strategic planning for 2015 capital replacement projects

STRATEGIC PLANNING for

CAPITAL REPLACEMENT PROJECTS

Mitchell H. Frumkin, P.E., C.G.P., R.S. President Kipcon Inc.

800-828-4118 Kipcon.com [email protected]

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

copyright Kipcon Inc. 2014

This is Meant To Be Interactive, So, Please Jump In With Your Thoughts

and Ideas !


Design (for a community association this includes a budget)


Construction


Maintenance and Replacements


Life Cycle Costs

Replacements, Maintenance

and Operations 64%

Construction 34 %

Design 2%


So, what is it ?


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


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


With the Result Being Keeping the Property Values High !


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.


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


Community associations do this already thanks to their …


Re$erve $tudy

“A budget planning tool which establishes a stable and equitable Funding Plan to offset anticipated

future major common area expenditures.”


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


The Strategic Starting Point

Remaining

Lives


Lets Talk Strategies


Funding is Easy If You Follow Your Reserve Study


But, If You Don’t


The Leaky Roof Will Not Wait


So You May Need…

• Special Assessment

• Loan


Once You Have The Money, the Project Planning Begins

• Management review of Reserve Study each year is critical

• Receive Board approval to move forward


Evaluate The Projects To Be Done

• Evaluate the projects for logical sequence

• Example : roofs and roads


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


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


Selecting the Design Professional

• Prepare a RFP for what you are looking for or you will get many different scopes

• Design

• Bidding

• Contract Administration


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


Have the Specifications Prepared

• Drawings

• Book

• Pricing format ( retainage)

• Bonds

• Insurance

• Commercial Terms : Have reviewed by Attorney

• Life Cycle Costs vs First Costs


Life Cycle Costing

• The Classic “First Cost” Approach Option One Option Two

Material Cost

Labor Cost ________ ________

Total Cost


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.


Look For Incentives

• Big Part of strategy especially with mechanical equipment

• Pay For Performance

• Direct Install

• Only good before contracting for work !!


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


http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=NJ10F&re=0&ee=0



























Bid the Project

• Contractors you know

• Open Bid

• References

• Pre bid meeting


Schedule and Start Construction

• Pre construction meeting

• Ongoing inspections for general conformance to plans

• Municipal inspections


Construction Complete

• Punchlist completion

• Retainage release

• Update Reserve Study


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

[email protected]

Kipcon.com 800 828 4118


mailto:[email protected]

strategic planning for 2015 capital replacement projects

Engineering

replacements copyright

construction copyright

budget copyright kipcon

lives copyright kipcon

strategies copyright

president kipcon

ca issues copyright

capital projects