Land Development Playbook

BUDGET MANAGEMENT A Review LD Budgets for all projects in feasibility, under development, and at closeout in LD2 budget meeting with division leadership, finance, NLD and Land Shared Services (LSS). o Budget Variance Memos (BVM’s) are required if current or future phases have greater than a net $100K increase from the last approved budget. See the next section for the BVM process. o Budget reallocations from development line items to Contingency do not require a memo. o Budget reallocations from Contingency up to development line items require NLD/LSS approval when greater than $100K and a Budget Variance Memo if greater than $250K. A Remaining funds in each cost code should be transferred to contingency after each scope of work has been fully contracted versus being kept in separate development cost codes. Surplus funds or contingency should be transferred to and from contingencies as needed. A NLD will schedule monthly LD2 budget meetings before the 10th of each month. NLD, LSS, and Finance are to be represented in each division’s LD2 budget meeting. o LD2 budget meetings are monthly budget meetings held to review LD budgets and make necessary budget revisions. o LD2 Sheet is a report pulled from the accounting system for the LD Budget review. This report contains all the project budgets within a division and the line-item budget codes that comprise these budgets. A LD2 meeting preparation requires the following tasks by the division. o At the first of every month, Finance will pull the LD2 report from the system and distribute it to the division land team. Best practice is to use a shared document, so all parties are updating a live document. o Update the LD2 Sheet with revisions and notes prior to the LD2 budget meeting for review as a group during meetings. o If there is an LD Budget variance requiring a memo, create a draft BVM in advance of the LD2 budget meeting utilizing the standard template found in the NLD SharePoint memo template folder. o Distribute the updated LD2 Sheet and draft BVM to the LD2 budget meeting group prior to the start of the meeting. A Finance is responsible for validating all LD Budget information and supporting financial tables for accuracy. A Within 5 days following the LD2 budget meetings, divisions are to route the attendance sheet and revisions for signature by Division President (DP), NLD, LSS, and Finance then submit LD2 sheet to LSS. A If the bond release major code is not funded during the initial AMC budget creation, the division needs to ensure that code is funded no later than once the project is paved. A Proactively adjust LD Budget before processing a PO, as you need an approved budget to process a PO.

A The division must continue to review LD Budgets on all closed-out communities until all bonds/ sureties have been returned to Century and HOA has signed off on all work. Until those requirements are satisfied, a budget must be kept up to date, and the cost of finishing the balance sheet accrual must equal the budget amount. A later entry will be made to increase the cost to complete, which will be taken to the income statement for that month if the division needs to increase the LD Budget. A Every month, the division needs to circulate an attendance list, which all attendees must sign. A The division is required to submit all the ECC reports, signed checklists, and signed attendance lists to LSS using ServiceNow. BUDGET VARIANCE MEMO PROCESS A Budget Variance Memo (BVM) is a brief write-up that explains significant LD Budget variances (positive or negative) to senior management and Asset Management Committee (AMC). A BVM should be concise, detailed, written in paragraph form, and at a minimum address the following questions within the narrative of the memo: A What steps have been taken to eliminate or partially mitigate a negative budget variance? A What changes have been made to ensure this type of negative budget variance does not occur again? Using the standard BVM template found in the NLD SharePoint memo template folder, division LD team will initiate a draft memo and collaborate with NLD on the proposed resolution to the issue. Disseminate a draft Microsoft Word version of the memo in advance of the LD2 meeting (as noted in the LD Budget section) concurrent with LD2 line-item proposed modifications and associated notes. Once a BVM has been drafted and reviewed by the division, national, and regional teams, the division LD team will utilize DocuSign to obtain approval in the following sequential path. Each signature is required prior to moving on to the next signee. The Division President is the responsible party for managing the DocuSign process and sending the fully signed-off BVM to the Region President for aggregation of any BVMs for the month and submittal to the AMC group, National President, and the CFO no later than the 15th of each month. A What was the primary/original cause of the budget variance? A When (month & year) was the budget variance identified?

1. Divisional Land Development 2.Finance (Division and/or Region) 3. Division President 4.National Land Development (CC: Land Shared Services) 5.Region President

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