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Building Information Modeling: B.I.M. and Building Lifecycle Management (BLM)

Welcome to the third post in our series on Building Information Modeling (B.I.M.)! If you haven't read the first two posts, I encourage you to read them! The first post in this series introduces the concept of B.I.M., and the second post explains why everyone needs to care about B.I.M. For those that just need a refresher, here’s a recap of what we covered in the last post:

"B.I.M. is beneficial to everyone who deals with buildings needs to care about B.I.M.:

  1. A three-dimensional (3D) computer model provides a central place for all parties to contribute to and pull from;

  2. Data about each of the physical building elements can be used during all phases, from construction through building maintenance;

  3. Information related to time (4D) can be used for scheduling during construction, communicating changes, and incorporating maintenance intervals and maintenance plans;

  4. Information related to cost (5D) will help produce lifecycle cost data as well as set reasonable service-life expectations and maintenance costs;

  5. And all aspects of the project lifecycle (6D). Need to know who designed the buildings being worked on? Or who applied the peeling paint on the exterior doors? And what the expected service life of that paint was, who made it, and how much did it originally cost? B.I.M. helps answer all of these questions."

Today I’d like to discuss the profound impact that BIM will have on all phases of Building Lifecycle Management, from planning and design up to and including decommissioning a building project.

  1. Plan/Design:

    • All designers will work in the same model (database). This way, any coordination issues can be worked out in the design phase rather than interrupting the construction phase.

    • Total Quality Management (TQM) can only be fully implemented when it begins in the design phase.

    • Project Management and planning data (scope, budget, and schedule) are integral to BIM.

    • Cost-benefit, if-then scenarios can be considered cost effectively. For example: Comparing a more durable and expensive deck assembly against a less expensive alternative that will require more frequent maintenance.

  2. Build/construction:

    • Clarifications (RFIs) and changes in the field will (1.) be reduced significantly by planning and designing using BIM, and (2.) be updated in the model (database) as the project progresses.

    • Because the scope, budget, and schedule were coordinated during the planning phase, and will be updated in real time, coordination and “Just-In-Time” delivery will, for the first time, come to construction projects with the kind of regularity that we see in manufacturing.

  3. Use:

    • The model will pass from the construction team to the facility management team during the commissioning process.

    • Significant configuration of interiors for use will be updated in the model. Details such as communications cabling will sometimes be included in the model. The model may even include information on who is sitting where, so that the space can be optimized.

  4. Maintain:

    • What was originally the Construction Progress Schedule will become the Maintenance Schedule.

    • All operation and maintenance (O&M) documentation for each and every element will be available in, or referenced from, the model.

    • Building maintenance, both planned and unexpected, will be updated in the model. “Best Practices” for maintaining structures and contracting for maintenance services will be applied by integrating data into the model, and owners of multiple projects will share these best practices from model-to-model. This will include who, what, when, where, how, how much, and how many.

    • Contracts for maintenance should be maintained element-by-element, location-by-location, and player-by-player (contacts) in the model.

  5. Repair & Improvement:

    • All repairs and improvements should be updated into the model. This will include who, what, when, where, how, how much, and how many.

    • If it is found that some element or elements were constructed in a way that is not consistent with the applicable standards, and the building is not performing as expected, the model will include information from construction about who designed, approved, supervised, executed, inspected and approved the assemblies, so that any disputes should only address the applicable elements, locations, and players.

  6. Learn:

    • Over time, since that data is structured, it will become information that smart people can use to make smart, informed decisions.

    • Not only will the decision makers have the structured information for the project at hand, they will also have the data from other, similar projects to aid in decision making across projects. This metadata (a set of data that describes and gives information about other data) can be created to further inform best practices.

    • See PFCS’ publications on Building Lifecycle Management, which argue the position that collecting and organizing building data such that it becomes actionable information is the only way to make smart decisions about building projects. Therefore, a central database of all building related data (BIM), searchable and able to output by building element, location, person/company, or timeline, is an amazing decision-making resource.

    • See a sample PFCS Building Lifecycle Management Matrix (BLMX).

  7. Decommission:

    • The decision to update or demolish is a tough one. But it will be made much easier when we can do multiple, cost-effective, A to Z, what-if analysis.

PFCS Building Lifecycle Maintenance Matrix (BLMX

PFCS Building Lifecycle Maintenance Matrix (BLMX

Decisions, Decisions...

There are many aspects of B.I.M. that seem small, but will have a profound impact:

  • For the first time in the history of building construction, all parties from design to decommissioning will use common names for all of the physical elements and locations of the project.

  • We will be able to finally know what the physical elements cost to design, build, use, maintain, repair, improve and decommission, since we will have a central repository for all information about each of the physical elements. And the actual history of costs associated with each phase in the lifecycle will be readily available.

  • Naturally, financial accounting will need to evolve to make costs associated with the respective physical elements available through the lifecycle, but this will be easy once the data has a home and its use begins to save building owners and users money over time.

  • The implications for the science and profession of construction Project Management are profound. The key fundamentals for all management of all projects are scope, time and cost management. BIM has these aspects of the "building information" built in as part of the "model" so project management software tools should be interacting with the model (BIM database) in a way that is very similar to the way all of the designers are interacting with it.

  • Financial management of the building lifecycle will become integral with building information modeling. Electronic financial tools (like the almost ubiquitous financial software Quickbooks) will eventually communicate directly with the model, with data that flowing out of, and back into a project's BIM. Periodic reports as well as permanently stored historical financial information should be integral to the model, even moving from owner to owner when the property is sold. Therefore the entire, uninterrupted economic history of the project will be able to be known. This will be similar to the record keeping of a fastidious automobile owner, who maintains records and receipts of every service appointment.

  • Naturally, changes to the scope of work will be limited when projects are fully modeled in 3D due to all of the physical elements being fit together in the virtual model before actual construction begins.

  • The simple avoidance of re-typing the same information over and over and over will save many thousands of dollars over the lifetime of the building.

This series on Building Information Modeling continues: 

  1. Building Information Modeling: What is B.I.M.?

  2. Building Information Modeling: Why Everyone Who Deals with Buildings Should Care about B.I.M.

  3. (This post) Building Information Modeling: B.I.M. and Building Lifecycle Management (BLM)

  4. Building Information Management & Modeling

To learn more about how PFCS leverages B.I.M., browse our services or give us a call at our Southern California Office (949) 240-9971 or Portland Office (503) 660-8670.

 

Building Information Modeling: Why Everyone Who Deals with Buildings Should Care about B.I.M.

Who should care?

  • Property Owners & Managers

  • Developers & Contractors

  • Product Manufacturers & Suppliers

  • Attorneys and Insurers

Welcome to the second post in our series on Building Information Modeling (B.I.M.)! If you don’t know what the heck we’re talking about, I encourage you to read the first post in this series which introduces the concept of B.I.M., talks through an industry definition, shows the opportunity for expansion, and even includes a fun video to help break it down.

For those that just need a refresher, here’s a recap of what we covered in the last post:

"B.I.M. is a sharable collection of building data, including:

  1. A three-dimensional (3D) computer model of the entire project;

  2. Data about each of the physical building elements including their location, number, and size;

  3. Information related to time (4D);

  4. Information related to cost (5D);

  5. And all aspects of the project lifecycle (6D).”

6d-bim.jpg

"So what?"

Now that you know what B.I.M. is, you’re probably asking, “So what?” Why should you care about B.I.M.?

The truth is that B.I.M. introduces a transformation in the way we think about, document, and share information related to building projects – and the results have serious implications and unrealized benefits for users across every industry that deals professionally with buildings (not just the construction industry).

