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A Link to ProfitPurchasing Department

Presented by:Charles C. Shinn, Jr., Ph.D.

September 11, 2008

For more information on Builder Partnerships, visit our website:www.builderpartnerships.com

A member of the Shinn Group of Companies

A member of the Shinn Group of Companies

Good Estimating and Purchasing is CRITICAL to Obtaining Superior Profitability

Can Increase Profitability 2% to 5%

Some Builders even say 8% Plus

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Most Builders DON’T have adequate systems

Root cause for Low Profitability Excess Materials Fill in Orders Variances Inaccurate Purchase Orders

Can’t pay PO’sNeed to be Invoiced

Delays in ConstructionWaiting for MaterialsTrades Not Available

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Costs Don’t Create Value BUT

Important in Pricing and Profit Knowledge of Costs KEY to Improving Profits Construction Cost is the VARIABLE

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Critical Service Departments

Sales Design Center Construction Accounting

Cash Flow ForecastingAccounts Payable

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Typically becomes a BOTTLENECK

Too Much To Do Under Staffed Not Well Organized Everything is a PRIORITY Semi-Custom Builders

Too Many PlansToo Many Customer Price RequestsToo Many Changes During Construction

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The Purchasing Function

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Locate Sources of Supply

Vendor Application Evaluation Selecting Qualified Vendors

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Process Bids

Bid Packages Duplication of Plans Vendor Bid Sheets

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Negotiate!

Move UP the Food Chain Things to Negotiate

Price Terms and Conditions Model Home Program Design Center Displays Quantity Discounts

• Annual Meeting

Things to Negotiate Payment Discounts Cooperative Advertising Manufacture Rebates Training

• Sales

• Superintendent

• Trades

• Warranty

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Finalize Contract

Vendor Agreement Terms and Conditions General Conditions Scope of Work Pricing Addendum Quality Standard Certification of Completion Checklist

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Monitor Performance

Evaluate Performance Quarter Review Meeting

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Implement Purchase Orders

Create PO’s & Job Budget from Sales Contract Release Purchase Orders Released PRIOR to Start of Construction Staged Releases Payment from Purchase Order

Eliminate Invoices

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Manage Variance Purchase Orders

Construction cost budgets should be within 1% accuracy

Use variance purchase orders to control cost

Variance Purchase orders must:Be WrittenGive Reason for variaceDenote Action to be TakenProcessed PRIOR to Service

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Purchasing Flow

Estimating Produce Quantities Purchasing Negotiates Prices Purchasing Contracts Vendors Estimating Applies Pricing To Quantities Purchasing Releases PO’s Production Orders Deliveries Production Checks and Approves Deliveries Accounting Pays Approved Vendor Payments

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Our role inThe Purchasing Department

A Member of the Shinn Group of Companies

A member of the Shinn Group of Companies

Increase your Returns

Most manufacturers offer incentive programs but not many builders are taking advantage of them to the fullest extent

Builder Partnerships was created in 2005 to support Purchasing Departments in this effort

Builder Partnerships allows you to focus your efforts on negotiating to get the best price without having to worry about the rebates

We manage the incentive programs and follow up with manufacturers to collect the money so you don’t have to

A member of the Shinn Group of Companies

A member of the Shinn Group of Companies

Leverage our collective strength

Representative of over 100 builders constructing nearly 25,000 units annually

Designed to award builders for our collective submissions allowing us to get rebates at the level of some larger national builders

Increases your $$ available per home

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Simplify your processes

Secured personalized website allows you to enter and track all rebate submissions

Easy to use catalog of programs to review and compare all of the programs offered

Simplified incentive programs submission process Minimal data needed to submit - just send the home

address, closing date and very limited information on product usage

Builders have told us it takes less than two minutes to submit.

Easy tracking and quick payment 

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Take advantage of other services

Strategic networking opportunities Direct link to manufacturer national

account managers Monthly audio conferences / discussions for purchasing

managers   Quick links / archive of manufacturer articles, product

information and installation instructions Monthly newsletter contains extremely useful and timely

articles as well as articles from manufacturers highlighting products discussing trends within the industry.

A member of the Shinn Group of Companies

A member of the Shinn Group of Companies

Upcoming Audio Conferences

Hold on to your AssetsJim Weigel and Chuck Shinn will discuss how to work with your banks to help them understand that you are much more valuable IN business than OUT.  Explore ideas and share experiences with a leading group of builders on how to ward off creditors and continue building.September 11th at 3PM EST                  Free to attend

Building Blocks of a Convincing Sales PresentationMake sure your sales team is doing what it takes to get the sale.  Bill Watson, MIRM leads a pointed discussion on how to successfully build a convincing sales presentation. Discuss tips and tricks with other leading builders in the market.September18th at 11 AM EST                Free to attend

Simple Cost Saving MeasuresHave you taken all excess costs out of your processes?  Are you making as much money as you possibly can from each home that you build?  Guess again. Chuck Shinn explores different ways to squeeze significant savings out of your organization.September 26th at 11 AM EST    Free for members / $60 per line for non-members

Reserve your spot today by emailing Helen Virene at helen@builderpartnerships.com. 

A member of the Shinn Group of Companies

Sign up now Fill out sign up card If interested, we can provide you an estimate of

what you can currently make per unit submitted through the program

Sign up soon to collect rebates for this quarter Contact us at: info@builderpartnerships.com

A member of the Shinn Group of Companies

A widely recognized and well-respected leader in providing support to homebuilders and other organizations in the home building industry.

The premier organization in management education for the home building industry since 1954.

An agent for its members and associates aimed at fostering communication and cooperation between builders and manufacturers.