Winning Strategies for Managing Maintenance Costs in Multi-Family Developments

Building maintenance in common interest developments can be a burdensome task, particularly in older developments.  Often it is neglected due to a lack of funding and a belief it’s not necessary.  These two reasons alone account for much of the deferred repairs and high maintenance costs most associations are currently living with.  Deferring routine maintenance only accelerates the damage and overall cost to correct.

One association has been proactive in implementing basic strategies for managing their maintenance and containing costs.  The result has been an extension of the service life of building components, while allowing their reserve funds to accumulate.  In this case, it was the concerned board members who realized they needed to take better control of their association’s funding and develop a plan to implement the needed repairs to their complex. 

Unsure where to start, the board sought the services of a construction consultant to assist in developing a short and long term maintenance repair plan that would reflect both available and projected funding.  The process began several years ago, and the benefits can be seen today as the association is currently on track and up to date with their maintenance requirements. 

At the time, the association was 27 years old, consisted of 96 units in 12 buildings with visible deterioration to the exterior siding and roof covering.  The complex was currently scheduled for repainting, and in the next three years, siding and roof replacement.  All About Homes (AAH) was contacted by the association in 2007 to discuss options for determining needed exterior repairs with the limited funding available.

According to the reserve studies, the wood siding, trim, and roof covering were due for replacement at a projected cost of $2,500,000.00.  Yet, the reserves for the siding and roof replacement were only 40% funded.  The board needed to know how much of the siding and trim required replacement now, and whether the roof covering could be repaired to last another two years.   

 Evaluate the Current Condition

A two-fold approach was employed to assess what work needed to be performed.  First, establish and document the current condition of the exterior siding, trim and roof coverings.  AAH performed a baseline evaluation inspecting the exteriors and roofs, including the detached garages.  Second, the observations were listed for each unit and grouped into three categories: 

§    1) Items needing immediate attention

§  I  2) Items that could wait another year to repair

§  I  3) Items that could be repaired during the routing maintenance of the buildings.

The results of the evaluation revealed that 40% of the siding and 30% of the trim required replacement, which was within the existing available funding.  However the evaluation also revealed unanticipated repairs to approximately 35% of the upper floor wood steps and some repair to the rear decks.  The wood roof covering, although nearing the end of its life, could be repaired to extend its serviceability.  These results gave the board a clearer picture of repair priorities. 

Review Reserve Study, Funding, and Expenses

The board then reviewed the reserve study and its finances.  Although the current reserve study was only two years old, it was discovered replacement costs were not current and square footage amounts were incorrect, rendering the report unreliable.  Wanting accurate information the board commissioned an updated reserve study. 

Based on the available funding and cash reserves, the board set preliminary budgets for the exterior repairs, and began to discuss how the work could be structured to maximize cost savings.  In order to do this, the board divided the work into three categories, exterior (siding, trim, stairs), roof, and painting.   

Determine the Scope of Work

The overall scope of repairs was extensive and involved several components of the building.  How the work was to be performed and the scheduling of the different trades had to be considered and closely monitored.  In order to minimize the uncertainties of the overall job and test the planned process it was decided to stage the job in three phases of four buildings each.  Structuring a job in phases is advantageous for both the association and the contractor.  It limits the work to a specific part of the complex, and allows for a learning curve for the unexpected.

The results of the baseline evaluation were tabulated and listed in a format contractors could use when preparing a proposal.  Guidelines were added to the list of repairs describing the association’s expectations as to how the work was to be done.  For example, it was specified that when replacing the siding proper flashing techniques (some of which were omitted during original construction) were to be employed.  The guidelines also stipulated on when partial sheets of siding and trim could be used as opposed to full pieces.    

Solicitation of Bids

In order to ensure the repairs were performed by qualified contractors, efficiently, and according to the desires of the association, a request for proposals (RFP) was drafted and sent out to roofers, painters, and general contractors.  Each contractor was met on site and walked through the job to point out the specifics of how the work was performed, the staging of the materials, and the scheduling of the various trades.  Meeting with the contractors provided feedback as to what would work best for them, where cost savings could be achieved, and give the board an opportunity to get a sense of the contractor’s potential capabilities and limitations.  As part of the bidding process unit pricing for typical but unseen common repairs was requested of each contractor.