We’ll illustrate this with an example. As you probably know, buildings are traditionally designed graphically, even when using three-dimensional computer aided design (CAD). It’s common for an architect to design a building project using 3D CAD, then print the contract documents but not share the electronic files. Contractors offering proposals then have to manually measure the scaled drawings and input their own interpreted data in order to develop their estimates and proposals.

As you can imagine, this traditional methodology is inherently inaccurate and inconsistent. Even two estimators in the same office will have different datasets. And this messy process is repeated for each and every contractor involved, which is terribly wasteful when you consider that large projects can have hundreds of players involved.

B.I.M. presents an alternative to this inaccurate and inconsistent approach.

Accurate, Consistent Information with B.I.M.

At its core, B.I.M. is a methodology that transforms the underlying design of a building into data that can be shared with all stakeholders, without interpretation, for reuse throughout the building lifecycle.

Recall our flooring contractor from the first post: Having one dataset about the building, that can be easily shared throughout the building lifecycle, will decrease historic inefficiencies associated with parties needing to create and re-create data over and over.  These savings will naturally lower the total building lifecycle costs. Those who participate by using this data will be at an advantage over those who continue to operate in the older, less efficient way. In addition, this data will make smart decisions easier, so in addition to lower costs, the performance will be better and more durable. Better and more durable building performance usually means “longer lasting,” so the cost over time is lowered ($/year).

Let’s discuss how each of our B.I.M. components becomes a living data set to be used virtually by all key players in a building project's lifecycle:

  1. A three-dimensional (3D) computer model of the entire project:

    • Build a true 3D model of the building project, representing the elements (floors, walls, roof, windows, doors, etc.) that will make up the real building in three-dimensional space. This is in contrast to 3D CAD (computer aided drafting), which is a purely graphical rendition requiring interpretation (which often leaves chances for error).

    • Create a “home base” model from which all players in the design of the building project contribute to and pull data from.

    • Leverage your 3D B.I.M. as a sophisticated database to output building information in various forms, including all elements in "one dimension" like Excel spreadsheets, two dimensions like traditional construction drawings, or three dimensions from any vantage.

    • Eliminate costly errors in dimensions and conflicts in physical space associated with the traditional methodology.

  2. Data about each of the physical elements including their location, number, and size:

    • Incorporate all physical elements of your project in your 3D model, accounting for the way that manufactured products are actually put into a real building.

    • Pull precise specifications and information related to physical elements that are not pre-manufactured.

    • Automatically account for every element, a process that traditionally requires calculations and scaling.

    • Incorporate service-life and maintenance information associated with each discrete building element (walls, windows, roof, mechanical equipment, etc.).

  3. Information related to time (4D):

    • Associate progress schedule and sequencing information with each discrete element, combining and associating with other interrelated elements that will be combined during construction.

    • Efficiently and effectively communicate changes to the construction schedule with a sophisticated B.I.M. scheduling mechanism.

    • Incorporate maintenance intervals for each element, and output maintenance plans for those elements that require periodic attention.

  4. Information related to cost (5D):

    • Include the cost of each physical element in the model.

    • Associate each discrete element with service-life expectations and maintenance costs, and manage throughout the building lifecycle.

    • Integrate lifecycle cost analysis data, including that for reserve studies.

    • Accurately evaluate the performance of the building against the expectation, as described in your model.

  5. And all aspects of the project lifecycle (6D):

    • Do we know who designed all of the buildings we worked on? This is an easy question if you have a complete Building Information Model.

    • How about trying to figure out who applied the paint that is peeling off the exterior doors?

    • How long did we expect that paint to last anyway? And who made it? And what color is it?

This series on Building Information Modeling continues: 

  1. Building Information Modeling: What is B.I.M.?

  2. (This post) Building Information Modeling: Why Everyone Who Deals with Buildings Should Care about B.I.M.

  3. Building Information Modeling: B.I.M. and Building Lifecycle Management (BLM)

  4. Building Information Management & Modeling

To learn more about how PFCS leverages B.I.M., browse our services or give us a call at our Southern California Office (949) 240-9971 or Portland Office (503) 660-8670.

 

Building Information Modeling: What is B.I.M.?

Welcome to the first post in our series on Building Information Modeling! I invite you to take a few minutes (3.5 to be exact) to watch this introductory video from Graphisoft on Building Information Modeling – just keep in mind, they are selling software to designers.

What is B.I.M.?

According to Wikipedia:

Building information modeling (B.I.M.) is a process involving the generation and management of digital representations of physical and functional characteristics of a facility. The resulting building information models become shared knowledge resources to support decision-making about a facility from earliest conceptual stages, through design and construction, through its operational life and eventual demolition.

Translated into English, B.I.M. is a sharable collection of building data, including a three-dimensional (3D) computer model of the entire project. This model includes data about each of the physical building elements (foundation, windows, plumbing system, site lighting, etc.) that make up the project, including the location, number, and size of those elements.

The model can also include information related to time (adding a 4th dimension to the B.I.M.), cost (a fifth dimension), and all aspects of managing the project lifecycle (a 6th dimension).

Levels of B.I.M.

  • 3D B.I.M.: Building Information Models in 3 Dimensions

  • 4D B.I.M.: 3D + Time (Think Einstein’s Space-Time Continuum)

  • 5D B.I.M.: 4D + Cost (Think Project Management’s Scope-Budget-Schedule. All 3 are now covered.)

  • 6D B.I.M.: 5D + all aspects of project life-cycle management information

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Benefits of “6D B.I.M.”

Imagine a flooring contractor preparing a proposal for a project. If the project was designed using B.I.M., the contractor would simply search the B.I.M. database for all of the flooring types, their locations and exact quantities. A perfectly accurate list could be generated along with links to all applicable specifications.

This method is far more accurate and efficient than the traditional method – which involves reviewing a set of paper drawings and specification manuals, making hand measurements, calculations and notes (which are never perfectly accurate). Just think how many times the floor area of a public building gets measured over the course of its service life. With today’s technology, this is a silly waste of time.

When B.I.M. is fully executed, it will save contractors unimaginable hours performing tasks that have no lasting value to the building owners.

And in a full 6D B.I.M. implementation, the flooring contractor would also have access to bidding and contracting information including the progress schedule. The general contractor (GC) would accept proposals electronically, and all of this information would be forever stored in the B.I.M. model for easy reference.


This series on Building Information Modeling continues: 

  1. (This post) Building Information Modeling: What is B.I.M.?

  2. Building Information Modeling: Why Everyone Who Deals with Buildings Should Care about B.I.M.

  3. Building Information Modeling: B.I.M. and Building Lifecycle Management (BLM )

  4. Building Information Management & Modeling

To learn more about how PFCS leverages B.I.M., browse our services or give us a call at our Southern California Office (949) 240-9971 or Portland Office (503) 660-8670.

 

Reserve Funding & Risk Mitigation: The Bottom Line

Last month we featured two powerful blog posts from CPA and credentialed reserve funding provider, David T. Schwindt. For those of you who read David’s insights on reserve funding and risk mitigation, I trust you found the information helpful!

In today’s post, I’ll recap the main takeaways from David’s content, as well as provide some added context for what his insights mean for how you manage property maintenance and repair.

Three Key Takeaways from Dave’s Posts…

1. A reserve study has two main components.

They are: (1.) the physical analysis and (2.) the funding (financial) analysis.

The physical analysis is the foundation of the funding analysis, and its accuracy dictates whether the money stored in your reserve funds is an appropriate (or wasteful) amount.

The bottom line: Proper physical analysis of property is a specialized professional discipline, involving a robust approach and industry standards for assessing the condition of your building.

