COLUMN: Carmel Hopkins

As the wheels grind slowly at the Nevada Legislature, home builders in Southern Nevada are suffering from the high price of liability insurance. That is, if they can even find a company to insure them in these litigious times.

Smaller builders have been leaving Las Vegas because their insurance rates have reached such heights that it's no longer profitable to do business. One of those builders had never lost a lawsuit, but his rates skyrocketed merely because the suits had been filed. The amount that the insurance companies spent on attorneys' fees contributed to the higher rates.

The large building firms have stayed put. With the help of their corporate attorneys, they can put up a better fight against homeowner associations and other members of the litigious circle.

The attorneys who specialize in construction- defect lawsuits raped the building industry in Southern California until that state's lawmakers put caps on suits. Then the attorneys moved to Nevada, where a similar bill was introduced recently to state legislators by Sen. Mike Schneider, D-Las Vegas.

The insurance crisis has affected not only home builders, but also doctors, another class with deep pockets that attracts attorneys. The medicos have generated more sympathy in Carson City than the builders and rightly so. If doctors keep leaving Nevada because of insurance woes, people will stop moving to our state and the wheels of progress will grind to a screeching halt. However, if insurance costs keep rising, builders will stop and the price of housing will begin to resemble California's.

As the insurance crisis was mounting, a forward-thinking group within the Southern Nevada Home Builders Association generated a Quality Assurance Program in August 2001. Local builders and subcontractors have been taking classes under the auspices of the National Association of Home Builders Research Center.

Participants are required to create a manual of industry standards for their companies. After a few months of training employees to work with the manual, the center sends out an auditor to ensure that standards are being followed. The company is then graded and, if it passes, becomes certified.

That's not to say the company is off the hook. You can bet there will be surprise audits coming down the pike to ensure the participating companies are continuing to adhere to the standards.

The local program has proved so successful, that the Research Center has implemented it nationwide.

Jim Hostetler, director of construction for KB Home, said the program has affected his company's bottom line.

"The customer satisfaction index is up 95 percent and claims have gone down. We also have improved relationships with vendors at the community level, and superintendents and supervisors are on the same page," Hostetler said.

Sean Cavanaugh of Gypsum Construction Inc. said not only has the program changed the nature of home building by partnering builder and subcontractors, it also has promoted safer construction practices and saved money through fewer callbacks.

"Just by cutting down on paperwork and being more efficient, the crew is getting done in four days what used to take five days," Cavanaugh said.

Darren Stoop of Quality Wood Products said using the manual has helped reduce installation errors.

"In six months, we eliminated 90 percent of `hot spots' (error-prone construction areas)," Stoop said.

MS Concrete's Bob Acorn has seen a one-third reduction in callbacks since his company developed a manual last year.

"Nothing is left to chance," he said. "The manual is evolving to meet the company profile. We pour more than 5,000 slabs per year, so you can figure the savings for yourself."

Kevin Christy of Milgard Windows has seen several benefits.

"Most notably increased customer satisfaction, a drop in liability and a gain in cost efficiency," he said.

Another series of classes started Monday, and will continue to be held for as long as necessary, according to John Pinna, government relations specialist for the organization and the local Quality Assurance representative for the national association.

The point is, builders are doing everything in their power to produce a well built, quality product for home buyers in Southern Nevada. Now, it's up to the legislators to do their part and make the environment less attractive for lawsuits.

Carmel Hopkins, real estate product manager for the Las Vegas Review-Journal and Las Vegas Sun, can be reached at 380-4574. Her e-mail address is Carmel_Hopkins@ lasvegasnewspapers.com. Snail mail is P.O. Box 70, Las Vegas, NV 89125.

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