Once the bids were received, the proposals were reviewed with the board.  The time spent developing the RFP and defined scope of work resulted in comparative bid proposals which made it easier for the board to understand the differences in pricing.  Most of the bids were within 10% of one another, eliminating the very high and very low proposals.  Once the bids were narrowed between two contractors, references were checked, and prior jobs were reviewed. 

Check References and Review Prior Work

It is critical to review a contractor’s prior work to evaluate the workmanship.  Of the two general contractors being considered, one was eliminated due to the poor overall workmanship at one of his referred complexes.  This was also true for the painting contractor.  The prior work of both roofing contractors was professional and well done.  After this process, it was evident which contractor was best suited for the repairs to the complex.

Awarding the Contract, Walk the Job.

Once the contracts were awarded, each bidding contractor was notified of the board’s decision, whether they were awarded the contract or not.  Prior to signing the contract, the job was walked again with each contractor to review interfacing with the other contractors, change orders, material storage, hours of operation, protection of the work area, and other restrictions normally associated with working in Community Interest Developments.  .

 Start on a Small Scale

Prior to starting the job, a site construction meeting was held with all contractors, delineating responsibilities and the sequencing of work.  Potential problems and concerns were addressed and resolved. 

Due to the various complexities of the overall job, it was decided to start work on just one of the four buildings to see how the job progressed and what type of issues would have to be dealt with.  The scheduling and interfacing of the contractors went well, however hidden damage was discovered during the removal stage.  The other three buildings were worked on in succession. 

In the interest of efficiency and avoiding slowdowns or work stoppages, AAH was given the authority to approve change orders up to $1,500.00.  Copies of approved change orders were transmitted to the board. 

Knowing change orders were inevitable, we established a per unit price for the siding, trim, and stairs, as well as an hourly rate for a trades person in the contract for the general contractor.  This gave the association some control in verifying if the costs of a change order were appropriate.  

Lessons Learned

The time spent at the beginning of the job closely monitoring the work resulted in large savings in time and money.  Phase 1 (four buildings) of the project took 4 months to complete, and Phase II & Phase III took three months each to complete.  The interfacing of the contractors went smoothly and after the first building, the change orders were controlled. 

Phase I also gave us an opportunity to reassess how the job was being structured.  Contingencies for hidden damages were increased to 15%, close to what the actual expenses were.  It was decided to take the responsibility for painting away from the general contractor and award it to a painting sub contractor.  The quality and execution of the painting did not meet the association’s expectations.  The general contractor and the roofing contractor were awarded contracts for Phases II & III. 

Developing relationships with the contractors, communicating expectations clearly, and weekly site reviews of the work kept the job running smoothly and on schedule.  At the completion of the project, the value of a project manager was evident.  Having a project manager on site to oversee the work and interface with the contractor allowed problems to be resolved quickly and information communicated clearly.

In terms of the total cost of the project, the siding, stair, roof replacement, and painting ended up costing 60% of the reserve estimate and the fees for the project management were approximately 5% of the total job.

Once the work was completed, the board decided to establish a bi-annual evaluation of the complex as a basis for its maintenance needs.  They reassessed the non-critical items from the original baseline evaluation and incorporated them into the annual maintenance schedule.  Within three years their annual maintenance costs were reduced by approximately half, and calls for repairs diminished to a manageable level. 

 John R. Schneider is a licensed general building contractor and certified code specialist. Since 1985, he has been president of All About Homes, Inc., an East Bay consulting company that specializes in the investigation of construction related deficiencies, project management, and the facilitation of disputes between owners, associations, and vendors. Mr. Schneider is a member of the ECHO Maintenance Panel. Questions can be directed to Mr. Schneider at jrschneider@allabouthomes.com, or by calling 510-537-6000

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