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That's Capital! Planning for Capital Improvement Project Contingencies

Sooner or later, every resident living in a condo association ot HOA community will  have to deal with the inconvenience of living through a major capital  improvement project—a roof replacement, an elevator rehab, serious exterior work, or something of  that nature. No matter how carefully the project is scheduled, inevitably it  will be disturbing someone. But with strategic planning and constant  communication between board members, residents, management and the project  crew, the hassle of the project can be significantly reduced.  

 Those Pesky Projects

 All capital improvement projects have their major inconveniences but industry  professionals note that some are definitely more disruptive than others, namely  a roof or façade replacement, or even a road repair.  

 “The most disruptive projects are the ones that obviously are going to interrupt  daily routines of those residents,” says Russ Zwergel, senior manager at Cambridge Property Management in Totowa, New Jersey. “For example, a roofing project where residents' routine is going to be  interrupted because of access to the premises.”  

 Exterior projects such as repaving the parking lot have also proven to require  tip top organizational skills from management. “The milling up of old pavement, preparation of the underlayment and then  actually repaving the lot, you have to keep people off that surface for a  couple of days. When you to take people away from where they are accustomed to  parking, you have to make sure that everything is moved so the project can go  off,” says Scott Dalley, senior vice president at Access Property Management in  Flemington, New Jersey. “Those kinds of projects are typically the most difficult in terms of how they  affect the residents.”  

 Although some projects can be done without interfering with the lives of the  residents, the noise, dust, disruption and general hassle can sometimes be  unavoidable.  

 Prepare Thyself

The impact of a capital improvement project can be reduced if building  administrators prepare both themselves and their residents adequately for an  upcoming project.  

When the board or management is initially planning to undertake the project many  months in advance, it is critical to keep everyone informed about the potential  schedule, costs and purpose. “When boards undertake a large-scale capital  improvement program, such as installing a new roof garden, replacing windows or a heating plant, repaving a parking lot, or restoring the facade, they take on  a serious financial commitment for their building,” says Stephen Varone, AIA, president of New York City-based RAND Engineering & Architecture. “Unfortunately, too many boards forge ahead without taking the necessary steps to  adequately determine the anticipated costs associated with their plans, thereby risking a serious fiscal shortfall.”  

Varone encourages boards to make sure they have adequate funds available for the  projects before jumping in, determine which projects are the most critical at  the time and establish a contingency fund that can cover any unanticipated  costs. Taking these steps can ensure that projects will run smoothly and won't  be interrupted or delayed due to financial constraints.  

For major capital improvement projects, communication is key. “Earlier notice and frequent notice is good,” says Zwergel. When his company was involved in a repainting project in one of  their communities, the last three months they sent out frequent notices to the  residents to remind them of the work that would be done.  

Dalley agrees. “If you are planning to do a parking lot re-pavement project and it is going to  happen in June, you want to start talking about it in February. Not because you  will be able to provide the details but you want to plant the seed and remind  people. You may want to mention it in the newsletter or the website, however  you give information in your community,” he says. This way residents don't feel like the project came out of nowhere,  they were consistently reminded of it, he adds.  

Notices, updates and scheduling regarding the project can be dispersed in many  different forms. Posting updates your community website or sending email blasts  may be the most cost-effective and fastest method, but emails could get lost  and not everyone may check the site, says Zwergel. But all hope is not lost in technology. “Usually when people get burned once on a project because it interrupted their  daily routine, you'll find that they then become a devotee of accessing the  website. But it usually takes that interruption in their lives before that  discipline happens. The website may be useful but people have to get in the  habit of going in there and looking at it,” he says.  

Dalley suggests that using an automatic dialing system the week of or even the  day of the project can be helpful in the final days prior to the start of a  project. “You shoot that out several times so that is really on their mind and if they are  leaving on vacation, they can make appropriate arrangements.”  

 Scheduling the Work

 While there is no job that can be perfectly scheduled, certain actions can be  taken to help minimize the impact on residents.  

 Many times, projects are best completed during the day when residents are at  work or generally away from home. “Doing it while they are away from home makes it more palatable for them. The  hammering and the noise is taking place while they are away. Of course, you  will have some people who are at home, and it will be inconvenient for them,  but you really have to look at your demographic and try to figure it that way,” says Dalley.  

 A lot of times the project dictates when you will be able to do the work.  Obviously, it would be very difficult to revamp the facade or redo the parking  lot in the winter but might be equally as challenging in a summer heat wave. “Certain projects are going to be dictated by climate. You have things like  roofing—you don't want to be opening up roofs or replacing windows in the middle of  winter. Same thing with painting. You don't have the chemistry that's necessary  to paint in 20-degree temperatures. You know you have to do that when it's 50  degrees or above,” Zwergel explains.  

 No matter what time of day or year a project is scheduled, it will for sure be  inconvenient to someone but this should not deter plans or scheduling. “You pretty much have to drive the project. You have to tell the residents this  is when it is happening. You know we're really sorry if it inconveniences some  of you. But you can think about it, if you have this whole logistical string  that you've got to line up between the contractors, the suppliers, the laborers—whatever it is then you can't say to a specific group or small group of  residents that unfortunately we're going to have delay this project because you  guys can't accommodate it,” Zwergel says.  

When Complaints Arise

Unfortunately, no matter how meticulous the organization and how prepped the  residents and team is for the project, problems may arise.  

“This is a fact of life that in a project manager's existence is that things  never go as planned,” says Noel Richardson, an association manager at Cambridge Property Management . “So it's a matter of adjusting those plans and coming up with the best solutions  as quickly as possible. And I think one of the things that empowers the  management company to do that is the confidence of their boards. Whether that  stems straight in giving them certain standard authorities during the life of  the project or it could be in soliciting additional expertise, subject matter  experts—whatever the situation is, so it can be dealt with quickly. It should be dealt  with quickly. That's really key. When you're doing a project, I mean, it's a  schedule. You got two weeks to two months or two years or whatever to finish  this thing and you got a budget to work within. And there are going to be  unforeseen circumstances that crop up.”  

 Ask for Help

 Good communication with your residents is key but some problems can leave even  the most experienced association manager baffled. Turn to higher-ups in the  company first. They may have experienced the same problem or may have another  association manager who has gone through something similar and can offer  first-hand advice or experience. If the project causes any legal glitches, get  advice from an attorney.  

 Richardson stresses the importance of having adequate insurance covering the  project. “The project itself is not a major legal issue. The biggest issue in projects is  actually insurance. Are you covered in case something goes wrong?” he asks.  

Also, organizations, such as the Institute of Real Estate Management (IREM) (which has offices in Las Vegas and Reno) or the Nevada chapter of Community Associations Institute (CAI),  have resources, including back issues  of their publication articles, which are available to members on their  websites. There might be a particular problem with capital improvement projects  that someone has either experienced or can help you with. These organizations  also offer online services to make your job easier.      

Editorial Assistant Maggie Puniewska contributed to this article.

 

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