2. Reserve Funding Philosophies range from 0% to 100% contingency.

In his first blog post, David outlined three reserve funding models to illustrate the vast spectrum of funding philosophies:

  1. Baseline Funding – funds only expected costs, and does not account for any contingency funding to cover surprises along the way.

  2. Threshold Funding – funds all expected costs (like the baseline model) plus a threshold contingency amount to cover unexpected costs that arise.

  3. Full Funding – allows funding for twice the amount of expected costs, providing a very large (100%) threshold contingency.

Reserve-Funding-&-Risk-Mitigation--The-Bottom-Line-figure1-methods-of-funding_b.jpg

The bottom line: Greater energy, discipline, and professionalism in how you manage property maintenance and repair can reduce the risk of expensive surprises, allow for a lower contingency, and free up capital that would otherwise be tied up in reserve accounts.

3. Best practices can lower the risk of special assessment.

It’s common to hear risk of special assessment correlated with contingency amount:

“If I maintain a larger contingency, there’s less risk of dealing with a lack of funds and, therefore, lower potential for a special assessment.”

But, this correlative relationship leaves out the primary causal portion of the equation: risk of surprises. The greater the risk of surprises (i.e. unexpected costs), the higher the risk of a special assessment. This, in turn, stipulates a larger contingency in the reserve account (i.e. money out of your pocket) to mitigate against special assessment. As you can see, it’s a vicious cycle!

In his second blog post, David shared 7 best practices that increase the effectiveness of a property owner’s building management, mitigate risks associated with saving too little money, reduce the probability of surprises and lower the required contingency. You’ll see them in Figure 2, which shows each best practice correlated with a reduction in contingency funding.

figure2-risk-mitigation-matrix_b.jpg

David’s best practices for risk mitigation are fundamental steps in the management of any building project, especially one with communal ownership like a Homeowner’s Association.

The involvement of a specialized construction professional is essential for:

  1. Properly evaluating your building elements (components), especially the weather resisting exterior envelope, in conformance with the highest standards (like ASTM E2018 and E2128);

  2. Writing a maintenance plan and budget to help building elements last longer with fewer repairs, and structuring it in a way so you can compare your plan and budget to what really gets spent;

  3. Performing ongoing inspections to catch issues before they become worse or cost more to repair, and structuring the information so you can track the performance of critical building elements over time;

  4. Incorporating all building elements into the reserve study to account all future repairs;

  5. Updating the reserve study periodically to account for increase in prices, changes in cash reserves, application of adjusted inflation;

  6. Specifying maintenance and repair work professionally to ensure it will last as long as you expect it to, and getting better quality that will last longer, thereby decreasing the total cost of ownership (TCO), and putting those specifications out to bid so that you get the lowest price the market will bear;

  7. Apply professional construction management discipline to protect your legal rights and manage the work, and, inspecting to verify the high quality work that was contracted for is being installed.

The bottom line: When properly executed, integrated, and delivered, these risk management best practices generate savings that far outweigh the cost of implementation.

Please note: This highly analytical approach to building lifecycle management does come with a price tag. So be prudent, and move forward in a way that is commensurate with the value of your property.

Three Deep Thoughts with Pete Fowler

  1. Three common strategies for managing property maintenance and repair include hope, prayer, and abdication. These are a far cry from the scientific, logical, disciplined and professional process that we recommend, and they will end up costing you significant time, money, and heartache.

  2. A large contingency is an alternative to good management. This is true in almost all aspects of human endeavor, especially business and property management. In fact, a large contingency is appropriate when your physical analysis is inaccurate, blurring the lines between expected costs and expensive surprises. So if you can’t develop managerial discipline and professionalism, then you should maintain a large contingency.

  3. Most people don’t realize how important historical building information is to making great, informed, cost-effective decisions long-term. Owners with organized project, maintenance and repair documentation including plans, construction specifications, inspection reports, bids, contracts, inspection documentation, etc, are in a far better position to make smart decisions, since they know where they have been. With today’s technology, including virtually free electronic storage “in the cloud,” there are no more excuses. And guess what? PFCS has an online, cloud-based, password protected Client Access system to organize and store all your documents and make them easily available and searchable, indefinitely.

Why Lawyers Should Care…

What I told you is that a robust, analytical reserve study can be leveraged for a total cost of ownership (TCO) analysis for the period being studied (usually 30 years). Be sure to check back next week for our blog post on why lawyers should care about reserve funding and risk management!


Ready to Eliminate Surprises and Overfunding?

Pete Fowler Construction Services (PFCS) can help get you there. Our team of expert consultants specializes in creating real, practical solutions for owners, associations and managers. We help you make intelligent decisions by examining your property, diagnosing problems, specifying the right maintenance and repairs, and applying construction management discipline to your project (including bidding and writing contracts to protect the owners, performing quality control inspections, managing change orders and processing invoices). We provide actionable insight and expertise to right your project, and clear up any messes that others may have created along the way.

To learn more, visit our website or give us a call at our Southern California Office (949) 240-9971 or Portland Office (503) 660-8670.

 

THE RESERVE FUNDING SERIES

 

Part II: Best Practices in Reserve Funding & Risk Mitigation

PART-II--BEST-PRACTICES-IN-RESERVE-FUNDING-&-RISK-MITIGATION.jpg

In Part I of this blog series, we “got a grip” on reserve funding with the help of our guest contributor, David Schwindt. David covered what reserve studies are, how they’re developed, and what it means for your finances.

As you know, homeowners and community associations absolutely need to put money aside for future expenditures and repairs. But the fact is, funding a 100% contingency is a conservative approach and, in many cases, can be wasteful.

In this post, David dives further into best practices for reducing the risk of “surprises” and painful special assessments to ensure that you’re not overfunding your contingency.

This concludes David’s contribution to our blog series on reserve funding & risk mitigation. Feel free to post any questions in the comments section below, and be sure to check back for my follow up post, where I’ll add my two cents and discuss the importance of comprehensive physical analysis in striking and maintaining a sensible contingency balance.

Thanks for reading!

-- Pete Fowler, PFCS President

Reserve Funding and Risk Mitigation, Part II: Best Practices

By David T. Schwindt, CPA RS PRA, Guest Blogger

Risk of Special Assessment

Many reserve study professionals present statistics that show the risk of a special assessment based on the percent funded. For instance, if an association is 50% funded, these statistics indicate there would be an 11.6% chance of a special assessment. The higher the percent funded, the lower the potential for a special assessment.

Please be aware that these statistics have been compiled by a reserve study provider and not vetted by CAI. However, if the contention is that the more extra cash an association has in the bank, the less likely the association will be to special assess due to surprises, then the underlying theory appears reasonable.

Best Practices

If our funding goal is to fund for all expected expenditures and to allow funding for surprises, how can we mitigate the risk of surprises thus lowering the contingency amount?

Many reserve study providers recommend a percent funded of at least 70%. Figure 2 shows that if associations follow a set of best practices in maintaining common area components, the percent funded could be much lower because the likelihood of a surprise is diminished. Note that this matrix addresses the fully-funded percentage but can also be used as a tool to determine the required threshold using the threshold method.

Let’s revisit Figure 2, which illustrates the relationship between a number of reserve study best practices and the probability of surprises.

figure2-risk-mitigation-matrix_b.jpg

Let’s examine these best practices through the lens of some of the surprises that associations experience. The following list includes but is not limited to events that may require additional cash:

  1. The design, materials or workmanship on original construction is not adequate thus requiring repairs, remediation or this may result in a significant reduction in the estimated useful life of components. A complete building envelope inspection by a construction professional may catch issues early on that may reduce the cost of repairs and may allow the association to bring an action against the developer or contractor. This investigation may include intrusive openings around decks, windows, roofs and siding.

