Review PATH Strategy, Operating Plan, and Performance Measures for innovation and replaced a crazy quilt of different rules and regulations that hampered manufacturers. Manufactured housing regulations, 24 CFR Part 3280, are another example. How important is this goal? The goal has a variable importance depending upon the definition of barriers and their impact on the goal. There are lots of barriers and opportunities to identify and assess them to determine their effect on innovation. Who is the audience and how do they define success? I guess the audience could be considered anyone in the U.S. that lives in a house or apartment, which is just about everyone. They could also be people that are professionally involved, such as the people involved in R&D and marketing new technologies, and users, such as builders and do-it-yourself homeowners. It is basically anyone who is involved in the process and factors that are important to them. The most universally important factor is money, i.e., cost effective operations and profitability. Are there performance measures to measure success? It all gets back to time or money, and time is money. The key metric is dollars. Changes in barriers, code changes, creation of new programs, and energy consumption are intermediate measures that can also be used. MR. KASTARLAK: Having heard very eloquent and to-the-point remarks from my colleagues here, I will add a few things to what they have said and wrap up this introduction to our workshop discussions. It seems to me that we are looking toward a state of affairs in the housing industry that is not sustainable. In West Palm Beach, Florida, where I live, the average house costs as much as PATH’s annual program budget. This is the reality. What can PATH realistically expect to accomplish? In my opinion, PATH has done an excellent job organizing and structuring the logic model of inputs, activities, outputs, and outcomes. However, budget constraints completely eliminate that as a particular line of reasoning or action. Achieving the goals will depend on what people in the housing industry contribute and that will require identifying and measuring results that are important to the industry. They probably couldn’t care less whether there is an innovation unless it improves their bottom line. To answer the specific question in the workshop agenda, Is the goal communicated? I can reply that it is, but it depends on whether that goal is attainable and for that reason we have to assess the resources allocated to the program. If there are limited resources, we need to determine the importance of this goal to the development of the new technology in housing. The goal of a federal government program should be to promote innovation that will do public good. Twenty percent of this country’s population is in need of decent housing. Technology that will reduce that gap should be a priority. DISCUSSION MR. SPEAR: I would like to focus for a moment on another objective for our meeting to suggest possible strategies for the dissemination of this information to interested parties in the homebuilding industry. One of the most effective tools for overcoming or removing barriers innovation in the homebuilding industry could be the new program called Concept Home that PATH is working on with its industry partners. I address this question to Mr. Chapman, who has participated in this program. My question is in your view is the Concept Home demonstration at the annual builders’ show an effective way to overcome barriers to innovation among builders and architects? MR. CHAPMAN: That is really a tough question to answer. The International Builders’ Show attracts more builders and industry participants than any other event in the U.S. The participants are especially concerned about innovation and new ideas. It is a great place to start. If you want to communicate with builders and industry people, then that is the right place to go. The problem is that the Concept Home is not nearly as radical as a lot of us would like it to be. It is fraught with problems from a regulatory standpoint. It is taking a very small step and yet the regulatory barriers have the potential to be huge. This is especially true of the demonstrated technologies at a local

OCR for page 23
Proceedings of a Workshop to Review PATH Strategy, Operating Plan, and Performance Measures level. The local regulators and politicians are not in the audience at the housing show. As discussed earlier, there is a morass of different code enforcement bodies throughout the nation with building inspectors whose personal decisions affect the adoption of innovative technologies. It is the right place to be, but somewhere in this process we need to determine how to reach out to communities and to people who are not directly involved in the housing industry, but have a tremendous influence. MR. KASTARLAK: In my community there are 72 steps to get from a pre-application conference to occupancy permits. There are obviously many people involved in that process. It seems that reform is needed. One example of how to communicate the importance of housing performance to consumers is the permanent exhibit for building systems in Munich, Germany. The exhibit displays mechanical, electrical, and