Today in the Managing a Major Project in a Condo Association series, we’ll be covering the design and bid phase. By now you’ve hired your technical experts, and now it’s time to get down and dirty and figure out what the project will look like and bid the project out to qualified performers.
Before unleashing the technical representation on the project, you need to come together as a Board and Management and figure out your approach and major parameters and priorities for the effort. First and foremost, you need to think about the most important parameter: cost. Cost is always a driver when it comes to a major project in a Condo Association. Your flexibility for the cost of a project is going to be fixed to a certain extent – generally major projects land in the same cost ballpark – i.e., a roof is a roof, but there are variables you can influence. Also important to keep in mind is that cost can drive your decisions, or it can be driven by your decisions. For example, an approach of “We’re going to do this job as cost-effectively as possible” means you make your decisions with cost in mind, always. Alternately, you might have some budget flexibility and instead design the project around your needs and desires and let the cost land where it may. Once you’ve figured out your cost approach, it’s time to dive into some specifics. Planning the details are critical to executing a major project in a Condo Association successfully.
Major Factors to Consider
The first thing to consider is the pace of the project. Do you want to emphasize doing the work as fast as possible or do you want to get a best value approach? You might even want to slow the work if possible so you can accumulate reserves. Factors that influence this, for example, are the number of work crews that you hire and how often they work. Typically there’s a “best value” a contractor will come to you with that is based on a five-day work week of eight hours a day. But maybe you want to work longer days, or maybe you want to work seven days a week to get the job done as fast as possible. This will drive up the cost, but it will also get the job done quicker. Think about what’s right for your Association.
The second major factor to consider is the impact to aesthetics. In general, you don’t want to mess with things like overall appearance – if your building is painted a certain color and you’re redoing half the facade, it’s best not to cut corners and not repaint just to save money. However, there may be choices you can make that save money for some aesthetic compromise. A great example of this might be if you are installing new wiring in hallways – maybe for a fire system update or fiber optic cabling. Concealing the wiring in the walls can be very costly, with cutting holes, patching, and repainting. Sometimes you can save money by instead installing conduits to hold the wires. While not as aesthetically pleasing, it can save the Association significant amounts of money. Make sure to ask your technical representation what your options might be to save money and make a decision based on the best interests of the Association.
Finally, figure out what the indirect costs of the project may be. Many projects may require you to assign staff time to them – whether it’s your front desk or building manager or maintenance. You might need staff to accompany contractors in Owner units, or you may need to spend staff time on administrative tasks like scheduling and coordination. If a project is big enough, you may need temporary office help to assist coordination, or need to pay staff overtime to get the job done. Factor in these costs – on a $1M project you might see up to $30K-$50K in staff time, a non-trivial addition to the cost you need to budget for. It is important to remember the indirect costs of managing a major project in a Condo Association, because they add up quickly. Failure to account for them can lead to a surprise during end of year fiscal reviews.
Remember – throughout this process, your technical representation is your ally. Ask them questions, ask them to come up with ideas for you, ask them how they’ve solved these problems at other buildings. Unfortunately, many vendors won’t always be proactive with you, so you need to be aggressive in tasking them with your needs.
Developing the Design and Peer Reviewing it
Once you have identified what you want, your engineering representative will come up with a design. This will include technical aspects – like the type of roofing material or style if it’s a roof – and also incorporate the design choices you previously made, such as aesthetics compromises.
When managing a major project in a Condo Association, you should have this design go through a technical peer review. Chances are your Board lacks the expertise to comment as to what materials and styles of work are the best. Even if you do have that expertise, remember, a Board should set policy and rely on contracted experts and not be overly hands-on. Find another technical firm and pay them to review the design. You should be transparent about this process with your technical representation – they should know you’re going to peer review their work, and they should welcome it. Ensure that the peer review doesn’t find any flaws. If you get conflicting opinions, get a third opinion. Don’t be penny wise and pound foolish over big projects. Better to spend $15K on a paper study to settle any questions than to end up with a bad design that leads to hundreds of thousands of dollars of remedial work.
Sending the Project to Bid and Reviewing Responses
Finally, when you have a final design, it’s time to send it out for bid. Your engineers will handle this for you and return you the responsive bids. Always ask for at least three bids as a best practice. As part of this process, your engineers will provide a summary sheet that will outline the differences between each bid. Make sure you set expectations with them that you want an assessment of the bids, not just a comparison. Often the product you will receive will simply outline the differences – like costs, approaches, types of materials, etc. This is necessary, but not sufficient. You need to ask your technical representation to walk you through what these differences mean. If there’s a different material used, for example, ask them the pros and cons of that material versus others. If prices are wildly different, they need to explain why. It may be that one company has technology that others do not, or it may be that the prices as bid are bullshit. Ask your technical representation about past experiences with each of the bidders. Once you’ve reviewed the responses, you’re ready for the next step in a major project in a Condo Association: bidder interviews.
Interviewing the Bidders
Once you’ve reviewed your bid sheet, you will either interview all or a subset (typically the best two) of the bidders. Your technical representation should be present for these interviews. I recommend you work with them, your Board members, and your Management to generate a list of questions to ask. I also recommend providing this list to them in advance, as it will lead to a more productive interview. As with interviewing technical representation, you want to ask questions around both their qualifications, experience, and “bedside manner.” Things to consider:
- Overall body of experience
- Experience with similar projects in buildings of similar size
- Crew capacity
- How the project will impact Owners
- Experience providing information to Owners, whether in a “town hall” scenario or written information sheets
While there is a tendency to emphasize price (for obvious reasons), the interview and its answers should also play a strong factor. If you get a bad vibe from a contractor, trust your gut. You’re going to be working with these people on a lengthy, stressful project – make sure things are “clicking.”
Once you’ve made a selection, you’ll draw up a contract. I suggest A1A contracts, and ensure your Association’s legal counsel reviews it. You should also make sure to include a performance bond, if applicable, in the work. Performance Bonds protect the Association against disputes over the quality of work.
Congratulations! At this point, you’ve got a plan and you’ve got someone to do the work. The next phase, which I’ll cover next month, will be one of the hardest when it comes to a major project in a Condo Association: you’re going to build a communications plan and get the word out to your Owners on the work and how it will impact them.