strategic planning for 2015 capital replacement projects
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STRATEGIC PLANNING for
CAPITAL REPLACEMENT PROJECTS
Mitchell H. Frumkin, P.E., C.G.P., R.S. President Kipcon Inc.
800-828-4118 Kipcon.com MFrumkin@Kipcon.com
Who am I ? • Mitchell H. Frumkin, PE, RS, CGP
• Past President
> Community Associations Institute (CAI) National
> CAI National Research Foundation
> NJ Chapter CAI
• Chair CAI National Reserve Professionals Committee during…
> Development of “National Reserve Study Standards of the Community Associations Institute”
> Development of “Reserve Specialist (R.S.) Designation
• Author: Reserve Funds: How and Why Community Associations Invest Assets (CAI)
• Ongoing Contributor: Audit and Accounting Guide for Common Interest Realty Associations (AICPA)
• Ongoing Speaker on CA Issues copyright Kipcon Inc. 2014
What I Will Be Talking About…
• Lets start at the beginning !
• Why is Strategic Planning Replacement Projects Important ?
• Where do you start ?
• What are the types of projects
• What is the Strategy ?
• The importance of Life Cycle Costs
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This is Meant To Be Interactive, So, Please Jump In With Your Thoughts
and Ideas !
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Design (for a community association this includes a budget)
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Construction
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Maintenance and Replacements
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Life Cycle Costs
Replacements, Maintenance
and Operations 64%
Construction 34 %
Design 2%
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So, what is it ?
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Strategic Planning is….
a communities process of defining its strategy, or direction, and making decisions on allocating its
re$ource$
to pursue this strategy. It may also extend to control mechanisms for guiding the implementation of the strategy Wikipedia
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Capital Replacement is….
Replacement of a communities common elements as they wear out and is dependent on
re$ource$
being available to perform this work
Mitch Frumkin
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With the Result Being Keeping the Property Values High !
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So, what is the starting point for you to
Strategically Plan for Capital Replacements ?
It is MONEY !
In all instances money is a critical component of the strategic plan.
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The Description of a Capital Improvement Plan is
• A listing of the capital projects or equipment to be purchased.
• The projects ranked in order of preference.
• The plan for financing the projects.
• A timetable for the construction or completion of the project.
• Justification for the project.
• Explanation of expenses for the project
Wikipedia
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Community associations do this already thanks to their …
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Re$erve $tudy
“A budget planning tool which establishes a stable and equitable Funding Plan to offset anticipated
future major common area expenditures.”
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And lists…
…all of the common elements of the community along with the Re$ource$ needed to perform the replacement
work as well as the time when the work will be needed
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The Strategic Starting Point
Remaining
Lives
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Lets Talk Strategies
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Funding is Easy If You Follow Your Reserve Study
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But, If You Don’t
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The Leaky Roof Will Not Wait
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So You May Need…
• Special Assessment
• Loan
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Once You Have The Money, the Project Planning Begins
• Management review of Reserve Study each year is critical
• Receive Board approval to move forward
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Evaluate The Projects To Be Done
• Evaluate the projects for logical sequence
• Example : roofs and roads
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And Evaluate The Proper Time For The Project?
• Roofs
• Spring through fall
• Roads
• Spring through fall
• Heating Systems
• The cooling season, late spring through early fall
• Cooling Systems
• The heating season, late fall through early spring copyright Kipcon Inc. 2014
Bid Multiple Projects
• If you can bid multiple projects of the same type, the savings can be significant !
• Review the Reserve Study to see what is anticipated for the coming year for your Association
• Group similar project types together
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For a Portfolio Manager or a Management Company It
Presents Great Opportunities
• If you can bid multiple projects of the same type, the savings can be significant !
• Review the Reserve Study to see what is anticipated for the coming year
• Group similar project types together
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Selecting the Design Professional
• Prepare a RFP for what you are looking for or you will get many different scopes
• Design
• Bidding
• Contract Administration
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Selecting the Design Professional
• Experience in projects of this type
• References
• Interview
• Do not select based entirely on cost
• Bidding direct to contractors without a spec can be dangerous
• Must understand life cycle costing
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Have the Specifications Prepared
• Drawings
• Book
• Pricing format ( retainage)
• Bonds
• Insurance
• Commercial Terms : Have reviewed by Attorney
• Life Cycle Costs vs First Costs
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Life Cycle Costing
• The Classic “First Cost” Approach Option One Option Two
Material Cost
Labor Cost ________ ________
Total Cost
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Life Cycle Costing
Option One Option Two
Material Cost
Labor Cost ________ ________
First Cost
30 Yr. Maint. Cost
30 Yr. Energy Cost ________ _________
Total 30 Year Cost
Also must consider any rebates, tax credits etc.
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Look For Incentives
• Big Part of strategy especially with mechanical equipment
• Pay For Performance
• Direct Install
• Only good before contracting for work !!
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Dsireusa.org NJ State Rebate Programs
• COOLAdvantage Program
• ENERGY STAR Homes Program
• ENERGY STAR Product Rebates
• Home Performance with ENERGY STAR Program
• Large Energy Users Program
• Local Energy Audit Program
• New Jersey Comfort Partners Program
• New Jersey Renewable Energy Incentive Program (Sustainable Biopower)
• New Jersey SmartStart Buildings - Direct Install Program
• New Jersey SmartStart Buildings - New Construction and Retrofits
• Pay for Performance Program
• WARMAdvantage Program
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Bid the Project
• Contractors you know
• Open Bid
• References
• Pre bid meeting
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Schedule and Start Construction
• Pre construction meeting
• Ongoing inspections for general conformance to plans
• Municipal inspections
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Construction Complete
• Punchlist completion
• Retainage release
• Update Reserve Study
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A Little Commercial
When it comes time to replace the components on your Reserve Study, Kipcon is a full service engineering firm
specializing in Community Associations
Roofs Balconies Facades
Water Infiltration Expert support
Parking Garages Transition Studies
Architectural and Engineering Design
Call us to walk your community copyright Kipcon Inc. 2014
Thank You…..Questions ?
Mitch Frumkin, PE, RS, CGP President
MFrumkin@Kipcon.com
Kipcon.com 800 828 4118
copyright Kipcon Inc. 2014
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