  2. The association does not adequately maintain the components which may lead to unexpected repairs or significantly reduced estimated useful lives. A written maintenance plan consistently followed by the association may help components last longer with fewer repairs.

  3. The association does not perform ongoing inspections of components. Ongoing inspections may catch issues before they become worse and cost more to repair.

  4. The reserve study does not include all components that need to be funded. Missing components may include plumbing and irrigation systems, water/sewer lines, rot, windows and doors, deck assemblies, asphalt, major landscaping projects, concrete issues including spalling/rusted rebar and replacement of siding and trim. Failure to include all components in the reserve study will likely lead to a special assessment to pay for unbudgeted repairs.

  5. The reserve study is not updated annually to account for increase in prices, changes in cash reserves, application of adjusted inflation in funding model and/or change in estimated useful lives. Failure to update the reserve study on an annual basis may lead to unbudgeted expenditures.

  6. The RFP (request for proposal) for repair and replacement projects is not written correctly resulting in specifications that are either inadequate or do not address issues. Using a construction professional to assist with RFPs can help assure that repair/replacement projects are performed by qualified professionals and includes all needed costs and procedures.

  7. The association does not use a construction consultant on major projects to assure that work is performed properly. The danger of not using a consultant increases the chance of substandard materials and workmanship and the possibility of requiring re-repairing/replacing the components or may significantly reduce estimated useful lives.

The Bottom Line

Associations that adopt best practice procedures and spend a little more each year on maintenance, inspections, reserve study updates and construction oversight can reduce the amount that is assessed to overfund the replacement reserve bank account to pay for unexpected costs.

As always, associations should look to the credentialed reserve study provider for guidance.


David T. Schwindt is a CPA and credentialed reserve study provider and is the owner of Schwindt & Co. Schwindt & Co provides accounting, tax and reserve study services to over 500 Associations in the Pacific Northwest. To learn more, visit www.schwindtco.com


Ready to eliminate surprises and overfunding?

Pete Fowler Construction Services (PFCS) can help get you there. Our team of expert consultants specializes in creating real, practical solutions for owners, associations and managers. We help you make intelligent decisions by examining your property, diagnosing problems, specifying the right maintenance and repairs, and applying construction management discipline to your project (including bidding and writing contracts to protect the owners, performing quality control inspections, managing change orders and processing invoices). We provide actionable insight and expertise to right your project, and clear up any messes that others may have created along the way.

To learn more, visit our website or give us a call at our Southern California Office (949) 240-9971 or Portland Office (503) 660-8670.

 

THE RESERVE FUNDING SERIES

 

Part I: Getting a Grip on Reserve Funding

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Introduction

And thank you for reading the kick-off blog post of our 2014 educational series!

At PFCS, our mission is to empower our community with actionable information – and the programming we’ve put together for this year’s educational series is designed to do just that. So be sure to stay tuned for future blog posts and webinars!

Today’s Post

I’ve decided to kick off our thought leadership efforts with a deep-dive into reserve funding and contingencies! (hold the eye roll, please)

Building owners and associations absolutely need to put money aside for future expenditures and repairs. But the fact is, funding a 100% contingency is a conservative approach and, in many cases, can be wasteful. With the right approach you can hone in on your future costs, mitigate risks, and strike a reasonable contingency balance.

Dave-T-Schwindt-blog1.jpg

Skeptical? Don’t worry, I’ve called in the cavalry. Who better to explain the nuances (and best practices) of reserve funding and risk mitigation than David T. Schwindt?

David is the owner of Schwindt & Co and provides accounting, tax and reserve study services to over 500 Associations in the Pacific Northwest. His expertise and insights are invaluable to building owners and associations struggling to understand reserve funding and risk mitigation – so listen up!

Part I of this four-part series will cover reserve studies and funding models – what they are, how they’re developed, and what it means for your finances. In Part II, David will dive further into reducing the risk of ‘surprises,’ special assessments, and the need to overfund your contingency.

Feel free to post your questions in the comments section below, and be sure to check back for Part II. Thanks for reading!

-- Pete Fowler, PFCS President

Reserve Funding and the Risk Mitigation Matrix

By David T. Schwindt, CPA RS PRA, Guest Blogger

What are Reserve Studies?

Reserve studies involve two distinct phases – the physical analysis and the funding analysis.

  • The physical analysis includes, but is not limited to, determining the association’s legal responsibility of repairing, replacing and maintaining association property (components) and identifying components and their condition, cost and useful life.

  • The funding analysis includes preparing a funding model that considers the cost and frequency of repairs/replacements/maintenance procedures. This funding model generally includes provisions for inflation on future expenditures, interest earned on reserves and income taxes.

Funding Theory

The theory behind funding is simple: determine how much money the association should set aside in the replacement reserve bank account each year so there is always enough money to pay for needed repair, replacement and maintenance expenses - and assess accordingly.

Since this funding model is based on numerous assumptions, many association professionals prefer to include a contingency amount in the funding model.

Although the theory of funding is relatively simple, the calculation of the required contribution to reserves is complicated by the various methods of funding and the determination of the appropriate contingency. For purposes of this article, contingency is defined as “the amount of cash set aside in the replacement reserve over and above the calculated amount needed to fund 100% of needed expenditures.” In other words, it is extra cash to fund unbudgeted expenditures or “surprises.”

Three Types of Funding Models

Community Association Institute (CAI) Reserve Specialist and Association of Professional Reserve Analyst standards include three acceptable funding models – baseline, threshold and the fully-funded model. (Note that there are other terms that describe these models; for sake of simplicity I am using the above terms).

Each of these models calls for a different level of contingency funding, which relates directly to their ability to mitigate risk. Figure 1 illustrates the level of contingency built into each model:

Baseline Funding Models

The baseline method includes a funding model that funds all expected costs over a specified period, in many cases thirty years. Although this model funds the replacement reserve bank account for all expected costs, it does not include a contingency amount should any components cost more than expected.

Proponents of this method only want to fund expected costs to maintain, repair and replace common area components. Note that this model is the bare minimum of funding and assumes there will be no surprises.

Over a thirty year period, the baseline funding model would show a cash flow projection that funds all expenditures and at some point the cash balance in the replacement fund bank account would drop close to a zero balance and then start building cash for the next major expenditure. The year the cash balance drops close to zero is risky to the association since there is no extra cash to pay for surprises.

Threshold Funding Models

The threshold method includes a funding model which funds all expected costs (much like the baseline method) but also includes a contingency amount for surprises. Reserve study specialists refer to this contingency as the “threshold.”

The threshold method would provide an amount that the projected replacement reserve cash balance would not fall below, say $100,000. This $100,000 is called the threshold and provides needed funds to pay for surprises. Proponents of this method realize that over a thirty year period, unexpected costs may arise and it may be prudent to have extra cash to pay for these surprises. The challenge for reserve study providers is determining the amount of the threshold or extra cash.

Fully-funded Models

The fully-funded method uses a formula for computing the threshold that mirrors the method used for computing depreciation.

The fully-funded formula computes a threshold that, in some cases, allows funding for twice the amount of expected costs. Knowing that the fully-funded method, if 100% funded, provides for a very large threshold, reserve study providers often use a funding target of less than 100%.

Please note that the higher the percent funded, the more extra cash is kept in the replacement reserve bank account as a contingency, over and above the amount necessary to pay for all expected repairs and replacements.

