Printing Corporate Fleet Cost

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Quality Fleet Ads, Inc. (QFA) produces        QFA is about to begin its annual
a wide range of decals for displaying         evaluation of proposed projects. Six
promotional messages on fleet vehicles        projects have been proposed as
(including delivery vans, eighteen-           described below. QFA currently has
wheelers and aircraft). Its decals range      annual sales of approximately $7
from flat-color designs to full-color         million. It typically allocates up to 10
photographic reproductions.                   percent of sales to these types of
Although it is one of the oldest forms of
printing, screen printing is superior to      1. Purchase new large press. There is
most of the more modern approaches            currently a 3.5 to 4 week backlog in the
because it permits making heavier             screen printing department. The result of
deposits of ink onto a surface resulting      this is that QFA’s total lead time is 4 to 6
in more vibrant and longer lasting            weeks in comparison to an industry
finishes. Screen printing works by            average lead time of 3.5 to 4 weeks. In a
blocking out areas on a silk screen so        typical month, QFA ships 13 percent of
that ink passes through only the              its orders early, 38 percent on-time, and
unblocked areas to make an impression         49 percent late. It has been estimated
on the vinyl decal.                           that 75 percent of the backlog is waiting
                                              for press 6, the largest press in the shop.
Many in the industry believe that the         Furthermore, press 6 is in dire need of
economics of fleet graphics make them         replacement parts but QFA has been
an extremely attractive form of               unable thus far to locate a source for
advertising and should lead to their          these parts. Given the problem of finding
continued penetration of a largely            replacement parts and the fact that the
untapped market. One industry source          press is somewhat outdated, this
estimated that the cost of fleet graphics     proposal calls for purchasing a new large
works out to be $2.84 per 1,000,000           press for $160,000. Based on estimates
visual impressions. Given the highly cost     that a new large press could process jobs
effective nature of using fleet graphics as   50 to 100 percent faster than press 6, it is
a form of advertising, it is speculated       calculated that the payback period for a
that organizations will increasingly          new large press would be one year.
exploit this form of advertising. In
addition, as organizations become better      2. Build new headquarters. QFA’s CEO
aware of this advertising medium, it is       fervently believes that the company
likely they will want to change their         needs to have a strong corporate identity.
message more frequently. According to         He therefore purchased land and had
managers at QFA, this may be one of the       plans drawn up for the construction of a
major factors that is apparently driving      new corporate headquarters. Analysis of
the competition to focus more on short        the new headquarters indicated that
lead times and prices, and less on decal      although it would improve operating
durability.                                   efficiencies, the savings generated would
                                              not pay for the new building (estimated
                                              to cost $4 million). Many of the board
members viewed the project as too risky       of pursuing this project is estimated to
since it would increase the company’s         be $10,000.
debt as a percent of capital from almost
zero to 50 percent.                           5. Purchase and install equipment to
                                              produce four-color positives in-house.
3. Pursue ISO 9000 certification. This        The lead time to have positives made by
proposal also comes from QFA’s CEO.           an outside supplier is typically one week
ISO 9000 is a set of standards that           and costs $1,500 to $6,000. According to
provides customers with some assurance        this proposal, the cost of purchasing the
that a supplier follows accepted business     equipment to produce four-color
practices. In some industries obtaining       positives      in-house      would       be
ISO 9000 certification is essential, such     approximately $150,000 plus $25,000
as in industries that export to Europe and    for installation and training. The variable
the domestic automobile industry. It was      costs of producing positives in house are
less clear what competitive advantage         estimated to be $375 per job. If produced
pursuing ISO 9000 would provide QFA           in-house, the lead time for the four-color
at this time. On the other hand, the          positives would be approximately an
process alone would help it document          hour-and-a-half.
and perhaps improve its processes. The
cost of this initiative was estimated to be   6. Purchase inkjet printers. An
$250,000 to $300,000 and would take           alternative to purchasing a new screen
one year to complete.                         printing press is to add capacity based on
                                              newer technology. Given the inkjet’s
4. Develop formal procedure for mixing        production rate, six inkjet printers at a
inks. This proposal comes from QFA’s          cost of $140,000 would be needed to
plant manager. At present, mixing inks is     provide the equivalent capacity of a new
a highly specialized skill that consumes      large screen printing press. The major
2-3 hours of the team leader’s time each      disadvantage of the inkjet printers is that
day. This project would focus on              compared to the screen printing process,
developing ink formulas to make the           the outdoor durability is more limited. In
task of mixing inks more routine, and         general, inkjet printers are more
less specialized and subjective. The team     economical for small orders, while
leader is paid $25,000 annually. The cost     screen printing presses are more
                                              economical for large orders.
                                              member of the bank’s help desk
First State Bank (FSB) is a regional bank     provided him with exposure to a variety
with branches throughout the northwest.       of areas in the bank. He quickly gained a
In early 2002 the bank launched a Web         reputation for being able to solve
site that provides its customers with the     difficult technical problems. In addition,
ability to check account balances, obtain     users of the bank’s various computer
information about the bank’s various          systems were often heard commenting
services, obtain contact information and      on how service oriented Bob was and on
email questions, and link to a variety of     his ability to describe concepts in
other useful sources of information.          nontechnical terms.
Given the site’s tremendous success,
competition from both traditional and         Because of both his technical knowledge
nontraditional organizations, and the         related to hardware and his ability to
desire to expand its presence beyond its      program, Bob was selected to develop
current geographical area, FSB decided        the bank’s Web site in 2001. Bob
to expand its online offerings                worked alone on this project and had
significantly. More specifically, FSB         frequent meetings with one of the bank’s
would like to expand its Web site to          directors of Information Systems, who
include an online bill payment service,       supervised the project. Initially, the
allow customers to apply for credit cards     director did most of the design work and
and loans online, open accounts online,       Bob did the computer programming.
and manage their investment portfolios        Bob often proposed alternative ways for
online.                                       incorporating key features into the Web
                                              site, and the director would choose
Vice-President of Information Systems,        among the options Bob identified.
Joan Bennett, has been charged with           Toward the end of the development
overseeing the project. One of her first      project, Bob began to take a more active
tasks is to select the project manager.       role in proposing features to include in
Because of the strategic importance of        the site.
the project, she has a strong preference
for staffing the project internally as        The development project was largely
opposed to employing the services of          completed on time and on budget,
one of the many consulting firms              considering the changes in the scope of
available that specialize in these types of   the project that were made as the project
projects. After developing a list of ten or   progressed. Several suggestions that
so possible candidates to serve as project    would have extended the site’s
manager, she has finally narrowed the         functionality were tabled to be
list down to the two finalists described      considered after the site was officially
below.                                        launched.

