Management negotiated a termed payment schedule with the contractor, which avoided the need to special assessment each owner. In today’s economy, unless a loan is considered, the chances of recovering a large special assessment are very low. Associations should consider their present delinquency rates along with vacant units. If unit owner expenses are attributed to a capital improvement project, it is preferred to build in a “contingency fund” to offset any potential shortfalls pertaining to those delinquent/vacant units.
Educating owners is the key to a successful project and will help avoid conflicts. In an effort to be transparent throughout the process, I included these three items in all project mailings:
1. Payment Terms. The below is an example for communicating payment terms. By including payment terms information, owners understood that their finances were being managed responsibly. They also appreciated knowing that the project management was in dependable hands. For this particular project, the total contracted price was broken out into four installments with the final payment being the least amount. Deadline dates were also determined, setting clear expectations for the contractor.
Payment Terms and Inspections
The Contractor will be paid by the association according to the terms and conditions as shown below:
First payment due at contract signing
Second Payment due once mid inspection is complete and board approved
Third payment will be made by December 5, 2012
Final payment will be released to contractor no later than May 31, 2013 +
TOTAL CONTRACT PRICE
2. Roofing Terminology and Roof diagrams. Detailed diagrams illustrated the work to be done and the areas affected. Labels, explanations and terminology provided a level playing ground of communication between owners, board members and the contractor.
A metal flashing used at the intersection of a wall and a sloping roof; the upper edge of the vertical part of the flashing steps down, following the general inclination of the roof; the horizontal edges are fastened to raggle cut in the brickwork of masonry walls.
3. Contractor Bid Comparison Sheet. The below example of a bid comparison showed the apple-to-apple comparison among three contractors and validated the final decision. The communication limited confusion and ensured confidence in the project.
|Contractor #1||$XXX,XXX + GPW $XXX =$XXX,XXX||$X,XXX.XX|
|Contractor #2||$XXX,XXX + GPW $XX,XXX =$XXX,XXX||$X,XXX.XX|
|JOB DESCRIPTION- Parcel 401 ROOFING PROJECT||Contractor #1||Contractor #2||Contractor #3|
|Remove and Install GAF Timberline Shingles 30YR||YES||YES||YES|
|Install Timber Tex Ridge Capping||YES||YES||YES|
|Install .15 lb Roof Felt Paper||YES||YES||YES|
|Install Alum. Step Flashing||YES||YES||YES|
|Install New Alum. Pipe Flanges||YES||YES||YES|
|Install Ice guard (storm shield) in eves and valleys||YES||YES||YES|
|Clean Up And Remove All Debris||YES||YES||YES|
|Install New Alum. Drip Edge||YES||YES||YES|
|Install Cricket Around Chimney||YES||NO||YES|
|Install 25′ Ridge Roll Vent||YES||YES||YES|
|Contractor Supply All Permits||YES||NO||YES|
|GAF Certified Contractor||YES||YES||YES|
|Contractors Licensed & Insurance||YES||YES||YES|
|Contractors Warranties||10yr Labor/ 30 yr Material||15yr Labor/30 yr Material||5yr Labor/30 yr Material|
|Unit Cost For Replacing Sheathing (plywood)||$45 Per Sheet 1/2 in||$50 Per Sheet 1/2 in|
|Dricon- (Fire rated) sheathing||$55 Per Sheet 1/2 in||$58 Per Sheet 1/2in||$95 Per Sheet 1/2 in|
|SPW System Plus Limited Warranty/GPW Gold Pledge Warranty||$XXXX GPW||$XX,XXX GPW||$XXX System Plus|
|12/31/2011 reserve fund balance||$XXX,XX.XX|
|2012 reserve contribution||$XX,XXX.XX|
|2012 Year-end reserve balance||$XXX,XXX.XX|
Furthermore, a “contractor provisions agreement” should be adopted for any projects over a certain threshold. This agreement protects the association and is added as an addendum to the contractor’s contract. During your initial bid solicitation, a sample of this document should be included for the vendor’s review and added as a requirement to the “Request for Proposal.” A comprehensive roof RFP can be found on the intranet under “Resource Library” maintenance-sample specifications.
Certain projects warrant a certified project manager, at the board’s discretion this should be considered for large scale capital improvement projects. In this economic climate there are other avenues to consider prior to implementation of a “special assessment.” BE CREATIVE!!
Continue to review your current reserve study fundamentals annually and provide a sound financial strategy that works best for your community. Strive to achieve these goals!!
This article is provided by Associa.