Proponents of this method realize associations have ‘surprises’ and it is prudent to have as much cash as you can as a contingency to provide for these costs.

Best Practices for Overfunding

These three funding models (baseline, threshold, and fully-funded) cover the spectrum of contingency funding that any association should consider for their reserve account. However, none of them offer a single, prescriptive best practice for reserve funding.

Figure 2 summarizes the takeaway of the next post in this series – which covers reserve study best practices for mitigating risk and reducing the need to overfund your contingency.

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As you can see from the matrix, proactive steps, including adequate and accurate physical analysis, can be taken to reduce the need for an overfunded contingency while simultaneously preventing unexpected surprises and maximizing the ROI of your building investment.

Be sure to check back for Part II, where David will dive into these best practices for reducing the risk of ‘surprises,’ special assessments, and the need to overfund your contingency.

To read David’s profile and learn more about Schwindt & Co, visit www.schwindtco.com.

The Reserve Funding Series

 

List of Statisticians

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At PFCS, we take a scientific approach to our analysis, and we do a better job at performing unbiased statistical analysis on our projects than any other experts we've seen. We've written internal standards on how this should be performed, and have even delivered a Random Selection and Extrapolation of Construction Defects program to the public. Often, it is necessary to collaborate with a statistician to validate our method at trial. While we've personally worked with a hand-full statisticians over the years, we were interested to see who else our clients have worked with in the past. So we sent the following email to all of our current and past clients:

I need a little help. I need a good referral.

I am looking for a good statistician to work with on projects (legal cases, mostly), and to refer to clients (usually lawyers or insurance companies). He or she will need to evaluate and testify about the problems with extrapolation based on poor sample selection methods in building performance evaluations (generally construction defect cases). In addition, s/he will need to evaluate my company's investigation method, including our random selection protocol, and be able to explain in a scientific but understandable way... that it's awesome ;-)

The results were impressive. We received many responses with statisticians up and down the west coast and beyond, even as far as Georgia! A brief break-down of our results:

  • 1,737 emails sent to our clients

  • 437 responses

  • 109 referrals

  • 64 statisticians

  • 4 with 5-9 glowing recommendations each

The following 4 statisticians were highly recommended by several clients each:

Ronald Farina, Ph.D. - Farina & Associates 5160 Idylwild Trail Boulder, CO 80301 T: 720-938-6874 E: ronaldfarina@comcast.net

Gary Lorden, Ph.D. - LordenStats / Professor of Mathematics - California Institute of Technology Pasadena, CA T: 626-395-4349 E: glorden@caltech.edu

Duane L. Steffey, Ph.D. - Exponent 149 Commonwealth Drive Menlo Park, CA 94025 T: 650-688-7262 E: dsteffey@exponent.com

John R. Weeks, Ph.D. - San Diego State University Distinguished Professor of Geography San Diego, CA T: 619-594-8040 E: john.weeks@sdsu.edu

The full results of our survey are below:

  1. Ronald Farina, Ph.D., Farina & Associates - T: (720) 938-6874 E: ronaldfarina@comcast.net

  2. Gary Lorden, Ph.D., LordenStats / California Institute of Technology - T: (626) 395-4349 E: glorden@caltech.edu

  3. Duane L. Steffey, Ph.D., Exponent - T: (650) 688-7262 E: dsteffey@exponent.com

  4. John R. Weeks, Ph.D., San Diego State University - T: (619) 890-8452, (619) 594-8040 E: john.weeks@sdsu.edu

  5. Tim Anderson, Portland State University

  6. Jay Bartroff, USC - T: (213) 740-1044 E: bartroff@usc.edu

  7. Dr. Paul Baum, Ph.D., CSU Northridge - T: (818) 497-7759 - Cell, (818) 677-2413 - Office, (818) 677-6079 - Fax E: paul.baum@csun.edu

  8. Carol Benassi, Zurich North America

  9. Stefan Boedeker, Berkeley Research Group, LLC - T: (310) 499-4924 - Direct, (213) 705-1324 - Cell E: sboedeker@brg-expert.com

  10. Brian Bontempo, Mountain Measurement - T: (503) 284-1288 E: brian@mountainmeasurement.com

  11. Linda Brown - T: (478) 918-6464 E: brownla@mindspring.com

  12. Thomas Carroll, Thomas Carroll & Associates - T: (702) 263-8044 E: statisticalforensics@gmail.com

  13. Dr. Louis Anthony ""Tony"" Cox, Ph.D., Cox & Associates - T: (303) 570-2643 - Cell, (303) 388-1778 - Office, (303) 388-0609 - Fax E: tcoxdenver@aol.com

  14. Paul DeBoer, RGL Forensics - E: pdeboer@us.rgl.com

  15. Steve Duree, Duree Barton P.C. - T: (303) 293-9966 - Office, (303) 437-0361 - Cell, (303) 320-0436 - Home E: sduree@duree.com

  16. Dwight Duncan - dwight@econlit.net

  17. Steve Eso - T: (760) 435-9663 - Home, (760) 650-6273 - Cell E: s_eso@yahoo.com

  18. Adrian R. Flessing, RGL Forensics - T: (714) 740-6161 E: aflessing@us.rgl.com

  19. Bob Fountain, Portland State University - T: (503) 725-5204 E: fountainr@pdx.edu

  20. Bruce Gates - E: brucegates@comcast.net

  21. Phillips Gorman - T: (626) 744-3540

  22. Kyle Jacobson, Taylor, Jacobsen - T: (303) 987-8999

  23. Joe Kanada

  24. Dr. Colleen Kelly, Kelly Statistical Consulting - T: (760) 846-6763 E: kstat.consulting@gmail.com

  25. Jeffrey H. Kinrich, Analysis Group - T: (213) 896-4544 E: jkinrich@analysisgroup.com

  26. Joeseph A. Krok, PhD, The Claro Group, LLC - T: (213) 784-3079 - Office, (310) 213-7776 - Cell, (213) 452-6556 - Fax E: jkrock@theclarogroup.com