Bob Dixon                                     In his current position as Webmaster,
Bob joined FSB in 1998 after graduating       Bob is in charge of maintaining the
from a well-respected small private           bank’s Web site. Although Bob’s staff
school with a degree in computer              now includes a programmer and a
science. His first assignment as a            hardware specialist, his approach is very
much hands on, staying involved with all    various issues were interrelated. His
technical aspects of the site. Bob has      evaluations further recognized him as “a
developed an excellent rapport with his     highly motivated self-starter with very
two direct reports, and they have           good     organizational     skills.” His
emulated much of Bob’s style including      organizational skills also helped him
working long hours and even competing       effectively present information, and he
to see who can accumulate the largest       was often requested to make short
number of soft drink cans, empty candy      presentations related to a particular
wrappers, and computer printouts on one     project’s status to senior management.
                                            By almost all accounts, Jim was
Jim Mason                                   considered      highly       competent,
Jim Mason also joined the bank in 1998      completing assigned tasks in a timely
after completing his MBA at a large         fashion with little or no direct
public university. Jim entered graduate     supervision. At the same time, Jim
school immediately after graduating with    always made it a point to communicate
a Civil Engineering undergraduate           regularly with other project team
degree at the same university.              members to keep them abreast of his
                                            progress. He was often passionate about
Jim spent his first year rotating between   his ideas and was typically able to get
various departments in the bank’s           buy-in from other team members for his
management training program. After          ideas.
completing this training, Jim requested
permanent assignment to the operations      Jim is almost always seen carrying his
group. His initial assignment was to        planner. As an avid stock investor, he
oversee the check encoding operation.       makes it a point to stay abreast of trends
After implementing several process          in technology. He has a basic
improvements, Jim was eventually            understanding of how the Internet works
promoted to senior operations analyst       and knows all the important buzz words.
and worked on several large process         While he has fooled around and created
improvement projects.                       a couple of Web pages, he knows very
                                            little   about     more      sophisticated
Performance    evaluations    of   Jim      programming languages such as Java,
suggested that one of his greatest          and knows even less about computer
strengths was his ability to step back      hardware beyond its basic purpose.
from a problem and understand how the

