Capital improvement projects are inevitable, at some point, something will break down or at the very least need to be updated.When that happens you, as a board member, will want to be prepared to confidently take on your association’s capital improvement project. We sat down with Robert Meyer, Executive Director of Engineering Services at FirstService Residential, Illinois to gain a better understanding of capital improvement projects and what to expect when beginning one.
What is a capital improvement project?
A capital improvement project is anything that is going to be done that the association at large is benefiting from. So, it could be something like a remodel to the party room or common corridors, roof replacement, masonry or tuckpointing etc. There is not necessarily a dollar amount tied to it. Anytime the association is making an improvement to the property, and they are using associations monies through their capital reserve fund, financing, or special assessment it can be identified as a capital improvement project.
It doesn't have to be tied to a dollar figure numerically that exceeds plus or minus X dollars.
What elements make up a capital improvement plan?
Understanding that the association is doing their due diligence by having a reserve study performed by an independent third-party business. They will assess every piece of mechanical equipment in the building. They’ll assess window units, door units, roof top units, facade issues where water infiltration has been identified, fire sprinkler systems and most of the things that are not on everyone’s radar.All of this is going to be within the reserve study, and they will attach to the study an end of useful life date. The association can use this date as a reference point for when a piece of equipment may need to be updated. This is not necessarily a “hard date”, but it is inferring that the association should be saving money to fund the replacement of this piece of equipment when it does eventually fail. There is also a built-in cost increase by percentage for the span of the reserve study based on the year it was produced.
I am of the opinion that, a reserve study should be updated every 3-5 years to keep it as current as possible with the rising costs of equipment and labor. For older buildings this cadence is very important if the association has not been funding the Reserves correctly, so first and foremost, make sure that your reserve studies are up to date.
Another piece that goes into a capital improvement plan is really understanding what the focus is from the board of directors (BOD) or the association perspective. Of course, the roof is more important to the “association” but most people can’t see it as opposed to new carpet and paint in the common areas of the building. The BOD must decide what is in the best interest of the association.
To sum it up, first an up to date and properly funded reserve study. Second, understanding the BOD or associations vision. Last, working with trusted people that can deliver the project with the associations best interest in mind.
Why should boards utilize FirstService Project Management?
FirstService Project Management was put in place to provide assistance and advocate for the associations managed by FirstService Residential.
- We provide professional construction project management from “conception through completion” of your capital project.
- We utilize the best architects/engineers/contractors that fit your capital project.
- We provide a true project cost through our project budgeting and pre-construction process that includes all necessary trades needed to perform your capital project correctly, avoiding costly unforeseen add-orders and change-orders.
- We provide a project specific Gantt Chart that will be used to drive the project and keep it on time and on track.
- We provide a project manager who keeps track of all things that are related to your capital project and keeps it on budget.
- We provide a project superintendent who will keep track of the contractors and their process of the construction as outlined in the engineered specifications.
- Lastly, we will provide to the BOD the close out documents that will have all material and labor warranties.