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Please note that the following article is strictly to provide information and neither the content nor transmissions through this website
are intended to provide legal or other advice or to create an attorney-client relationship.
Major reconstruction and repair projects can test the sanity of even the most experienced boards and managers. Repair prioritization, contractor selection, and funding options present just a fraction of the elements that must be weighed and considered prior to commencement of work. Whether conducted post litigation or due to deferred maintenance, all associations face the same question: Where do we begin?
After settlement/verdict in a construction defect case, associations and managers are inundated with litigation materials. There are settlement agreements, defect lists, cost of repair reports, and a bevy of client file documents that must be reviewed and considered. Expert reports provide a comprehensive analysis of deficiencies throughout the development and can provide preliminary cost estimations to remedy defective elements. While experts use markedly different techniques in developing these reports, review and analysis of litigation reports created for both the association and the developer (if available) can provide insight into the elements requiring immediate attention. If certain elements in both plaintiff and defense reports are consistent in scope and cost of repair, it is an indication that both sides generally agree that those elements contain legitimate defects that require repair.
Where an association is conducting reconstruction projects due to either deferred maintenance or as a comprehensive maintenance/repair package, expert reports will not be available but other preliminary documentation likely exists. Reserve studies, member correspondence, maintenance records, and routine visual property inspection reports can provide important insights as to which elements require immediate repair.
Finally, it is important to consider the difference between life safety elements (fire sprinkler systems, ingress/egress, etc.) that require immediate repair versus aesthetic elements that, while important, may not require immediate attention.
After gaining a general understanding of the elements requiring repair, associations should issue requests for proposal (RFP) packages to construction management providers. The construction manager, preferably a licensed general contractor specializing in association reconstruction projects, will review all documentation and assist the association in further refining repair priorities based on the association's reconstruction budget. The construction manager will then develop a bid package containing various scope of work items selected by the board and solicit bids for the areas of reconstruction.
Of note, it is important to have legal counsel assist throughout this process to contract with and assist the construction manager. In addition, Counsel should be involved if the construction manager will also be bidding on the work, to ensure a level playing field for all bidders.
During the pre-construction process, it is important to identify all reserve components which may be affected by reconstruction or repair projects. In many instances, a new reserve study will need to be conducted after a reconstruction project due to modifications in the remaining life of repaired components. Reconstruction projects will also impact the amount of reserve funding, as reserve funding may be expended or added to certain components depending on the work performed.
In addition, associations should consider elements that were not identified for immediate reconstruction but are identified on the reserve study as requiring maintenance, repair or reconstruction in the near future. Contactors incorporate certain general conditions and mobilization costs into each bid, irrespective of the amount of work that is performed. In some instances, associations can save money on these fees by having the contractor conduct additional work under the current contract, instead of waiting until the end of the useful life of an association-maintained component.
After a comprehensive bid package is created by the construction manager and put out for competitive bidding, the board should review proposal packages and conduct interviews of the interested contractors. It is worth noting, the lowest price should not automatically determine the winning contractor. A big-picture approach should be employed, with boards considering not only price but previous projects of similar size and scope. As the saying goes, you get what you pay for.
Once a contractor has been selected, legal counsel should assist with drafting and negotiating the contract. Careful consideration must be given to scope of work inclusions and exclusions, project duration, member coordination, and warranty provisions. After a contract has been executed, the reconstruction contractor should provide a schedule to the board and manager, and any member coordination issues should be discussed and planned for immediately.
One of the most important and often overlooked considerations when conducting reconstruction or repair projects is developing a strategy to proactively maintain the reconstructed or repaired elements. In most cases, reconstruction or repair contracts involve a significant expense to the association and extensive coordination efforts with the membership. Failure to proactively maintain the improvements can cause the association to end up in same place it was before the repairs were conducted.
Additionally, and importantly, many product warranties contain provisions requiring periodic maintenance and are voidable if the required maintenance is not performed. To avoid this issue, the association / manager should work with the contractor to develop a comprehensive maintenance plan and budget accordingly.
While this all may seem overwhelming, take solace in the fact that all associations will face major repairs or reconstruction projects at some point. Building a team of legal, pre-construction, and construction professionals with experience in the intricacies of reconstruction and repair work will help to ensure a smooth project from start to finish.
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