On January 4, 2005, senior executives at    Enterprises informed Finmore that,
Finmore Inc. were overjoyed at being        owing to a projected cash flow problem,
awarded an important contract from          follow-on work would not be awarded
Madison Enterprises. This Madison           until the first week in March (2006).
Project, if managed correctly, offered      This posed a tremendous problem for
tremendous opportunities for follow-on      Nancy Li because she did not wish to
work over the next several years.           break up the project office and team. If
Finmore’s management viewed the             she permitted her key people to be
Madison Project as providing strategic      assigned to other projects, there would
opportunities for future growth.            be no guarantee that she could get them
                                            back at the beginning of the follow-on
The Madison Project was expected to         work. Good project office personnel are
take ten months and involved developing     always in demand.
a new product for Madison Enterprises.
Madison informed Finmore that sole-         Rather than disband the team, another
source production contracts would           option would be to support the team for
follow, for at least five years, assuming   four months and temporarily assign
that the initial R&D effort proved          people to small special projects on other
satisfactory. All follow-on contracts       programs. In order to support and
were to be negotiated on a year-to-year     maintain her key people during the
basis.                                      November through February “lull”
                                            period before follow-on work would
Nancy Li was selected as project            start, Nancy estimated that she would
manager. Although she was young and         need to spend $120,000.
eager, she understood the importance of
the effort for future growth of the         At the weekly team meeting, Nancy told
company. Nancy was given some of the        the project team that they would have to
best employees for the project team.        “tighten their belts” in order to establish
The Madison Project maintained a            a management reserve of $120,000. The
project office of seven full-time people,   project team understood the necessity for
including Nancy, throughout the             this action and began rescheduling and
duration of the project. In addition,       replanning until a management reserve
eight people from the functional            of this size could be realized. Because
departments were selected for the team:     the contract was firm-fixed-price, all
four full-time and four half-time.          schedules for administrative support
                                            (i.e., project office and project team
Even though the workload fluctuated         members) were extended through
somewhat, the staffing level for the        February 28 on the basis that this
project office and team members was         additional time was needed for final cost
constant throughout the project at 2,080    data accountability and program report
hours per month. The company assumed        documentation.
that each hour worked incurred a cost of
$60.00 per person, fully burdened.          Nancy informed her boss, Jack Boles,
                                            the    division   head     for    project
At the end of June, with four months        management, as to the problems keeping
remaining on the project, Madison           the team together during the lull period.
Jack was the intermediary between              (Jack’s) end-of-year bonus. Jack and
Nancy and the general manager. Jack            Nancy argued for a while, with Jack
agreed with Nancy’s approach to the            constantly saying, “Don’t worry! You’ll
problem and requested to be kept               get your key people back. I’ll see to that.
informed.                                      But I want those uncommitted funds
                                               recorded as profit and the program
On September 16, Jack told Nancy that          closed out by November 1.” Nancy was
he wanted to “book” the management             furious with Jack’s lack of interest in
reserve of $120,000 as excess profit for       maintaining the current project team.
the year since it would influence his

Discussion Questions

1. Should the key people be supported to preserve the team during the lull period, or
2. What should Nancy Li do now?
3. From Nancy’s perspective, what could she have done differently to avoid having the
   management reserve fund being swept away by her boss?
                                    Conflict Exercise

                               Role Sheet for Dr. Jones

You are a research scientist who recently      you were depending on was killed by an
developed a vaccine to prevent Stache, a       unseasonable freeze just prior to the
children’s disease that permanently            outbreak of Stache. Therefore, you must
disfigures the victim and can cause brain      obtain mature veginot rinds immediately
damage. The disease had been extremely         or it will be too late to prevent the spread
rare, and your research was not                of Stache.
considered      particularly    valuable.
However, there has now been an                 Your search has turned up only one crop
outbreak in a small community, and             of mature veginots. This crop is just
several thousand children are in danger        large enough to produce the vaccine
if they do not immediately receive a           needed for the children who are in
vaccine for Stache. The consequence of         imminent danger of Stache, and the
no vaccine, of course, could be a              owner of the crop will sell it to the
nationwide or worldwide epidemic.              highest bidder.

