by Benny Bercovicz / Published November 2014
With aging buildings on the coastline of Florida, the need for major renovation comes sooner rather than later. When a condominium board meets to discuss a construction/renovation project, the typical process starts by determining what to do and how to do it, then a preliminary plan is formed to establish a budget for the project.
The decision to go ahead with the project is not a simple one, and there are a number of issues that need to be discussed and agreed upon first. If the project is to restore the property after a storm with insurance funds, the issues to be decided are:
• Should it be restored to its prior condition?
• Or, should the association take advantage of the opportunity and perform additional property upgrades?
If the latter option is chosen, then to what extent should the association perform additional property upgrades?
If the project is not connected to any storm or property damage, but is simply an aging building with access wear and tear and deferred maintenance that needs up-grading, then a preliminary budget is established and an architect/engineer is selected to draw up the plans, specifications, and to oversee the bidding process for contractors and contractor selection.
While this is the common way of handling construction/renovation projects, it is not necessarily the best way for the property owners to oversee projects. Let’s start first with the architect’s selection. It may be that your community has hired the best architect, who is familiar with your type of project, but at this first stage of the process, you are only getting a single architect’s opinion, and you have no other way to compare and evaluate the architect’s proposal. The hiring of this single architect influences contractor selection, construction, and completion of the project because all trades must follow the architect’s plans and specifications.
One example of what is to be cautioned against comes from a condominium project that this author became involved in after the problem occurred.
The subject building was in the city of Hallandale Beach. The condominium board was notified by the insurance carrier that all exterior doors needed to be replaced with new hurricane-approved doors as a condition for the property insurance renewal. The condominium board awarded the contract to a local door company, which subsequently applied for permits and supplied and installed the doors.
Upon final inspection by the city of Hallandale Beach building inspector, it was discovered that the door jamb was fastened into the wall that was made out of masonry units on one side of the jamb and metal framing on the other side. The city building inspector failed the final inspection, ordered all the doors to be removed, and requested a structural engineer evaluate the problem and make recommendations on how to reinforce the metal framing side to make it the same strength as the masonry unit side before reinstalling the doors.
The door company—the contractor in this case—left the job and refused to correct the problem without getting paid for additional change orders, claiming that the problem was concealed conditions and not within the contract scope of his work. The condominium board is in litigation with the door company, and the project was on hold for almost two years. The building permits expired, and the insurance policy was going to be cancelled.
The condominium board had no other choice but to start the process all over again by hiring a new company and paying an additional $185,000 to correct the problem. In this particular example, by having a consultant on board, the problem would have been discovered prior to bidding, and it could have saved the condominium board the additional cost of $185,000 plus the cost of ongoing litigation, which is unknown.
So what is a community association to do to avoid the aforementioned problems? A more accurate and efficient method is to first hire a construction consultant (owner’s representative) to coordinate and perform the following services:
• Initial project evaluation
• Preliminary budget recommendation
• Prepare preliminary scope of work for architects
• Prepare Request for Proposals (RFP) from architects
• Evaluate architect proposals and make award recommendations
• Review the final plans and specifications from architect/engineer
• Prepare a contractor’s bidding package
• Evaluate proposals from contractors and make award recommendations
• Monitor project quality control and performance for the owners
• Perform inspection prior to payment release
• Completion and warranties verification
• Post-completion instructions and operations
In using this method, the project is likely to run more smoothly, with minimal to zero problems, due to the fact that every step of the way is tightly controlled by the construction consultant, and if an issue arises, it can be mitigated on the spot without affecting the entire project. The second benefit is that if your association has to litigate any disputes and or claims, you have an expert witness with full backup, detailed documentation of the project, which will save time and money and, in most cases, it will lead to a settlement or a judgment in the owner’s favor.
The consultant’s job is to coordinate and monitor all project activities, and the owner can rely on the service of a single, prime professional to manage the entire process of a construction project. The consultant does not replace any of the project professional services, but advises the owners and coordinates all project activities for a successful outcome.
The statistics show that many condominium associations and/or property management companies (referred to as owners) involved in a major restoration or remodeling project end up with some construction disputes or costly litigation due to the fact that the job specifications were open to more than one option, and the contractor’s choice or method was not the same as the owner’s choice. Having a clear understanding of the project details, which includes unforeseen conditions, schedule conflicts, change orders, delays, and other details, can substantially reduce potential disputes by hiring a construction consultant at the early stage before the process starts.
As an example, the consultant will make recommendations on how to handle change orders when they arise by creating a menu of services with a set price for potential change orders. A consultant will further anticipate potential, unforeseen conditions; he will expose the condition and make it a part of the bidding instructions. A construction consultant is a valuable service for a better project outcome.