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Condominium Reserve Study Meets Best Cost

February 15, 2012 | Comments: 0 | Views: 113

In the ongoing challenge to extract the maximum benefit from dollars spent on building and site maintenance, board members of condominium associations may well ask themselves, "Are our building and property components performing as cost-efficiently as they could? Are there other ways to get the same performance at reduced cost; are we spending too much (or perhaps not enough) on preventive maintenance; how can we extend the service life of our building and property components?" Operating expenses for the maintaining the common area components and contributions to the capital reserve fund are unquestionably tied together. Let things slide into a state of deferred maintenance and you will be replacing capital assets sooner than your reserve study predicted.

Clearly, the intent is to get the best value for your dollar by maximizing the performance of a particular component for a chosen level of funding. But best value, as we know, does not have to mean least first cost. Perhaps a more costly initial investment will translate into significant cost savings down the line. It bears repeating that a capital reserve study should be a resource needing continual review. If the reserve study were done well it should become a dynamic management tool and not gather dust on the shelf.

A good way of expressing this line of thinking might be to call it value integrated performance, combining two industry-recognized techniques - life cycle analysis and value engineering. Take, for example, the maintenance of a building's wood siding.

Life cycle analysis will assemble all the costs needed to keep the siding intact and a leading indicator of well perceived property value. Value engineering injects some innovative analysis into the assembled life cycle analysis by asking four questions:

1. What is the required performance? 2. What does it now cost to get that performance? 3. What are the alternatives? 4. What do they cost?

The required performance of a building's siding is to deny water entry into the exterior wall cavity while providing an attractive architectural appearance. Experience over time in maintaining the siding may indicate that the initial design intent may have been compromised by unanticipated conditions. Inadequate structural ventilation may be allowing exiting indoor air that is high in moisture content to lift the paint film. Correcting the root cause is clearly more economical than repetitive short-lived coatings. Or, alternative products, some new to the market since initial construction, may now provide the same (or even better) performance. These alternatives their own life cycle costs are factored into the mix. The focus is to always maintain the function, the performance of the component while analyzing the most cost-effective way of getting it. It would be counter-productive to reduce cost while reducing the perceived property value.

Value integrated performance simply formalizes into a routine procedure what condominium board members and property managers do intuitively - try to get the best bang for the buck.

Robert J. Burns is a principal with Burns Associates-Engineers. The firm offers capital reserve fund studies and developer transition studies for condominium associations and HOA. Engineering consulting services for building and site services are offered. Mr. Burns is a licensed professional engineer and CAI credentialed Reserve Specialist.

Source: EzineArticles
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