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Best Practices - Option Management

Revised October 24, 2008

The following Best Practice was provided by the Professional Service team at BuildTopia. To share your best practices visit our user forum @ http://groups.google.com/group/buildtopia

This best practice includes the following subjects;

• What should I include in my master option list?
• How can I handle allowances?
• Packages versus Individual Options?
• Should I utilize the 'Standard Options' in BT?
• Option Numbering

If you are creating your first options list or getting ready to add several options - you might want to use the options upload template to start capturing your options. Click here to download the template.

What should I include in my master options list?

Base House versus Option?

Base House.  Anything that is included with the home and does not (1) reflect a change in price nor (2) requires a decision on color, location, quantity, and level/upgrade should be included in the base house.

Option.   Anything that is (1) NOT included in the base house, (2) reflects a change in price, or (3) requires a decision on color, location, quantity, and level/upgrade should be included in your options list.

Many customers question which “standard features” should be included in the base house and which should be considered an option in BuildTopia.  One universal example is structural elevations.  The key to deciding if the item is an option is to ask yourself this question: Does this require a decision – any decision, even if it is a decision only re: color or wood type – by the buyer?  If so, it should be an option.

Administrative Fees

The user charges administrative fees (e.g., change order fee) to customers that they want to reflect on the sales contract.   As a best practice, these “fees” can be set up as options – within a single option category and with either a fixed or overridable price.

Advantages

Any monies charged to the customer will reflect on change orders or the sales contract for easy tracking.

Additional Considerations

BTBuilder - What cost code will you associate to this option? If there is not a cost associated, you can create an internal trade and an internal activity code that will serve as a placeholder.

How can I handle allowances?

Vendor Allowances versus Builder-Managed Options?

The user establishes a pre-set monetary limit (i.e., allowance) that the buyer uses to make option selections directly with a vendor.

Advantages

• It’s simple!  Create each allowance as a price overridable option.  
• Lets the vendor manage all selections freeing up the sales team to focus on other prospects/buyers.

Additional Considerations

• The vendor provides selection details to the sales team, who updates information in selection notes for capture on the sales contract.  
• Amounts spent more or less than the allotted allowance are reconciled as change orders.
• The allowance must be price overridable to allow for different allowance amounts.
• Purchase order/Cost must be manually changed to capture monies to go to trade partner

Packages versus Individual Options?

Packages.  Grouping of options into packages that are priced and sold together.

Advantages

• Simplifies decision making process for prospect/buyer.  
• May speed the selection process and lead to sales contract more quickly because customer has less to decide.  
• Easier option management due to reduced number of options.
• Easier to market, advertise and sell packaged options – packages are priced so the highest upgrade seems like the best bargain.
• Options dependent on one another can be grouped together to minimize errors during selection (e.g., cabinets and knobs, sinks and faucets).

Additional Considerations

• Packaged may be difficult to define to suit the average buyer.
• Prospects/Buyers may feel “boxed in” if pre-determined packages don’t suit them.
• Some packages can be quite large and a difficult “fit” within character limitations of option description and selection notes fields.
• May have to use NSOs (non-standard options) to account for package deviations desired by the prospect/buyer.

Individual Options. “A la carte” options sold separately or individually.

Advantages

• Allows the prospect/buyer to “customize” option selections, while the user retains an established list of options.
• Prospects/Buyers may feel it’s easier to understand a single option and what is included as opposed to a package.
• More friendly when options vary across plans, as they don’t require redefinition of packages.

Additional Considerations

• Increases the decisions made by the prospect/buyer, which may equate to a longer selections process.
• The sales team must be well-versed in related options so all “required” options are chosen.

Should I utilize the standard option functionality in BT?

Making an option 'Standard' in BuildTopia does two things;

1. Adds the option with a quantity of one (1) automatically upon selection of the plan that the option is associated.
2. A standard option is included on the plan Proforma Budget reports – allowing the user to see the Proforma Budget vs. the Primary Contract for Standard Options so that there is a clear ‘picture’ of the base house.