structural systems and how they are integrated in a house. MR. HATTIS: I would like to respond to the question of dissemination of information and channels of communication. Every barrier has somebody who benefits from that barrier. Barriers are not there abstractly. Therefore, barrier removal needs to be communicated to those stakeholders. Those stakeholders are probably not at the builders’ show. It was mentioned that the Concept Home has many innovations but is fraught with regulatory problems. It may be necessary to address barrier removal more incrementally, innovation by innovation, rather than a whole house. MR. CHAPMAN: I don’t want to leave a misconception about the Concept Home. It is incremental. It may be too incremental. The fact that we are using a whole house to demonstrate technologies is unique, but for the most part it uses existing systems that are completely code-conforming. A lot of people thought the house is not innovative enough because it is not creating new systems. The Concept Home is an incremental approach, but having said that, there are still regulatory barriers. The Concept Home is basically in conformance with most of the existing codes. But there are so many details that cause regulatory problems. When asking if the International Builders’ Show is an effective channel of communication or if there are better venues elsewhere, the answer is that every opportunity needs to be used. The battle is getting to the people who are resisting innovative changes. MR. CONOVER: It is difficult to tell if the problem is with the code official, the person that does plan review and inspection, or the whole system including zoning, environmental, and other issues. For example, I have a stream within a hundred yards of my house. If I want to put on an addition, I have to go through the county environmental regulatory process, which has nothing to do with the building code or the building official. It is important to know if the problem is building regulations in general and the specific issues that are causing problems. Yes, the code can be a barrier, but there are a lot of other things that are often more significant. With respect to the Concept Home, one approach to the regulatory issues could be having a jury of regulatory authorities, representing the building, fire, plumbing, mechanical, and other regulatory specialties, review the house to determine whether it is consistent with the test standards and code requirements to determine if it meets the code. A report of that panel’s findings would facilitate the acceptance of the Concept Home and help deal with local idiosyncrasies. Singapore is an example of an ideal building regulatory system with one code and one ministry where everybody does it the same way. Here, there are 44,000 systems. There are ongoing efforts to make them work together over time, but a national code and regulatory system cannot be mandated. The concept of standard automated plan reviews, and of interoperability with manufacturers’ specifications, is being discussed as a way to automate the process and make it more consistent. The local building official does not test a heat pump to approve it. The official looks at the equipment label to see if it has been independently tested to prove that it meets regulatory standards. A house is similar, except that it is an assembly of those components. A system of automated submittals of standardized criteria could be developed at the national level and inspection at the local level could ensure that it is built as proposed. Computer-based interoperability provides an opportunity to do this. In ten

OCR for page 23
Proceedings of a Workshop to Review PATH Strategy, Operating Plan, and Performance Measures years, the building regulatory system in the United States could look like this. MR. KASTARLAK: That is the direction architects and engineers would like to see the regulatory system take. MR. SPEAR: Some of the NRC committee members and many of today’s workshop participants would like to see PATH grow into a program for performance certification or to provide a recognized “seal of approval” for technological innovations. That process could be the basis for developing a PATH brand identity similar to EnergyStar. A consistent and predictable level of effort is needed for branding to succeed. But PATH continues to face federal budgetary restrictions and uncertainties. In 2001, the administration started zeroing out PATH’s budget and refused to let PATH distribute its literature. In my view that is not the way to enhance PATH’s credibility with stakeholders and industry partners nor to build the kind of program that can influence decisions needed to reduce the barriers to innovation. PARTICIPANT: A $5 million budget can make a difference but only after people know what PATH is. If you ask 100 purchasing managers of home construction companies across the United States if they know what PATH is, 99 of them would say they have no idea. I presume the Good Housekeeping Seal became valuable only after it was around for a long time and people knew what it meant. The same is true for Consumer Reports. PATH cannot establish a brand until everybody knows what it is and the value it adds. First, PATH