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A Homeowners Association in Trouble

This is another edition in our “How To Save Your Community A Million Bucks” series.

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The Problem

This project was a 132-unit multifamily community in the Pacific Northwest, constructed in 1977 as apartments and converted to condominiums in 1981. There are six 16-unit buildings, one 24-unit building, one 8-unit building, one 4-unit building, and one clubhouse. The 4-unit building and the clubhouse are single story, the remaining are two-story, and all are wood-framed structures on slab foundations. All upper floor units have wood-framed decks and landings with wood stair treads at the entries. All buildings were clad with Masonite siding and painted wood trim. Sliding glass doors and windows were a mix of flanged aluminum and unflanged vinyl (replacement windows). The units are designed in a back-to-back style so the front and back elevations are similar.

The exterior cladding of the project was in terrible condition. In 2014 the HOA and Previous Community Manager hired a building consultant who proposed a design they budgeted at $3.8 to $4.3 million in repair and improvements. In 2015 a second building consultant / engineering firm was hired to refine the scope of work in hope that the bids would be less expensive; but they came in at $3.6 to $5.7 million. For projects like this, based on similar projects in the region, the Owners would need to add for design (10-15%), construction management (5-15%), and change orders (10-25%) for a minimum of 25% over bid price. Up to 55% over the bid price would not be unheard of, and even more if the project did not run smoothly. The 25-55% would take the lowest bid of $3.6 million to a total of $4.5 to $5.6 million in total project cost. But the HOA only had $600,000 in reserve and limited capacity to borrow for the project. At this point, the HOA decided to hire a New Community Manager.

The Solution

In the Fall of 2016 PFCS was contacted by the New Community Manager to (1.) review and reduce existing scope of work, prepare a new budget, oversee the bid process; and (2.) act as Owner's Representative / Construction Manager (CM). By the end PFCS had managed the scope, budget, schedule, and quality for a complete rehabilitation of the exterior building walls for $3.0 million; a savings of $1.5 to $2.6 million, that is savings of at more than 33% in total project cost.

PFCS Work

  • 9/2016 PFCS Proposal

  • 11/2016 Updated PFCS Proposal and attend HOA Meeting

  • 1/2017 Delivered Scope Comparison and Options Summary report with a Project Summary Memo

  • 3/2017 Delivered Bid Analysis and Recommendations

  • 9/2017 Executed a contract between Architect and HOA

  • 11/2017 Architect submitted plans to City and PFCS Delivered RFP to 3 contractors

  • 1/2018 Contract between General Contractor and HOA.

  • 1/2018 Revised Drawings submitted for Permits.

  • 2/2018 Project Kick-Off Meeting and works begins

  • 2/2018 Railing Contract between trade contractor and HOA

  • 3/2018 to 11/2018 Inspections, Change Management and Payment Application Approvals

  • 11/2018 Project Completion and Closeout Memo

Final Project Costs

  • $25,000 Architectural Design

  • $2.6 million Original Contract Price with General Contractor

  • $240,000 Deductive Change with General Contractor

  • $190,000 Contracted Directly with a Subcontractor (saving $50,000)

  • $260,000 Change Orders (+/- 10%) which included improvements not included in the original scope of work

  • $210,000 Construction Consulting & Management (less than 8% of construction cost)

  • $3.0 million Total Cost

  • $1.5 to $2.6 million Total Savings