Wood Side Homes
1.What steps do you take in the budgetary process in terms of developing, implementing, and evaluating your plan?
Building the budget I do estimates off of experience and history. After we get closer we narrow down scope as we understand more. Guesstimate to an estimate. We then have two or three parties bidding on the job. For these bids we finalize a final budget. We use this budget for 18 months as a reference. We do budget by phases in construction. We end a finalize payment on each phase and them open the next phase. Whatever the original budget was we put a 10-15% continence to pull from for variances.
2.Can you tell me more about the costs of your organization: fixed, variable, direct, indirect, controllable, and noncontrollable?
In mine it is fixed, with an estimate and we accept it is what it is for 2 to 3 years. I have watched in purchasing, you bid on a community and it won’t start for 6 months and then it goes for 3-4 years. There is a every other year window for agreed upon contract to be adjusted for inflation. If there is not a way for our subs not to make money or lose their business because of a huge job in lumber or other commodity, then we have a conversation to fix the problem.
3.What do you do when there is inconsistency between the approved budget and the actual expenditure of a department?
I would call them up and say, “hey, walk me through whats changed?” If they can justify the change than we use contingency fund, if we can’t justify then they cut their price to original bid.
4 Do you have to oversee several different department budgets? If so how do you prioritize your time between each department.
Yes! I do oversee several different budgets. The company tries to create an even work flow. Where communities can come on line in a certain order, this provides an even work flow. On one community I’m waiting for guesstimates, or estimates, or awarding contracts.
5 Have you been a part of a large budget cut? How did you implement that?
Yes, during the downturn we were trying to find ways to cut budgets. Home sales became low, and amount of people who could afford became low. So we revamped our floor plans for more value oriented. Before downturn big open spaces with gingerbread trim. After the crash the only homes that would sale were smaller square feet and less show so we moved to match the market.
6 What is the most challenging part of budgeting?
Probably, two things, communication and desire to provide more. I love to have beautiful design, usually beautiful design is a higher price tag. So I have to prioritize design that matches the project. Bigger project you get more model homes, landscape, and design. You need to create to get more foot traffic. Smaller community less budget and narrow down necessities with in good design. Communication-you have to understand all the parties involved, development agreement, internal team rules, City government, and HOA agreements.
7 When you have a big expense once a year, do you allocate it across twelve months? Or do you add it to that month’s budget only?
If there is a big expense that spans multiple communities. Say for example if, I rented out a space for an office space for the month. Every community will pay for that expense. As they open up the expense is spread throughout the communities.
8 When you have a variable amount for an item in your budget how do you handle it? Do you take the mean? Or just the highest possible amount for the item?
I would put the highest amount in the budget.
9 Do you use a zero based budget or do you use last years numbers as a basis so you can increase or decrease the numbers from there?
I take a guesstimate from past numbers and the guesstimate will get you through planning and then I get it all bidded out and then they become estimates that are awarded.
10 Do you give budgeted salary increases based on a percentage for everyone? Or do you give performance raises, and do you budget for those raises?
I don’t handle that but I can tell you how the company handles it. We are salaried employees that are based on performance as well as bonuses that are based on performance.
11 Who is involved in evaluating/implementing changes to the budget?
Myself and the land manager, when we do land acquisition, he puts together a guesstimate budget, and then there is a lot more contingency in his budget. That budget will come to me and I decide if it will work. All of my budgets get adjusted depending on land acquisition.
12 Do employees have access to the budget? Is the budget transparent to everyone in the department?
The budget is transparent to our department, the president and the controller.
This was a very interesting interview to do with my sister. She is a fun, happy, spontaneous, and organized person and to see and hear her in her work environment was super cool. She is such a core part of the company. My father is a retired contractor and it was one business I seriously considered going into before becoming a nurse. This conversation made me even happier that I chose nursing even though construction is interesting. Like I said before, I hate accounting and budgets, even though I understand the crucial importance of having a budget and holding to the budget I’m glad I’m not in charge of it.