IDENTIFYING AND MANAGING CONDOMINIUM REPAIR PROJECTS
Condominiums are becoming increasingly popular primarily due to spiraling apartment rents, their affordability relative to single family homes, proximity to work, seniors downsizing and homeowners’ desire for community and security. Not surprisingly, many folks buy Condominiums because of the perception that they won’t have to deal with maintenance and repairs. This article will help explain the truth behind the often complicated and costly repair process.
Condominiums, like all homes need preventative maintenance and repairs due to their age, construction defects, or both. When significant preventive maintenance or construction issues arise, every homeowner is compelled to “deal with” repairs in one way or another. Depending on the complexity and potential cost of the repairs, some homeowners choose to get personally involved in the decision making and control process. However, most hope that their elected Board members (homeowners with personal and work lives of their own) have the skills, time, and dedication to realize the best outcomes for the common good and with the least use of funds. While only a select few volunteer to serve on Boards, the folks who elect them expect a high level of responsiveness, expertise and care from their Board members. Occasionally, Boards cannot make timely decisions when they don’t have a quorum at critical meetings, or the Association does not have adequate funds. This results in conditions getting more expensive to fix later when in an emergency or reactive mode.
OBJECTIVES OF THIS ARTICLE
This article focuses on impacts of major building problems which need to be resolved in Condominiums. Who is responsible for capital repairs; who pays for what and how is the repair managed in a way that the repairs are done right and in an affordable manner.
THE CONDO REPAIR PROCESS
Major building repairs can be overwhelming, expensive, and time consuming. The task of planning and executing projects requires considerable time and expertise. Best results are realized when the repairs, whether they be selective or extensive, are done right the first time to avoid recurrent problems and long-term damage.
HOMEOWNERS’ INSTINCTIVE APPROACH AND ASSOCIATED CHALLENGES
Without in-depth knowledge of the causes and the true extent of damage, it is not uncommon for Homeowners’ Associations to have spot repairs carried out by contractors who may not be qualified to recognize a more serious issue. Washington State does not require general contractors and some construction trades to pass any exams or provide any proof of expertise to get licensed. Therefore, homeowners are at a higher risk of realizing unpredictable outcomes. Also, such repairs are usually done with a huge focus on bottom lines. Very often bids are invited without a written scope. Also unknown is whether and how hidden damage is to be addressed and if the repairs would fix and prevent future problems. Oftentimes this approach is adopted and repeated at a considerable overall cost until frustration finally sets in when the Association realizes that its precious reserves have been severely depleted, and the problem has not been corrected.
Association Boards, while having to manage homeowners’ expectations regarding assessments and the cost of capital repairs, also have to contend with the added burden of obtaining funding when all homeowners cannot pay their share. A depressed real estate market, which leaves homeowners with little or no equity, can also exacerbate this problem.
Very few Associations have the necessary funds in Reserve Accounts to fully fund major repairs. Associations are often under pressure to keep from seeking additional funds, and Boards sometimes decide against fully declaring the facts to the homeowners or choose to do nothing. The legal liabilities related to such decisions can be substantial. Also, without proper guidance, an Association might be oblivious about the possibilities of obtaining funding by filing legal claims through proper channels.
THE RECOMMENDED APPROACH
To determine whether spot repairs are feasible, one needs a deeper understanding of the causes of obvious problems. Properly planned and funded repairs, resulting from having the full picture of technical and financial issues and concerns, gain from economies of scale which are significantly lost in spot repairs. Note that spot repairs are distinct from well planned, selective or phased repairs which are done either to better manage cash flow, or to address essential repairs in a prioritized manner.
Experience has shown that Associations which have good leaders and members who are actively engaged in decision making and timely approvals, realize the best results. To develop a functioning team, the Board must determine whether its members are able to spend the time to interact with service providers. Alternately, community members may be appointed to volunteer to act as special project liaisons.
Once the key players are in place, the work of understanding the scope, assembling the construction team and developing budgets begins. The Association must check if it has resources and knowledge to self-manage or if it needs an independent Owner’s Representative & Project Manager to take the project from investigation through completion. If an Association has already engaged design consultants or contractors, it should identify someone who can interpret construction issues, interact with all team members, develop & control budgets and provide overall direction. Otherwise, the overall process can get disjointed and unduly expensive. To decide how best to fill that need, the Association must be mindful of the pieces of the construction puzzle which must be put together.
The following, broad outline shows the project planning and control process, ensuring predictability and successful outcomes. It also helps mitigate homeowners’ doubts and fears regarding the complex process of repairs and lets them know who to turn to for answers.
Overview and Program Support
- Review historical documents and homeowners’ concerns
- Select and engage design and legal consultants and lender, if necessary
- Study the building issues to determine repair priorities
- Develop a project management plan, master schedule, procedures, and budget
- Make presentations to homeowners to explain the findings, potential solutions and costs
Procurement and Design Phase
- Manage initial needs assessment and funding requirements
- Prepare scope of repairs and invite bids
- Analyze bids
- Select construction firm
- Negotiate pricing and contracts
- Manage design team; perform design reviews and studies to balance quality with affordability
- Obtain permits
Construction and Closeout Phase
- Review, monitor, document, and track all construction, meetings, submittals, payment requests
- Review and process change requests
- Resolve disputes
- Verify quality assurance
- Ensure project is completed on schedule and within budget
- Manage warranty services
A PROJECT MANAGER’S ROLE & RESPONSIBILITIES
A Project Manager and Owner’s Representative will provide peace of mind for the homeowners through expert guidance and advocacy during the design and construction process. This results from responsible management of funds and compliance with contract documents including, but not limited to, quality control, scheduling, safety, protection of property, lien releases, warranties, and prevention of disputes. The Project Manager will also support legal and funding processes, which involves in large part convincing the homeowners of the need and cost of repairs.
The Project Manager should not derive any income from any team members working for the Association and should diligently seek and evaluate value engineering options to minimize costs and maximize value. Through dedicated oversight of the design and construction process, savings can help pay for a substantial portion of overall project costs or voluntary upgrades to enhance marketability and equity. Project Management costs can and should be included in the Reserve Study.
MEASURES OF SUCCESS
Finally, the proof of a job well done lies in the perceptions of homeowners regarding the performance of the whole construction team, which also includes the Board. Here are four questions to which every Association should answer yes if it’s been a successful project.
- Were the homeowners able to carry on with their lives during construction?
- Were they treated with respect and provided with a high level of service?
- When problems arose were they resolved quickly and without causing undue anxiety?
- Did they receive value and did the overall experience meet or exceed their expectations in a positive way?
The condominium repair process requires a measured and expert approach, one that keeps budgets in check and provides long-term solutions to construction challenges, resulting in satisfied homeowners.
By Jehan Bharucha
Published by Community Associations Journal