A member of the Shinn Group of Companies A Link to Profit Purchasing Department Presented by: Charles C. Shinn, Jr., Ph.D. September 11, 2008 For more information on Builder Partnerships, visit our website: 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

A member of the Shinn Group of Companies 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’s Need to be Invoiced  Delays in Construction Waiting for Materials Trades Not Available

A member of the Shinn Group of Companies Costs Don’t Create Value BUT  Important in Pricing and Profit  Knowledge of Costs KEY to Improving Profits  Construction Cost is the VARIABLE

A member of the Shinn Group of Companies Critical Service Departments  Sales  Design Center  Construction  Accounting Cash Flow Forecasting Accounts Payable

A member of the Shinn Group of Companies Typically becomes a BOTTLENECK  Too Much To Do  Under Staffed  Not Well Organized  Everything is a PRIORITY  Semi-Custom Builders Too Many Plans Too Many Customer Price Requests Too Many Changes During Construction

A member of the Shinn Group of Companies The Purchasing Function

A member of the Shinn Group of Companies Locate Sources of Supply  Vendor Application  Evaluation  Selecting Qualified Vendors

A member of the Shinn Group of Companies Process Bids  Bid Packages  Duplication of Plans  Vendor Bid Sheets

A member of the Shinn Group of Companies 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

A member of the Shinn Group of Companies Finalize Contract  Vendor Agreement  Terms and Conditions  General Conditions  Scope of Work  Pricing Addendum  Quality Standard  Certification of Completion Checklist

A member of the Shinn Group of Companies Monitor Performance  Evaluate Performance  Quarter Review Meeting

A member of the Shinn Group of Companies 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

A member of the Shinn Group of Companies Manage Variance Purchase Orders  Construction cost budgets should be within 1% accuracy  Use variance purchase orders to control cost  Variance Purchase orders must: Be Written Give Reason for variace Denote Action to be Taken Processed PRIOR to Service

A member of the Shinn Group of Companies 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

A member of the Shinn Group of Companies Our role in The 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

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

A member of the Shinn Group of Companies 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

A member of the Shinn Group of Companies 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

Upcoming Audio Conferences  Hold on to your Assets Jim 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 Presentation Make 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 Measures Have 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 ing Helen Virene at

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:

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