Advantages

• Builder can quickly see the budget for the entire house including standard options
• Sales staff will not forget to capture standard option selection notes
• Ability to clearly see the cost for options

Additional Considerations

• Do you include ALL of your standard options – or just the ones that need additional information; i.e. color of stove, color of paint, and color of carpet?
• The margin calculator in SM > Price Options will not function with the full cost of the option. See example below.
• Required to understand and inform Trade Partners how you are costing the options; incremental cost or entire cost of options.

• You can still mark an option as standard and cost the option like Example 1 above.

Option Numbering

Using some sequencing strategy for option codes is advantageous to the user.

• It allows the user to add more options at any point and keep them in logical order.
• It allows the user to decipher the “meaning” of options, e.g., the room to which the option belongs.
• Don't forget to document your option numbering and save it to your BT data library for use when you are adding more options.

Cat.Room.Sequencer

Identifies the option by its category and its room location.

Advantages

• Complements and re-enforces use of “by room” option categories.
• Data aligns well visually on screen, making the BT user interface easier.

Additional Considerations

• If adding an “all/multiple rooms” option category, the user will need to also create a number system for these options.

Example:

A user that offers four options for kitchen sinks and three options for kitchen faucets may be coded as follows.

Kitchen sinks: 104-117-001, 104-117-002, 104-117-003, 104-117-004

Kitchen faucets: 104-217-001, 104-217-002, 104-217-003

First Section XXX-xxx-xxx

• The first section of digits matches the first few letters of the option category name or the option category number.
• 104-xxx-xxx indicates that the option falls within the “104.Plumbing Options” category.
• ALTERNATIVE - Categories could also be identified with a 3 digits Alpha.
• PLU = Plumbing
• CAB = Cabinets
• FLO = Flooring
• MED = Media

DECISION POINTS:

1. Do you want the options to list in alpha-numeric sequence or numeric sequence?
2. Decide upon your option categories prior to deciding on your option numbering methodology.

Second Section xxx-0XX-xxx

• Subsequent sections of digits indicate additional details regarding the option, such as the location of the option (e.g., interior level/room or exterior) and often include sequencing digits for greater flexibility.  
• xxx-017-xxx indicates that the option is on the main level (1) in the kitchen (room 7).  
• ALTERNATIVE - Rooms could also be identified with a 3 digits Alpha.
• MBA = Master Bath
• KIT = Kitchen
• BA2 = Hall Bath
• INT = Non room specific Interior Options
• EXT = Non room specific Exterior Option
• ADVANCED - xxx-1xx-xxx and xxx-2xx-xxx sequences all variations of those options together; 1= sinks, 2 = faucets

DECISION POINT: Come up with list of all possible rooms. Example

DECISION POINT: Do you want the rooms sorted alphabetically or by room number?

Third Section xxx-xxx-XXX

• The final section of digits is often used to indicate the finishing level of the option.
• xxx-xxx-001 indicates a level one finish; for most builders this is the standard “option.”
• xxx-xxx-101 the first digit in the last section provides additional room for sequencing.

DECISION POINT: Is '00' the standard or is '01' the standard? Subsequent option levels would be 02,03...

REMEMBER: The user may include as many sections – and as many digits within a section – as desired. There is no one way to do this.  Ordering the rooms in a logical “walk-through” order allows sales reps to take the prospect/buyer on a visual tour of the house.  It also keeps options well-ordered for the Production, Construction, and Sub/Vendor teams via the Lot Details Reports.

Cat.Sequencer

Identifies the option by category.

Advantages

• It’s simple and easy to understand!
• The sequencer can be used to further “define” the option number (e.g., options ending in double zeros ‘00” are standard options).

Additional Considerations

• Provides less detail on the option, which is easily addressed with the option description field.
• Increased potential to run out of space to add additional options.

Example

The option number uses sections of digits or letters, such as AAA-000.

• The first section of digits matches the first few letters of the option category name.
• The second section of digits is used to indicate the finishing level of the option.