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Webinar: A Road Map to Avert Costly Surprises? Capital Reserve Study

Measure Twice…Cut Once
Slaying Sleeping Giants with Capital Reserve Studies

Watch the webinar here

By William T. Payne, P.E., Vice President/Principal at O&S Associates an engineering/architectural firm and Margie Russell, executive director of the New York Association of Realty Managers

Webster’s dictionary describes a SLEEPING GIANT as “a great but unrealized emerging power”. An apt metaphor when describing hidden conditions lurking in your buildings and the consequences of discovering them once the work has already begun. During a recent NYARM webinar, William Payne, P.E borrowed this analogy to illustrate the importance of due diligence during the planning stage of large projects.

Nobody has a crystal ball but a capital reserve study is probably the closest thing you will get to having one. Why? Because choosing to initiate a capital reserve study allows you to create a completely transparent funding plan giving management and owners the most valuable and cost effective tool in terms of placing their buildings in a sound financial position.

Have you ever had a client complain that you over budgeted for something? (No) Exactly… What this type of prudent long range planning can do is actually very impressive. It allows for management and owners to engage in important and appropriate budgeting according to a building’s specific needs. Owners understand that knowing upfront what your budget plan is avoids contentious board and annual meetings and, it is just smart business. 

The final cost of a particular project is usually the main surprise. Of great concern when working with existing buildings are the hidden conditions. 

Let’s say you open a wall or part a building’s structure and you find something you have not anticipated or budgeted for? Now you have a situation where fixing the problem ends up pushing back the schedule, running up the costs. If the project is already under the gun to complete, you have a whole new ballgame on your hands because of surprises that could have been avoided. 

Providing ample time to plan the scope of the project and communicate with the people involved, gives you options. For example, one building thought they had a steam pipe leak so they quickly opened up the apartment thinking it was going to be a quick fix to a steam line. But after they opened up the chase, they discovered that there was a 12 inch thick slab assembly with cinder fill and topping slabs. This set everything back.  Not only did the apartment have to be evacuated for quite a long time, it had become an emergency situation adding unnecessary costs to the budget that could’ve been avoided if the project had been well planned.

In today’s digital age, careful evaluation often takes a backseat to the fast food version of budgeting. Management, owners and professionals have seen it before. Buildings move full speed ahead into projects that may cost up to sums of six or seven figures. Whether it’s engineering or architecture, the goal is to uncover all the possible unknowns in the beginning of capital projects. As an example, if time is money, then surprises could easily end up being four times the money.

The key is to eliminate as many surprises as possible during the planning process. Create a road map for every building in order to avert costly surprises because that is money a building shouldn’t have to spend.  Illustrating why the maxim of “Measure Twice…Cut Once” is at the heart of judicious planning.