HouseRaising helps homebuilders and clients stay in touch and on top of construction projects After 40 years of building custom houses, Robert McLemore knows firsthand how builders struggle to fulfill their customers' wishes without blowing a hole in either of their budgets. Last year he turned his knowledge into HouseRaising.com, an interactive service tied to his home building business that helps custom builders reap more predictable profits.

Because builders of tract houses put up many units with the same design, they benefit from predictability in materials and are able to negotiate volume discounts. That's not the case with builders of one-of-a-kind homes. "Custom homebuilding is the most difficult part of the industry because you have to deal with homeowners who own the lot and have dreams about what they want and how much they want to pay," says McLemore.

The Charlotte (N.C.) startup acts as a cyber-middleman during the construction process, handling pesky coordination problems while allowing the builder to focus on building. This year, builders began paying a one-time fee of $2,000, plus $200 a month thereafter, for the service.

McLemore tapped into his own experience and frustrations in the construction industry to come up with the system. He identified 1,269 specific problems he had encountered when building custom homes, from homeowners who were disappointed that no trees were left standing when a building site was cleared to complaints about noisy plumbing. He then came up with 3,400 steps that solved those problems, such as requiring that homeowners be on site when land was cleared or signing a waiver, and providing soundproofing for pipes. He bought a small technology company, merged it into HouseRaising, and dumped all the problems and solutions into a proprietary online system. "It took six years to define and two years to develop the software," says McLemore. He invested $5 million of his own money, and, by completing a reverse merger, was able to use equity for the rest.

Once builders become HouseRaising members, they can store files about a particular project online, including contracts, costs, and vendors, the payments, and projected schedules. The builder's clients also have access to the file. And they can view digital photos of the building as it progresses. The builder and client put all their comments about a project in the system, so there's a record of who said what. The site also provides models of houses in a wide range of prices and an in-house staff that helps would-be homeowners figure out what their budget will buy.

HouseRaising has an offline component as well. McLemore's 35-person staff works with contractors to handle everything from accounting to referrals. The company maintains a list of 100 vendors that offer discounts to homebuilders using the system.

McLemore is marketing the site to single-family construction companies, new homebuilders, and residential remodelers through direct-mail campaigns. Mike Freeman, owner of Freewood Contracting, a custom builder in Greenville, S.C., is using HouseRaising to help build a $550,000 house in that town. "My customer has been looking at models on the site, and eventually we'll have it set up so that he can go on the Internet and see where the house is in terms of cost and at what stage it's in," Freeman says. Having all the information online is an enormous help, because his customer lives in Kentucky. "With the Internet," Freeman says, "everything is easier and quicker, and there's instant reporting. I can focus on building.