If the company for which you work can          Dr. Richards, a researcher employed by
produce enough vaccine to stop the             a successful competitor of your
potential epidemic, it will probably           company, is also in need of veginots.
receive enough government grants to            You are not sure of the type of research
bring it out of its precarious financial       Richards is doing, but it has something
position. And, of course, it will receive      to do with national security. Richards
worldwide publicity for its contribution       knows about the available veginots and
to humanity. Needless to say, you will         intends to buy them.
be the star of the entire episode.
                                               You have been authorized to obtain the
Unfortunately, the veginots, which you         veginot rinds that you need, and your
use to develop the vaccine, are rare. The      company is willing to pay $3 million.
veginot, an experimental melon that has        However, you have decided to talk to
a toxic rind when it matures, takes four       Dr. Richards before approaching the
months to produce the toxin. You need          owner of the veginot crop. You hope to
the toxin for your vaccine, and the crop       persuade Richards not to bid on the crop.
                                      Conflict Exercise

                                Role Sheet for Dr. Richards

You are a research scientist who is               Your search has turned up only one crop
working on some secret projects for               of mature veginots. This crop is just
national security. You accidentally               large enough to produce enough Zeno to
discovered that Zeno, a substance that            seed clouds over the cities that are
your group created, would neutralize              potential targets for the bomb. The
radioactive fallout. By the time you              owner of the crop will sell it to the
made this discovery, there was very little        highest bidder.
Zeno left. None of the ingredients of
Zeno are difficult to obtain except               Dr. Jones, a researcher for a small
veginot seeds. The veginot, an                    competitor of your company, is also in
experimental melon, takes four months             need of veginots for some sort of
to produce the seeds needed for Zeno.             research on a rare disease. Jones knows
                                                  about the available veginots and intends
It has been confirmed that a group of             to buy them.
terrorists are planning to set off a nuclear
bomb within a few days in a certain               The Federal government, though not as
Middle-East country. Although the                 convinced as you are about the value of
target city is unknown, several are most          Zeno, has authorized you to offer up to
likely. If enough Zeno is available, it can       $3 million to obtain the veginot seeds.
be used to seed clouds over these cities.         However, you have decided to talk to
Your experiments indicate that the rain           Dr. Jones before approaching the owner
produced by these clouds will protect a           of the veginot crop. You hope to
city from fallout if the nuclear explosion        persuade Jones not to bid on the crop.
occurs within two weeks. Naturally, the
cloud seeding must be kept secret.

DynaTech Equipment Corp. manufactures           how long it will take, and what the
cell phones in four locations around the        deliverables are.
globe. To meet expected growth in South
America, DynaTech would like to expand its      If the project gets management’s approval
Argentina plant.                                and       management        provides      the
                                                appropriations, the project progresses to the
The project to expand the Argentina facility    third phase, design and construction. This
involves four major phases: (1) concept         phase consists of four major activities: (1)
development, (2) definition of the plan, (3)    detailed engineering, (2) mobilization of the
design and construction, and (4) start-up and   construction employees, (3) procurement of
turnover. During the concept development        production equipment, and (4) construction
phase, a program manager is chosen to           of the facility. Typically, the detailed
oversee all four phases of the project, and     engineering and the mobilization of the
the manager is given a budget to develop a      construction     employees      are     done
plan. The outcome of the concept                concurrently. Once these activities are
development phase is a rough plan,              completed, construction of the facility and
feasibility estimates for the project, and a    procurement of the production equipment
rough schedule. Also, a justification for the   are done concurrently. The outcome of this
project and a budget for the next phase are     phase is the physical construction of the
developed.                                      facility.

In the plan definition phase, the program       The final phase, start-up and turnover,
manager selects a project manager to            consists of four major activities: pre-start-up
oversee the activities associated with this     inspection of the facility, recruiting and
phase. Plan definition consists of four major   training the workforce, solving start-up
activities that are performed concurrently:     problems,      and    determining      optimal
(1) defining the project scope, (2)             operating parameters (called centerlining).
developing a broad schedule of activities,      Once the pre-start-up inspection is
(3) developing detailed cost estimates, and     completed, the workforce is recruited and
(4) developing a plan for staffing. The         trained at the same time that start-up
outputs of this phase are combined into a       problems are solved. Centerlining is initiated
detailed plan and proposal for management       upon the completion of these activities. The
specifying how much the project will cost,      desired outcome of this phase is a facility
                                                operating at design requirements.
Activity Duration Estimates:                        Activity                     Duration
                           (months)                 Design and Construction
Activity                   Duration                   Detailed engineering           3
Concept Development          12                       Facility construction         12
Plan Definition                                       Mobilization of employees 2
  Define project scope        2                       Procurement of equipment 3
  Develop broad schedule      0.5                   Start-up and Turnover
  Detailed cost estimates     0.3                     Pre-start-up inspection        0.5
  Develop staffing plan       0.3                     Recruiting and training        0.5
                                                      Solving start-up problems      1
                                                      Centerlining                   1