  27. Mark Kuga, Delta Economics

  28. Jim Lackritz, San Diego State University

  29. John Landry

  30. Richard Laton, CSU Fullerton - E: wlaton@fullerton.edu

  31. Jeff Leedom, Price Waterhouse Coopers - E: jeff.leedom@us.pwc.com

  32. Robert Lenk, RDLenk - T: (805) 350-0969 E: consulting@rdlenk.com

  33. Bill Lepowsky - T: (510) 524-2101

  34. M. Laurentius Marais, William E. Wecker Associates, Inc. - T: (415) 898-2255

  35. Phil Martinson, Phil Martinson Engineering, Inc. - T: (503) 557-1555 E: phil@pmeng.com

  36. Richard McCleary, UCI - Social Ecology Program - T: (949) 824-7280 E: mccleary@uci.edu

  37. Jim Meeker, UCI - Social Ecology Program - T: (949) 824-1463 E: jwmeeker@uci.edu

  38. Jubin Merati

  39. Chris Money, Hagen, Streiff, Newton & Oshiro Accountants - T: (714) 750-4007, (949) 251-1133 E: cmoney@hsno.com

  40. Cynthia Mulvihill, Geico

  41. Jeya Padmanaban, JP Research - T: (650) 559-5970 - Office, (650) 559-5980 - Fax E: jeya@jpresearch.com

  42. Ana Panorska, University of Nevada - T: (775) 784-6548 E: ania@unr.edu

  43. Mike Phillips

  44. Dean Plager, Quantitative Decision Support - T: (603) 431-1120 E: plager@comcast.net

  45. Dr. S. James Press, UC Riverside - T: (951) 827-4241 E: jpress@ucr.edu

  46. Dan Ray, Hemming Morse - T: (415) 836-4000

  47. Rose Ray, Ph.D., Exponent - T: (650) 688-7264 E: rray@exponent.com

  48. Jay Sickler, Cogence Group - T: (503) 467-7900 - Office, (503) 467-7901 - Direct

  49. Steve Simmons - T: (714) 350-2220 E: sballsim2@gmail.com

  50. Steve Sloman

  51. Roland Sorge

  52. Scott Stewart

  53. Michael Sullivan - T: (415) 777-0707 E: michaelsullivan@fscgroup.com

  54. Greg Taylor, Taylor, Jacobsen - T: (303) 987-8999

  55. Audrey Thompson, Datalogix

  56. Bill Thompson, UCI - Social Ecology Program - T: (949) 824-6156 E: wcthomps@uci.edu

  57. Robert R. Trout, Ph.D. - T: (760) 944-9721 E: ecnxprt@aol.com

  58. Ted M. S. Vavoulis, Vavoulis & Weiner - T: (213) 817-6600

  59. Lynne Weber, Duff & Phelps - T: (650) 798-5500

  60. William E. Wecker, William E. Wecker Associates, Inc. - T: (415) 898-2255

  61. Stephen Wexler, Wexco - T: (310) 306-3877 E: wexler@wexco.net

  62. Gerry Williams - T: (503) 318-1174

  63. Jack Williamson, 3C Advisors & Associates

  64. Michael Willoughby, UC San Diego - T: (213) 880-0789 E: mwilloughby@ucsd.edu

  65. Dr. Jeffrey Wilson, Arizona State University - T: (480) 965-5628 - Office (480) 213-4460 - Cell E: jeffrey.wilson@asu.edu

 

General Conditions to a Prime Construction Contract

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From PFCS's Training Construction Document Literacy:

"General Conditions to the Contract describe the general guidelines for administration of the Prime Contract. The document includes information like how to terminate a contract under various circumstances, obligations of the parties to a construction contract, and important definitions. It is intended to guide the Owner and Contractor through all agreed upon aspects of general contract administration. By reading an industry standard document like AIA 201 you can learn a tremendous amount about how construction projects are supposed to work."

 

If you deal with construction regularly, I highly recommend that you print out one or more of the documents below (or upload to your iPad), put it on the nightstand, and let it bore you to sleep a few nights in a row. It will solve insomnia and enlighten you significantly. Then, any time there is a problem with a construction project you are working on, just remember the old favorite acronym: RTFC. Read the f-ing contract! Since you will have read these General Conditions, you will know generally what should be in the contract and how the clauses work together. This will allow you to make smart decisions in applying specific contract language to specific situations.

 

Pete Fowler Presents Construction Claims Management at ACIG's Fall Safety/Claims Meeting in San Antonio, TX 9/12-13/2012

After having been introduced to PFCS through the Construction Defect Webinar Series, ACIG invited Pete Fowler to present our Construction Claims Management program at their Fall Safety/Claims Meeting in San Antonio, TX. ACIG sponsors numerous opportunities for its members to stay abreast of all the construction and insurance industry changes. These meetings and workshops offer great forums for the exchange of information as well as ample opportunities to listen to quality speakers from both its member companies and outside industry experts; leading construction and insurance professionals are always included as session speakers. ACIG’s workshops are a great combination of fascinating topics, fabulous locations, and quality speakers that provide an interactive atmosphere for discussions, enabling attendees to engage in meaningful conversations and dialogue regarding the pressing issues that confront risk, safety and claims managers. Every Spring and Fall, safety, claims and risk management professionals from all over the country are invited to the ACIG Fall Safety/Claims Meeting to network and learn about issues affecting their organizations.

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The American Contractors Insurance Group (ACIG) writes insurance policies and provides related services to the construction industry.  The policies cover workers compensation, general liability, automobile liability and subcontractor/supplier default exposures.  The services include underwriting, supervision of claims, policy filings and issuance, loss and quality control, engineering services and brokerage placements. The ACIG mission is: “To save lives, prevent injuries and reduce the overall cost of risk and insurance for our members by (1) effectively reducing losses, (2) providing a stable market with quality services, (3) utilizing our group purchasing power and (4) creating equity.”

 

Dave & Pete's Excellent Adventure! - CDLA 2012 Annual Conference

On July 27, 2012 David McMahon and Pete Fowler embarked on fun-filled road trip to beautiful Crested Butte, CO to attend the Colorado Defense Lawyers Association's (CDLA) 35th Annual Conference. CDLA is a statewide organization that is 700 members strong, dedicated to the defense of civil actions, defending the interests of business and individuals in civil litigation, and the promotion of fairness and integrity in the civil justice system.

Here are some highlights from Dave & Pete's Excellent Adventure:

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Pete and Dave leaving the Boulder office --- Crested Butte or bust!

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Our first stop on our excellent adventure was the Coney Island Boardwalk in Bailey, CO.

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We indulged ourselves in some tasty, heavily loaded Coney Island style hot dogs!

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Our booth at CDLA, where we distributed our finest Pete Fowler Reserve Wines.

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Conference attendees testing out our raffle item, an awesome RYOBI 18V One+ Drill Set!

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Dave and Pete waiting to ride the lift to the top of Mt. Crested Butte.

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Dave and Pete at the summit of Mt. Crested Butte.

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On our way back down from the summit: the beautiful city of Mt. Crested Butte and the fantastic CDLA Friday Night Bash with live band!

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On Saturday we took in the sights. Here we are in front of Crested Butte's Old City Hall and Montanya Distillers. Some other great bars were passed through included Kochevar's, Eldo, and The Dogwood Cocktail Cabin, definitely worth checking out if you ever find yourself in lovely Crested Butte.

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Dave and Pete at Teocalli Tamale, some of the best Mexican food you can find this far North!

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We found friends old and new while in Crested Butte! Can't wait to see you all again soon!!

 

Continuing Education

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From the day of our founding, PFCS has been dedicated to training & education. Years ago, we realized that many of our clients were interested in receiving a summary of the same training topics we were creating for our own internal use. Eventually we registered to provide continuing education credits for various professional organizations that our clients belonged to. Today, many of our courses are registered for continuing education credits with the following organizations:

  1. The State Bar of California: PFCS is an approved provider. All courses we offer are available for credit.

  2. California Department of Insurance: PFCS is an approved provider. Each program requires individual approval 30 days in advance. Application fee is $28.00 per course.

  3. Nevada Board of Continuing Education: Each program is applied for online with no application fee. Apply 30 days ahead to be safe.

  4. Oregon State Bar: Approval is applied for in advance, but can be approved up to 30 days after each webinar. Application fee is $40.00 per course.

  5. Community Associations Institute (CAI through CAMICB): PFCS is currently seeking approval for our Property Analysis Series.

  6. Paralegals are provided a Certificate of Attendance which they can submit to either:

    1. National Federation Paralegal Association (NFPA) website www.paralegals.org

    2. National Association of Legal Assistants (NALA) website www.nala.org

  7. Colorado Supreme Court: Needs to be reviewed and updated.

For more information, contact us at marketing@petefowler.com.

 

 

OWCAM Expo

On January 20, 2012, we had a great time participating in the 2012 OWCAM Expo Annual Trade Show in Vancouver, WA. In the spirit of this year’s "Cruising in Paradise" theme (remember this is January in the Pacific Northwest!) Pete Fowler and Adrian Bullmore dressed the part. The Expo is an annual venue for community managers and vendors to network amongst peers and to participate in educational sessions.

