Boards Need to Figure Out What’s Around the Next Curve

When tackling major capital projects, co-op and condo boards need to remember that timing is everything. If they don’t have the money in hand, they can’t do the work. How do they avoid getting ambushed by what lies around the next curve? 

Planning, planning, planning. One piece of advice I can offer to a board: do not underestimate the importance of planning for major capital improvement projects. Unfortunately, most co-op and condo boards are so focused on day-to-day issues that they don’t think enough about the long-term challenges that they may face. Most of these challenges can be easily anticipated, and the benefit of addressing them early can be substantial. 

Typically, boards will just need to obtain an estimate to get a sense of how much a capital improvement project will cost. I strongly recommend that those estimates be prepared soon after a project has been identified. I also recommend that those estimates be prepared by the architect or engineer who will be responsible for developing the final scope of work, as they will be most familiar with the issues at hand. It would be wise to verify a firm’s budgeting capabilities before engaging it for a capital improvement project. 

Adequate planning provides the time needed to raise funds for major projects. Since most projects do not have to be undertaken right away, spending 1 to 3 percent of a project’s budget to develop a plan is, in my view, money very wisely spent. 

Planning ensures that the money will be in place when needed. Lack of planning, on the other hand, can be financially devastating, draining reserves to the point where projects, some of which might be required by law, have to be cancelled or postponed because of a lack of funds. 

The money already spent on architectural or engineering services will go to waste if the project cannot move forward. An example of this is a client of ours for whom we prepared a Cycle 7 facade inspection report four years ago. They waited two years before bringing us back to produce the construction documents that would be used to solicit bids. When they received the bids, they didn’t have the money to do the project. The job has been on hold for over two years now. 

In January of this year, Cycle 8 came up. Because none of the repairs related with the Cycle 7 had been addressed, the building was automatically classified as unsafe. The board was required to install a sidewalk shed, and they’re now spending thousands of dollars a month in sidewalk shed rental fees, in addition to all of the expenses associated with filing fees required because of their unsafe status. 

If they’d had a plan in place, they could have had at least two more years to raise the funds needed to undertake the project. And they probably would have been in a much better situation than they are now. Remember: when undertaking a capital improvement project, money spent up front on developing budgets is a very wise investment. 

Joakim Aspegren is president of Architecture Restoration Conservation.