needs to be generally recognized, and then the brand begins to have value. Unfortunately, PATH does not yet have broad recognition of the good work that is being done. MR. SPEAR: Recognition requires a consistent program. MR. CHAPMAN: The code organizations and other established systems for certification and approval can facilitate the recognition of PATH and add to its capability to push technologies forward. PARTICIPANT: If a new technology is approved by the building code organization it does not replace the approval of the old technology. The building official decides what he or she will accept. The official might not believe that the new technology is better and be reluctant to accept a technology that has not been proven effective over many years. An education program is needed to help officials understand the value in new technologies. The code official has the power to make the builder construct the house the way the official wants it built. MR. CHAPMAN: As a former chairman of the Construction Industry’s Commission of New Mexico, which is responsible for adopting all the codes for the state, I know the system is fraught with conflicting interests. Positions of individual organizations are often based on self-interest instead of engineering principles and test results. Building regulation is a very convoluted, difficult process. That is why a program to reduce the effect of barriers posed by the regulatory process is needed and why government involvement can make a difference. MR. GONZALEZ: Codes and regulations are recognized as a huge barrier, but there are probably others that could be addressed to achieve PATH’s goals. MR. NOSSE: It gets down to the essence of our governmental system of home rule. There are many political decisions involved when the federal government is promoting change in local government activities. PATH’s role should be to foster an educational process. MR. ENGEL: There are two other major barrier issues. One is potentially solvable, but the second is probably unsolvable, given the legal system in this country. The first one is educating stakeholders to provide an understanding of the value of innovation. That can be addressed by developing programs for lenders, consumers, regulators, and so forth. The other one involves assigning risk and financial responsibility. If a house fails, that failure might cost tens of thousands of dollars or one hundred thousand dollars to correct. The risk is great and the potential benefit to any one stakeholder is probably minimal. That is going to remain a problem until there is a method to rationally and equitably assign and share risks. MR. CHAPMAN: Another barrier that has been alluded to is the cyclical nature of the housing industry. It can create a problem for new technologies that do not have the resources to stay through the slow periods of the market. One of the changes that has happened in the homebuilding industry is that

OCR for page 23
Proceedings of a Workshop to Review PATH Strategy, Operating Plan, and Performance Measures there are now long-term players, such as Mark, K. Hovnanian, Pulte, and Centex, which produce about 30 percent of new housing. The other 70 percent of the marketplace are generally short-term players that are in and out. Lee Evans, a former consultant to the housing industry, now retired, was fond of saying to homebuilders that your propensity to go broke in this business never changes and if you stay in it long enough, you will. There is a lot of truth to that and the result is that homebuilders never complete their fixed plant. The moment the fixed plant is complete, the builder sells and starts all over again. Our company just started its 40th year, but there are not many 40-year-old homebuilding firms in this country. Adopting a new technology takes planning. A dollar per square foot can be saved on a house, but it might take three or four years to implement. The delayed reward has no impact on an industry that is driven by short-term outcomes. To get the attention of builders, a new technology needs to save a dollar per square foot on the next house. MR. SPEAR: Do we have any additional barriers that people would like to propose for discussion? Hearing none, I will use the panel chair’s prerogative to wrap up with a description of a useful concept from the late University of California at Berkeley professor Horst Rittel. In his seminal paper published in 1973, Dr. Rittel identified a class of “tame” problems, susceptible to rational analysis and satisfactory solution through traditional linear processes, and an altogether different class of problems—characterized by systems and processes that are richly interrelated with a number of factors, with a host of stakeholders with conflicting views, that are burdened with a number of externalities and interconnected with so many other parallel systems that they become very, very difficult to solve—known as “wicked problems.” I think that the barriers issue we have before us in this segment of today’s workshop is in fact a “wicked problem,” one that cannot be solved like a tame problem reasonably might be, but one that PATH in its time will address and in the process help move innovation in the homebuilding industry forward.