We spent the day catching up with old friends, making new friends and raffled off a fabulous bottle of Gaston Chiquet Traditional Champagne at the end of the day.

The Oregon Washington Community Association Managers, (OWCAM) was founded in 2002 to educate and serve Community Association Managers and service vendors in Oregon and Washington.

 

CAI's Essentials Workshop

On February 4, 2012, the Oregon Chapter of the Community Association Institute presented a one day Workshop in Portland, Oregon. The "Essentials" program is a comprehensive course about the history, organization and financial structure of community associations, including problem solving techniques to help run your community better. Pete Fowler spoke on property maintenance

SB 800 Introduction and Summary: CA Builders Right To Repair Law

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SB 800 Introduction and Summary: CA Builders Right To Repair Law - A 5-page whitepaper by Pete Fowler Construction Services, Inc., copyright Dec. 2, 2011

Introduction

Senate Bill (SB) 800, the ‘Builders Right To Repair’ bill was signed into law September 20, 2002, and took effect for every living unit sold in California after January 1, 2003. Printed, the bill is 12 pages, and specifies the rights and requirements of a homeowner to bring a construction defect action, contains building standards and functionality requirements for new residential units, and gives a detailed pre-litigation procedure. SB 800 was developed as a compromise of various factions of the building and legal communities to address the problems of the home building industry. The 9,000 word bill states the intent of the legislature is to improve the procedure for the administration of civil justice in construction defect cases.

Problems that led to the development and passage of the bill into law include:

  • Issues of quality in home building and consumer protection

  • Pervasive construction defect litigation

  • A lack of insurance coverage for builders, subcontractors, and suppliers

Important components of SB 800:

  • Pre-litigation procedure requires the owner to notify and allows ‘Builders Right To

    Repair’ before being sued

  • Immunity for ‘qualified’ third party quality inspectors. This is meant to encourage the

    practice of third-party quality control.

  • Allows recovery for damages previously excluded under Aas

  • Builders must notify owners of maintenance requirements and SB 800 protections at

    time of sale

  • Builders now have a document retention requirement, by statute

  • Specific statute of limitations, less than the blanket 10 years, for many components in

    residential construction

  • Builders cannot demand a ‘release’ for performing repairs. Builders can get a full

    release if they offer cash or upgrades in return for release.

  • The pre-litigation process does toll the statute of limitations

  • Conduct during the pre-litigation procedure is admissible in a subsequent suit. Bill does

    apply to subcontractors, suppliers, manufacturers and designers, except pre-litigation procedure

Actionable Defects

Water Issues

(1) A door shall not allow unintended water to pass beyond moisture barriers.
(2) Windows, patio doors, deck doors, and their systems shall not allow water to pass beyond moisture barriers.
(3) Windows, patio doors, deck doors, and their systems shall not allow excessive condensation.
(4) Roofs, roofing systems, chimney caps, and ventilation components shall not allow water beyond moisture barriers.
(5) Decks, deck systems, balconies, balcony systems, exterior stairs, and stair systems shall not allow water to pass into the adjacent structure.
(6) Decks, deck systems, balconies, balcony systems, exterior stairs, and stair systems shall not allow unintended water to pass within the systems themselves and cause damage.
(7) Foundations and slabs shall not allow water or vapor to enter into the structure so as to cause damage.
(8) Foundations and slabs shall not allow water or vapor to enter into the structure so as to limit the installation of the type of flooring materials.
(9) Hardscape, irrigation systems, landscaping systems, and drainage systems, shall not cause water or soil erosion or come in contact with the structure so as to cause damage to another building component.
(10) Stucco, siding, exterior walls, exterior framing, exterior wall finishes and fixtures, pot shelves, horizontal surfaces, columns, and plant-ons, shall be installed in such a way so as not to allow unintended water to pass into the structure or beyond moisture barriers.
(11) Stucco, siding, and exterior walls shall not allow excessive condensation to cause damage to another component.
(12) Retaining and site walls and their drainage systems shall not allow unintended water to pass beyond moisture barriers so as to cause damage.
(13) Retaining walls and site walls, and their drainage systems, shall only allow water to flow beyond, around, or through the areas designated by design.
(14) The plumbing system, sewer system, and utility systems shall not leak.
(15) Plumbing, sewer, and utility lines shall not corrode so as to impede the useful life of the systems.
(16) Sewer systems shall allow the designated amount of sewage to flow through the system. (17) Shower and bath enclosures shall not leak water into the interior of walls, flooring systems, or the interior of other components.
(18) Ceramic tile and tile countertops shall not allow water into the interior of walls, flooring systems, or other components so as to cause damage.

Structural Issues

(1) Foundations shall not contain significant cracks or vertical displacement.
(2) Foundations shall not cause the structure to be structurally unsafe.
(3) Foundations and soils shall comply with the design criteria for chemical deterioration or corrosion resistance in effect at the time of construction.
(4) A structure shall comply with the design criteria for earthquake and wind load resistance.

Soil Issues

(1) Soils and retaining walls shall not cause damage to the structure.
(2) Soils and retaining walls shall not cause the structure to be unsafe.
(3) Soils shall not cause the land upon which no structure is built to become unusable.

Fire Protection

(1) A structure shall comply with the design criteria and codes.
(2) Fireplaces, chimneys, chimney structures, and chimney termination caps shall not cause unreasonable risk of fire.
(3) Electrical and mechanical systems shall not cause unreasonable risk of fire.

Plumbing and Sewer Issues

Plumbing and sewer systems shall operate properly and not impair use of the structure. Four year statute.

Electrical System Issues

Electrical systems shall operate properly and not impair the use of the structure. Four-year statute.

Other Areas of Construction

(1) Exterior hardscape (driveways, sidewalls, etc.) shall not have excessive cracks or vertical displacement. Four-year statute.
(2) Stucco, siding, and exterior wall finishes shall not contain significant cracks or separations. (3) (A) To the extent not otherwise covered by these standards, manufactured products, shall be installed so as not to interfere with the products' useful life.

(3) (B) "useful life" means a representation of how long a product is warranted or represented, through its limited warranty or any written representations, to last by its manufacturer, including recommended or required maintenance. If there is no representation by a manufacturer, a builder shall install manufactured products so as not to interfere with the product's utility.

(3) (C) "manufactured product" is completely manufactured offsite.
(3) (D) If no useful life representation is made, the period shall be no less than one year. This subparagraph does not limit recovery if there has been damage to another building component caused by a manufactured product during the manufactured product's useful life.
(3) (E) This title does not apply in any action seeking recovery solely for a defect in a manufactured product located within or adjacent to a structure.
(4) Heating, shall be capable of maintaining a temperature of 70 degrees Fahrenheit three feet above the floor in any living space.
(5) Air-conditioning, shall be consistent with the size and efficiency design criteria in Title 24 of the California Code of Regulations.
(6) Attached structures shall comply with interunit noise transmission standards. One-year statute.
(7) Irrigation and drainage shall operate properly. One-year statute.
(8) Wood posts shall not be installed so as to cause decay. Two year statute.
(9) Steel fences shall be installed so as to prevent corrosion. Four year statute.
(10) Paint and stains shall be applied so as not to cause deterioration of the building. Five year statute.
(11) Roofing materials shall be installed so as to avoid materials falling from the roof.
(12) Landscaping shall be installed so as to survive for not less than one year. Two year statute.
(13) Ceramic tile and backing shall be installed so it does not detach.
(14) Dryer ducts shall be installed pursuant to manufacturer requirements. Two year statute. (15) Structures shall be constructed so as not to impair the occupants' safety.

The standards set forth in this chapter are intended to address every function or component of a structure. To the extent that a function or component of a structure is not addressed by these standards, it shall be actionable if it causes damage.

