If you have occupied or managed a Florida Condominium Association for more than a few years, chances are you have been through a concrete restoration project. And chances are it wasn’t very fun.
Statistically, your project exceeded its budget or schedule—probably both. Most Florida Condominium concrete restoration projects exceed their original estimated schedule and budget, leaving homeowners and Boards in stressful, uncomfortable, and expensive situations. Change orders. Overages. Delays. Chaos…. It happens over and over and can almost always be traced to one thing: lack of preparation and planning during the pre-construction phase.
The most critical phase of any major restoration project is this first phase: the time when the Association finds and contracts the right Engineer for the job and then releases that Engineer to develop the specifications that will act as the roadmap for the rest of the project, and will ultimately determine the project’s direction, budget and potential success.
The two most common mistakes made by Association Boards during this critical phase are:
- Rushing the process (and rushing the Engineer):
Any major project on the horizon can create tension within the community. Boards are under tremendous pressure to get a lot done quickly, and are often driven by deadlines such as: the next election, the next Board meeting, the snowbird season, hurricane season, etc. Unfortunately, a well-planned and well-designed project may not be achievable within the Association’s desired deadlines.
Establishing deadlines based on the Board’s agenda rather than the project’s needs often causes Board members and Design Professionals to overlook critical elements that should have been considered.
Without taking the time to thoroughly understand the current conditions of the building, scope of work, potential pitfalls, other areas that may be affected by the work, and the estimated quantities of work to be performed, the Association will not have an accurate idea of what to expect from a financial standpoint. Reality will hit sooner or later, and if the project is already under construction, it will be too late.
The solution: Take the time to advocate for your Association, ask questions, allow the professionals to investigate and consider all possible factors, outcomes and costs during the pre-construction phase.
- Underestimating quantities: Creating a scope of work and budget that reflect what the Association wants—not what it needs.
How does this happen?
Unit pricing: Restoration projects are based on estimated quantities and costs per unit of measure. Contractor bids are submitted based on the contractor’s cost per estimated square foot, linear foot etc. for specific repair types that may be needed during a concrete restoration project (overhead repairs, full depth repairs, etc.). This cost per unit is then multiplied by the Engineer’s estimated quantities of each repair type, based on his or her inspection of the building.
Economies of scale: As with many other commodities, contractor unit prices are based on economies of scale: the greater amount of work there is to be done, the lower the cost per unit. Conversely, the smaller the scope of work is, the higher the unit costs. You would not pay the same price per square foot to install floor tile in a small bathroom as you would to install tile in an entire department store. Concrete restoration is the same.
The problem: underestimated quantities.
The reality of a concreate restoration project can be overwhelming, anxiety-producing, and major source of contention, panic and chaos in an Association. Boards and homeowners worry about the financial impact of the project, the day to day disturbance in their lives, and the long and short-term effects on their property values, among many other things. It is a stressful and emotional time for everyone the community.
Under this great pressure, it is tempting for Boards and even Association-hired professionals to hope and plan for the best possible outcome—that the amount of work will not be “that bad.” It makes the politics, the budgeting and the interactions with homeowners easier. It helps the community feel more comfortable with the situation—for the time being.
The problem with assuming the best possible outcome in a concrete restoration project, is that there is little room to negotiate with reality. Engineering standards and code-compliance require concrete and steel reinforcement that contain certain levels of deterioration, to be repaired. The exact amount and nature of the repairs in a concrete restoration project cannot be known until the work begins and concrete is chipped away to reveal the underlying conditions, and the reality is what it is, regardless of what the hope was.
So while assuming the scope of work is “not that bad” from the beginning of the project may be comforting to your Associations’ homeowners for a time, at the end of the day, the reality will become apparent, and the Association may have committed to a high unit cost and an inadequate budget, exposing the Association to excessive Change Orders and leaving homeowners financially unprepared.
Case Study: Miami Beach
Background
An iconic hi-rise Condo in the heart of Miami Beach knew it needed concrete restoration and had a budget in mind based on the Association’s reserves and what the Board was willing to assess against the homeowners. The Association engaged an Engineer to create specifications and estimated quantities for the work. These estimated quantities were based on a limited inspection of the building and were significantly lower than the typical estimated quantities of repair work for a building of similar size and age. Upon review of the Engineer’s package and contractor’s bids, the Board requested the Engineer further reduce certain estimated quantities so the contractor’s bids would fit into Board’s pre-established budget. Because the quantities estimated were low, the contractor’s price per unit was high.
What happened?
A contractor was selected and engaged based on the estimated quantities in the bid package. Once the contractor finished repairs on less than one tenth of the building’s balconies, they had already reached 100% of the budgeted amount for most repair types. With 90% of the project left to go, the Association had already spent nearly its entire project budget.
DSSC was engaged to correct the project scope, develop a realistic budget and rebid the project. Unit costs were re-negotiated with the contractors based on new estimates. Alternate means and methods of repair were recommended in order to deliver the project within the client’s new budget. Through these methods, DSSC was able to save this Association over $1.1 million on what it would have otherwise paid under the previous contract and contracted unit costs. The Board still had to to pass another Special Assessment to cover the additional costs and scope of work, but this time, it was knowing the Association was financially prepared for the reality of the project.
While this case study may seem extreme, it is a common story that we see and hear every day. Associations needlessly spend millions of extra dollars by not giving the design, engineering and planning process the time and attention needed to achieve accurate, realistic estimates and budgets before beginning construction. Board members with good intentions, who want to make the process easier on their homeowner’s by reducing the project budget and estimated quantities, ultimately do their homeowner’s a disservice by leaving them under-prepared for reality.
“Well begun is half done” –Aristotle
Concrete restoration projects are serious. The best way to ensure your project’s success is to slow down the process, and take the time to fully understand the complexities of the project, get the right team in place and make sure the Association is prepared for what is to come. Doing this homework up front will save time, money and stress once construction begins.
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