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PREPARING BUDGETS AND ESTIMATES METHODOLOGY Good budgeting and estimating begin with developing a clear project program including prioritizing the program elements and aligning them with the budget. We begin each project developing cost estimates based on the known information and program. We work with the client to determine the revisions to the program throughout each submittal to maintain accuracy of project costs with budget. Verde Design is actively working throughout the State and understands that market conditions vary. Our team adjusts to local market conditions to provide the most accurate estimating possible. Currently, we are in a period of change from the contractor market back to a more owner friendly market. We are actively seeing more bidders per projects, the combination of escalation has slowed markedly but inflation has allowed for still high pricing. In our book of work, we see prices somewhat flattening from the 12-15% or more gains year over year. Electrical and petroleum influenced industries are still at all-time highs. We consider these items with each estimate. Other markets have remained somewhat stable without huge price fluctuations. Asphalt paving and synthetic turf prices are examples of markets which have been stable, in part due to the low oil prices in the world market. The biggest challenge we have seen for the past few years is not the commodity pricing, but the contractors' ability to staff projects properly due to the shortage of skilled and unskilled laborers. Our strategy to overcome these challenges is a multi -faceted approach to cost estimating, including utilizing relationships in the contractor community to understand current pricing, and preparing additive alternates to our project plans to cushion against market dynamics. CONTINGENCIES UTILIZED Verde Design utilizes the following contingencies as a starting point for most projects: • Survey, Permits, Traffic and SWPPP 3% • Bonding 2% • Mobilization/Project Management 12-15% We have also carried other contingencies as determined by the project and bidding environment: • Escalation +/- 5% (January - July forecasted escalation rate in 2023) • Bidding Contingency +/- 5-10% (Based on the number of bidders received) Our pricing approach includes materials, labor and markups based on proven format we have honed over years of successful project bidding. The trickiest part of cost estimating is the dynamics of the market at the time of bid versus when the plans are completed, which is usually months before in some cases. Adding a bid contingency is good if there is a lag between the final estimate and bidding. CONTINGENCIES UTILIZED Verde Design does not rely on manuals of guidebooks for estimating. We have found these to be unreliable. We focus on getting real costs from suppliers and manufacturers. We communicate with specialty trades to understand costs for asphalt, concrete, electrical, fencing, etc. We can demonstrate the accuracy of this approach through our historical bid results summary. "LAND.S.0 HITE(TUR�E�iCI��VIL ENGINEERING •SPORT PLANNING &DESIGN � r 1