‘Builders Right to Repair’ Calendar

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‘Builders Right to Repair’ Calendar

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Methodology for Evaluation of Water Infiltration in Buildings

Introduction

Pete Fowler was invited to present at the Oregon State Bar Construction Law Section for a Construction Defect Claims Series. The OSB Construction Law Section and Smith Freed & Eberhard sponsored the free lunch series for attorney continuing education credits. Pete Fowler presented the topic of Methodology for Evaluation Water Infiltration in Buildings. The program included building envelope evaluations, construction defect analysis and prevention, and expert witness services.

This program is also part of a Property Analysis Seminar/Webinar Series presented by PFCS . The objective of the Property Analysis Seminar Series is to gain a“big picture” understanding of how professionals gather, analyze and use building performance data. Also participants may learn best practices and “the scientific approach” to figuring out building performance problems to have something to contrast against, when faced with people who have drawn erroneous conclusions based on poor investigation techniques.

Property Analysis Seminar/Webinar Series

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Programs in this series:

  1. Property Condition Assessment Using ASTM E2018-08

  2. Evaluating Water Leakage of Buildings Using ASTM E 2128-01a

  3. Prioritizing Maintenance and Repairs on a Limited Budget

  4. Contracts for Property Maintenance, Repair and Improvement.

  5. Managing Property Maintenance, Repair and Improvement.

For more information or to attend an upcoming seminar/webinar call us or email us at marketing@petefowler.com.

 

Expert Witness Success

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Expert testimony can make or break some cases. “Expert Witness Success: Managing the development and delivery of opinions, reports and testimony for success” will give you a framework to make sure your expert testimony is complete, supportable and understandable by the non-technical people who need to use the information to make decisions. Since there are no guarantees in litigation, disciplined execution of a well-tested method is as close as we can get. With our system for development and delivery of expert opinions, you don’t have to wait until the testimony is delivered to know if it is going to be good.

Expert Analysis

Forensic work includes collecting and organizing documents and physical evidence, and documentation of conditions with photos and other demonstration aids like diagrams and flow-charts. Analysis includes turning raw data into understandable, usable information. Ultimately presentation of conclusions occurs in meetings, mediation, or sworn testimony.

Click here to view excerpt of presentation

For more information on seminar dates or to have this presentation delivered to your company call us or email us at marketing@petefowler.com.

 

Selecting and Evaluating Expert Consultants

Our company is an expert consultancy that offers services in virtually all aspects of the building lifecycle (see PFCS Services below). I think everyone can understand that all top tier consultancies shiver at the idea of being judged by clients who simply compare the fee schedules of various competitors (Think Wal-Mart vs. Nordstrom). Although our hourly rates are competitive, they will never be the lowest.

Our company's highest and best use, and what we have worked on for the last decade, is to figure out how we make the "Total Cost of Consulting" valuable to our clients. "Most value" is sometimes the lowest cost, but often not. “Value” is a function of how the fruit of the consulting work is going to be used. If someone pays for a report but does not read it, ignores the information in making decisions, or does not execute the recommendations, then the consulting work has no value, no matter how excellent the analysis.

Creating the most value for consulting services, regardless of whether the “total cost of consulting” is modest or extravagant, requires:

  1. Case-by-case application of professional judgement by awesome, experienced and well trained consultants;

  2. A well defined and fine-tuned system to maintain consistency and quality control;

  3. A mechanism to get the price right and be able to compare the ultimate cost of the solution to the original plan, and;

  4. Communication, information and feed-back by the purchaser of the consulting services.

Many of our projects are likely to lead to litigation, are currently in litigation, or have already been in litigation, so we know as well as anyone that life is messy. Litigation is unpredictable and constantly changing. Disciplined management in the face of constant, unpredictable change is hard; but we have figured it out. We even have a seminar to teach owners, attorneys and insurance professionals the discipline of “Managing Expert Work and Costs” - there is a 3 minute video introduction if you have time.

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Analyzing Construction Defects

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Analyzing Construction Defects is for anyone faced with construction litigation related to physical problems or allegations of defects in buildings or construction. We will explain what a construction defect is, how the process of construction defect litigation flows, present a framework for working through the complexity of potential defects and the issue-by-issue analysis of each potential defect, and discuss appropriate investigation standards.

This program is for attorneys, adjusters, property managers, building professionals, and others involved in construction or real estate; as they are likely to face an insurance claim or litigation at some point. Indeed, many such professionals deal with construction related claims as a common occurrence in the course of their work.

Click here to view an excerpt of presentation

For more information on seminar dates or to have this presentation delivered to your company call us or email us at marketing@petefowler.com.

 

Property Condition Assessments Using ASTM E2018

Making Good Decisions

Managing property maintenance, improvement and repair is hard. Making good decisions in managing the building lifecycle takes hard work, professionalism and good information. From our founding, PFCS has been helping clients to understand their buildings and to make informed decisions. We have developed an integrated suite of services designed to give property managers and owners the information they need. The first and most important step in making good decisions about a building project is to get a “Baseline Property Condition Assessment.”

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Components of a Property Condition Assessment (PCA) 

  1. Document & Building Information Management: We collect, organize, and permanently store all project information created or received by PFCS in the context of our investigation and evaluation. The data and information are saved in a password protected information system that you can access via PFCS Client Access (watch the video here).

  2. Meetings/Interviews with Key People: Our Team Members keep notes and report on key information we collect in the context of our professional investigation.

  3. Inspection: After collecting and analyzing key information, we conduct a thorough, rigorous, on-site investigation. We take many hundreds of photographs per day of inspection using a proprietary application that allows categorizing by location, building element, issue, plain english descriptions, and much more. These photographs are uploaded to our proprietary information system within 24-hours and can be viewed via our password protected Client Access site.

  4. Analysis: Our analysis method has been honed over the years through tens-of-thousands of structures inspected, millions in construction specification and management, and having been named as expert witnesses on thousands of construction and property related claims & litigation. Each building element is investigated and evaluated.

  5. Estimate: Some PCAs include estimating the probable costs for repair or maintenance of some building assemblies. The PFCS Team includes several professional construction cost estimators with more than 20 years experience each.

  6. Property Condition Report (PCR): A PCR is typically 50 or more pages and organized by building element (foundations, exterior siding, decks, roofs, electrical, site drainage, etc.). The report includes photographs, descriptions, observations and conclusions for each major element. And the Executive Summary includes explicit recommendations for managing the life of the building professionally.

Seminar or Webinar

We have a 1-hour seminar or webinar to explain the American Society for Testing and Materials (ASTM International) “Standard Guide for Property Condition Assessment” (E2018-08), which represents a universally recognized set of practices for professionally collecting and evaluating data regarding the performance of buildings.

Program Outline

  1. Introduction

  2. ASTM E2018-08 Sections

  3. Sample Work

  4. Additional Building Performance Assessment Activities

  5. Building Life-Cycle Management

  6. Deep Thoughts and Hot Buttons

  7. Conclusion & Recommendations

Property Analysis Seminar / Webinar Series

Programs in this series:

  1. Property Condition Assessment Using ASTM E2018-08

  2. Evaluating Water Leakage of Buildings Using ASTM E 2128

  3. Managing Property Maintenance, Repair and Improvement

  4. Contracts for Property Maintenance, Repair and Improvement

  5. How to Save (Your Community) A Million Bucks! Prioritizing Maintenance and Repairs on a Limited Budget

For more information or to attend an upcoming seminar/webinar call us or email us at marketing@petefowler.com.

This post was updated 8/31/2018