Land Development Playbook

CHANGE ORDERS Change orders are modifications to a contract arising from a change in scope. These are used in LD to either add or remove scope of work from a contract instead of creating a new contract with an existing vendor. A Obtain a rough order of magnitude estimate of cost or a detailed bid to propose a budget revision and follow up with a formal change order request to create a Purchase Order (PO). Request a budget revision in LD2 monthly budget meetings by providing a rough order of magnitude estimate or detailed bid to support a budget increase before the work is performed. When an Exception exceeds $100k, it is important to inform NLD about it. A Enforce contracted scopes of work and review the budget before proposing a budget increase due to a change order. All change orders require confirmation of a necessary change to the contracted scope of work, a quantity of material related to that scope change, and the associated unit price. A plan revision can require a change order but should be at the contracted unit pricing for that cost category. MULTIPLE PHASE COMMUNITIES A Multi-phase developments must have segregated schedules and budgets for each phase, and future phases must be updated regularly; at least semi-annually or when a current phase is bid. Current bid data is to be used in updating future phase unit prices with existing or updated quantities. Common budgets should be updated concurrently with each phase budget. A If actual or estimated costs exceed the budget in either current or future phases, the division must update the LD Budget in all phases..

CONTINGENCY There are contingencies in every LD project to compensate for risk and uncertainty inherent in Land Development. Every project will have a different amount of contingency depending on its risk profile and stage of development. When progressing through the LD process (from LOI through design and permitting and into bidding, contracting, and LD start), contingency levels should be evaluated and adjusted based on updated information and risk level. Contingency is based on the status of plans, bid status, and cost to complete, which is a combination of the remaining budget and open POs. Therefore, if a large scope of work such as an amenity is not complete, the remaining budget and/or open PO amounts will dictate the appropriate amount for Contingency. Managing risk during the development of an LD Budget can be done within individual development cost codes or in the contingency cost code. Century’s policy is to place any amount in excess of a contracted budget in contingency. All remaining funds inside cost codes will be moved to contingency during the management of an active LD Budget (after a contract is executed), leaving no contingency in the cost codes. Moving excess funds from individual line items could result in a contingency amount above required thresholds. It is the division’s duty to validate the level of contingency based on the stage of development. A Twenty percent (20%) – Projects or Cost Categories at the conceptual phase with preliminary designs and/or due diligence plans (any complete project plan set that has not received official municipal comments from the first full submittal review). A Fifteen percent (15%) – Projects or Cost Categories with plan sets that have received the first set of municipal comments and final permit plan set approval. A Ten percent (10%) – Projects or Cost Categories with approved plan sets that have been bid out and work awarded (contract signed by both parties with a Notice to Proceed issued). A Projects that are fully contracted and paved are allowed to have less than 10% contingency with approval from NLD and the Regional President and require discussion and approval as a part of the LD2 budget process. A Any remaining contingency level is typically held to address all Land Development close-out items and should be based on the project municipality, surety conditions, and other project-specific criteria. A Upon completing paving, transfer all remaining unused budget to contingency and update the bond release budget for completing any anticipated punch list work to achieve acceptance. A Although complete subdivision plan sets (including environmental, earthwork, wet utilities, and paving scopes) are usually finished before LD begins, other project plan sets (dry utilities, landscape, and amenity plans) that would be completed later may require a higher level of contingency. The following levels of contingency will be held at the associated project milestones:

Best Practice: Verify and update all reimbursement estimates no less than semi-annually.

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