ID#   WBS#   Activity                      Duration
                                                      (use WBS#)
 1           Concept Development             12

 2           Plan Definition                           -----------

 3             Define project scope           2

 4             Develop broad schedule        0.5

 5             Detailed cost estimates       0.3

 6             Develop staffing plan         0.3

 7     3     Design and Construction                   -----------

 8     3.1     Detailed engineering           3

 9     3.2     Facility construction         12

10             Mobilization of employees      2

11             Procurement of equipment       3

12           Start-up and Turnover                     -----------

13             Pre-start-up inspection       0.5

14             Recruiting and training       0.5

15             Solving start-up problems      1

16             Centerlining                   1
ENVIROSAFE PROJECT case                               Project Manager: “The customer was willing to
                                                      pay for the remake units. This was established in
The Envirosafe Company production project             the contract. Unfortunately, our contract people
was completed four months behind schedule and         didn’t tell me that we were still liable for the
at a cost overrun of approximately 50 percent.        penalty payments if we didn’t adhere to the
Following submittal of the final report, Don          original schedule.”
Jackson, the director of project management,
called a meeting to discuss the problems              Don Jackson: “Don’t you feel that
encountered on the Envirosafe Project.                misinterpretation of the terms and conditions is
                                                      your responsibility?”
Don Jackson: “We’re not here to point the finger
at anyone. We’re here to analyze what went            Project Manager: “I guess I’ll have to take some
wrong and to see if we can develop any policies       of the blame.”
and/or procedures that will prevent this from
happening in the future. What went wrong?”            Functional Manager: “We need specific
                                                      documentation on what to do in case of
Project Manager. “When we accepted the                specification changes. I don’t think that our
contract, Envirosafe did not have a fixed             people realize that user approval of specification
delivery schedule for us to go by because they        is not a contract agreed to in blood.
weren’t sure when their new production plant          Specifications can change, even in the middle of
would be ready to begin production activities.        a project. Our people must understand that, as
So, we estimated 4,000 units per month for            well as the necessary procedures for
months five through twelve of the project. When       implementing change.”
they found that the production plant would be
available two months ahead of schedule, they          Don Jackson: “I’ve heard that the functional
asked us to accelerate our production activities.     employees on the assembly line are grumbling
So, we put all of our production people on            about the Envirosafe Project. What’s their
overtime in order to satisfy their schedule. This     gripe?”
was our mistake, because we accepted a fixed
delivery date and budget before we understood         Functional Manager: “We were directed to cut
everything.”                                          out all overtime on all projects. But when the
                                                      Envirosafe Project got into trouble, overtime
Functional Manager: “Our problem was that the         became a way of life. For nine months, the
customer could not provide us with a fixed set of     functional employees on the Envirosafe Project
specifications, because the final set of              had as much over time as they wanted. This
specifications depended on OSHA and EPA               made the functional employees on other projects
requirements, which could not be confirmed            very unhappy.
until initial testing of the new plant. Our people,         “To make matters worse, the functional
therefore, were asked to commit to man hours          employees got used to a big take home paycheck
before specifications could be reviewed.              and started living beyond their means. When the
      “Six months after project go-ahead,             project ended, so did their overtime. Now, they
Envirosafe Company issued the final                   claim that we should give them the opportunity
specifications. We had to remake 8,000                for more overtime. Everybody hates us.”
production units because they did not live up to
the new specifications.”                              Don Jackson: “Well, now we know the causes of
                                                      the problem. Any recommendations for cures
                                                      and future prevention activities?”

