At the Housing Leadership Summit in May, I hosted a panel discussion with Chris Schoonmaker of S&A Homes, C.R. Herro of Meritage Homes and John Friesenhahn of Imagine Homes — all high-performance builders — on “Seizing Energy Efficiency as a Competitive Weapon.”

I was struck by how packed the session was — standing room only.

I’ve seen full sessions at these events when the topic is capital, land or design trends, but never when its energy efficiency and high-performance home building. It occurred to me that there’s a paradigm shift in progress, with building science at the center.

Why So Much Interest?

Since the housing market downturn, some builders have responded by building simpler, smaller, less expensive homes without improving quality. But in a market where a home is no longer always the best long-term investment, home buyers are looking for a value differentiator. And with a glut of foreclosed homes on the market, they have options that underprice new homes.

Let’s translate that into auto industry terms: Consumers are wondering why they should buy an inexpensive, brand-new car that offers no value-added except for price, when they could get a loaded, higher-quality model whose initial higher price is more than offset by lower gas costs.

The three builders I mentioned earlier all understand this kind of thinking and have capitalized on the opportunity offered by a changing housing market. They represent a good cross section of the industry — local, regional and national — and are gaining market share by building better homes with performance as an anchor, not down-speced homes at rock-bottom prices. In the span of 90 minutes, they shared their experiences and insights.

Packed into that crowd were home builders who recognize high performance isn’t just for niche builders anymore. Beyond consumer expectations, regularly scheduled changes in codes and voluntary standards such as Energy Star mean that the bar is consistently being raised across the board. Sam Rashkin, manager of Energy Star since 1996, pointed out in a recent webinar that all homes permitted after Jan, 1, 2012, will be subject to Energy Star Version 3, which is 15 percent better than the 2009 International Energy Conservation Code (IECC). To date, almost 20 states have adopted the 2009 IECC. And, over the next several years, codes and Energy Star will continue to push for higher levels of efficiency in tandem with each other. Basic building science principles are now a “need to know.” For most builders, however, this is still uncharted territory, and a lot of fundamental questions are being asked.

Builders are hungry for best practices to approaching high-performance home building in three categories: 1) technically, from a design and construction perspective, 2) operationally, in terms of integrating it into business processes and managing change, and 3) strategically, as in how to use high-performance construction techniques to differentiate and sell homes in a tight market.

From our session, here are some of the high-level “nuggets” or best practices that builders can follow to make building science work for their businesses.

1. Designing for Performance

Understanding building science is critical from the start, because the definition of a high performance home will depend on many factors: what climate zone you’re building in, what metrics you’re interested in (energy, water use, air quality, comfort, etc.), and whether you want to meet third-party standards like Energy Star. Be sure to take these steps:

Define performance for your company. Knowing the science allows you to set a long-term performance goal, and then plan for how to achieve it — whether gradually or more quickly. For example, in 2009, Meritage Homes pledged to build 100 percent Energy Star-rated homes. This April, the company announced it is offering net-zero energy homes as part of its standard product line in 21 communities. That’s quick progress toward a performance goal.

Take a whole house approach. A home’s enclosure, mechanicals and energy sources are interdependent systems that work together to deliver energy efficiency, durability, comfort and a healthy living environment. In contrast to a spec-and-purchase approach, designing with those relationships in mind will allow you to improve performance and consider cost tradeoffs simultaneously.

Consider performance, cost and value tradeoffs. Don’t make the mistake of opting for technology for technology’s sake. Some higher-priced items, like well-designed windows, are worth the price for the efficiency they offer. But at some point there is a decline in ROI. Keep in mind your market and target price point.

Get buy-in from trades, suppliers and your own executives. It doesn’t take much imagination to realize that when a trade’s higher-ups lack commitment to, and understanding of, high-performance building principles, quality issues are much more likely to crop up. That goes double for a home builder’s own organization. You can’t effectively build or sell a home designed and built with principles you don’t believe in.

2. Aligning to Implement Greater Energy Performance

Buy-in and communication need to continue beyond initial planning and design, and successful change requires a thought out, managed process.

Make communication an organizational cornerstone. Time and again, failed or miscommunication — whether it’s within a building company or between and among your trades and suppliers — is one of the leading causes of increased costs and declining quality. In the June 2010 NAHB Research Center report “The Economics of Quality,” improved communication was found to correlate with both increased customer satisfaction and home building quality.

Try it, measure it, then scale up. Testing a higher performance design with a house or group of houses makes implementing change easier. Watch these projects closely to see if something’s not working or people need more training before you scale up. But don’t be timid about adopting higher performance products and practices in broad strokes if they work.

Measure quality, manage change. Implementing change, whether it’s new business practices or a new home design, also requires measuring the efficacy of that change. Accurate metrics for things like a home’s energy use, airtightness and systems performance are essential tools to help a builder identify weaknesses in design or execution and respond quickly.

One of the measureable changes that helped Imagine Homes win a 2011 NAHB Green Building Award for a single-family production home in San Antonio, Texas, was the semi-conditioned attic that houses the HVAC system. Through Building America, IBACOS worked with Imagine to test solutions for the attic and installed a monitoring system to measure the chosen solution’s cost-effectiveness. Imagine intends to use the semi-conditioned attic feature in future home designs.

3. Differentiating Your Company in the Marketplace

Right now, offering high performance homes can push you out in front of the pack. But that competitive edge only applies if you can communicate the advantages of your product to the home buyer. Be sure to:

Benchmark your homes against your competitions’. What are their performance claims and how do they back them up? How do they stack up in terms of cost, location and amenities? How are you different? Better?

Make your value proposition tangible and measurable for home buyers. Keep technical speak light. Numbers are good, but be sure to relate performance and associated benefits to their everyday lives. What do air exchange rates and HERS ratings have to do with comfort and energy savings? If your home is 40 percent more energy efficient than code, what will that do for utility bills? Most important, what does your high performance home offer that a cheaper, no-frills new home or foreclosed home cannot? Performance certifications like Energy Star and Resnet’s Energy Performance Guide—the MPG equivalent for homes — can help you tell your story, providing third-party credibility and giving consumers an easy way to measure the value of what you’re selling.

If you’re interested in learning more about C.R., Chris and John’s stories, you can download the slides from our panel discussion here. In the meantime, I’ll leave you with the words C.R., vice-president of environmental affairs at Meritage Homes, used during our panel discussion: “Things are changing.” And I’ll add: It’s the wise company that recognizes the benefits of change.

Michael Dickens is a partner in IBACOS, a company that enables production home builders to improve the quality and performance of their homes, and he oversees its Best Practices Research Alliance, a collaborative research community of leading builders, manufacturers and industry experts created to foster greater levels of innovation within the industry. IBACOS provides technical and business management expertise in three key areas: quality assurance, risk management and performance coaching. He can be reached at mdickens@ibacos.com.