First Technology Equipment, Inc. (FTE)        higher-grade component that sells for
has received a onetime contract to design     $72 with quantity discounts. The new
and build 10,000 units of a new product.      price is substantially higher than what
During      the     proposal     process,     you had budgeted. This will create a cost
management felt that the new product          overrun.
could be designed and manufactured at a
low cost. One of the ingredients              You meet with your manufacturing team
necessary to build the product is a small     to see if they can manufacture the
component that can be purchased for $60       component at a cheaper price than
in the marketplace, including quantity        buying it from the outside. Your
discounts. Accordingly, management            manufacturing team informs you that
budgeted $650,000 for the purchasing          they can produce a maximum of 10,000
and handling of 10,000 components plus        units, just enough to fulfill your contract.
scrap.                                        The setup cost will be $100,000 and the
                                              raw material cost is $40 per component.
During the design stage, your                 Since FTE has never manufactured this
engineering team informs you that the         product before, manufacturing expects
final design will require a somewhat          the following defects:


      % defective        0    10    20    30    40
      Probability of    10    20    30    25    15
        occurrence (%)

So for example, there is a 25% probability that 30% of the components manufactured
would be defective. All defective parts must be removed and repaired at a cost of $120
per part.

BestTech ComLink Corp. was a                    recommended the termination of both
telecommunications          manufacturer        projects.      Technical breakthroughs
specializing in networking equipment for        seemed unlikely, and the schedule
the healthcare industry. In June 2004,          appeared unduly optimistic.           But
the executive committee of BestTech             terminating the projects this early would
ComLink reluctantly approved two R&D            certainly not reflect favorably upon the
projects    that    required     technical      sponsors. Reluctantly, both sponsors
breakthroughs. To make matters worse,           agreed to continue the projects to the
the two products had to be developed by         third gate in hopes of a “miracle.”
the summer of 2005 and introduced into
the marketplace quickly.        The life        During the third gate review, the projects
expectancy of both products was                 were still in peril.       Although the
estimated to be less than one year              technical breakthrough opportunity now
because of the rate of change in                seemed plausible, the launch date would
technology. Yet, despite these risks, the       have to be slipped, thus giving BestTech
two projects were fully funded. Two             ComLink a window of only six months
senior executives were assigned as the          to sell the products before obsolescence
project sponsors, one for each project.         would occur.

BestTech ComLink had a world-class              By the fourth gate review, the technical
project management methodology with             breakthrough had not yet occurred but
five life cycle phases and five gate            did still seem plausible. Both project
review meetings.       The gate review          managers were still advocating the
meetings were go/no-go decision points          cancellation of the projects, and the
based upon present performance and              situation was getting worse. Yet, in
future risks.      Each sponsor was             order to “save face” within the
authorized and empowered to make any            corporation, both sponsors allowed the
and all decisions relative to projects,         projects to continue to completion. They
including termination.                          asserted that, “If the new products could
                                                not be sold in sufficient quantity to
Company politics always played an               recover the R&D costs, then the fault
active role in decisions to terminate a         lies with marketing and sales, not with
project. Termination of a project often         us.” The sponsors were now off the
impacted the executive sponsor’s                hook, so to speak.
advancement opportunities because the
projects were promoted by the sponsors          Both projects were completed six
and funded through the sponsor’s                months late. The sales force could not
organization.                                   sell even one unit, and obsolescence
                                                occurred quickly. Marketing and sales
During the first two gate review                were blamed for the failures, not the
meetings,    virtually   everyone               project sponsors.

Discussion Questions
1. Should the project have been terminated? When?
2. What should the company do differently so that this situation does not happen again?

To construct a high-quality, custom home within five months at cost not to exceed

• A 2,200-square-foot, 2½-bath, 3-bedroom, finished home.
• A finished garage, insulated and sheetrocked.
• Kitchen appliances to include range, oven, microwave, and dishwasher.
• High-efficiency gas furnace with programmable thermostat.

1. Permits approved—March 5
2. Foundation poured—March 14
3. Dry in. Framing, sheathing, plumbing, electrical, and mechanical inspections passed—
   May 25
4. Final inspection—June 7

1. Home must meet local building codes.
2. All windows and doors must pass NFRC class 40 energy ratings.
3. Exterior wall insulation must meet an “A” factor of 21.
4. Ceiling insulation must meet an “R” factor of 38.
5. Floor insulation must meet an “R” factor of 25.
6. Garage will accommodate two large-size cars and one 20-foot Winnebago.
7. Structure must pass seismic stability codes.

1. The home will be built to the specifications and design of the original blueprints
   provided by the customer.
2. Owner responsible for landscaping.
3. Refrigerator is not included among kitchen appliances.
4. Air conditioning is not included but prewiring is included.
5. Contractor reserves the right to contract out services.
6. Contractor responsible for subcontracted work.
7. Site work limited to Monday through Friday, 8:00 A.M. to 6:00 P.M.

John and Joan Smith

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