The Advantages of a Financial Assessment for the Preconstruction Phase

By Adam Snitzer / Published August 2023

As experts in Florida association construction project management, DSS Condo recognizes the significance of effective financial planning within condominium and homeowners’ associations.

     We’ve learned that the adoption of a financial assessment for just the preconstruction phase of a major restoration project can greatly benefit board members and the overall community. By issuing a financial assessment solely for the preconstruction phase, board members can secure the funds necessary to initiate major projects, renovations, or improvements without sending financial shock waves throughout the community.

This article explores the advantages of implementing this approach and sheds light on how it can positively impact the association’s financial and political stability while greatly enhancing the chances of a successful project.

Securing Adequate Funds for Major Projects

     Associations often encounter financial challenges when undertaking significant renovation projects. Implementing a preconstruction assessment enables board members to collect a reasonably small sum upfront, alleviating the burden of explaining the rationale for a costly assessment before all the ducks are in a row.

     In DSS Condo’s experience, issuing a multi-million-dollar assessment before all the key questions have been answered puts the community into a financial tailspin, unnecessarily scares unit owners, and leads to vehement unit-owner objections and nasty finger pointing.  Instead, by issuing only a preconstruction financial assessment, board members can proactively address the sort of strains that often derail projects from the get-go and lead to long delays in getting important and necessary projects started.

Comprehensive Cost Estimation

During the preconstruction phase, detailed cost estimation takes place, encompassing all aspects of the project. Project managers work closely with architects, engineers, and other stakeholders to develop a comprehensive understanding of the project scope, materials, labor, permits, and other cost components. By conducting thorough research and leveraging industry expertise, project managers can provide accurate and realistic cost estimates that reflect the project’s unique requirements. This ensures that the final, overall project budget is based on reliable data.

Detailed Scope Definition

     The preconstruction phase allows project managers to define and refine the project scope in detail. Through collaborative discussions with clients, engineers, architects, and contractors, project managers can identify the specific requirements, expectations, and costs for each aspect of the project. Clearly defining the scope helps eliminate ambiguity, reduces the likelihood of scope creep, and ensures that the budget is aligned with the project’s most important deliverables.

Thorough Material and Supplier Evaluation

     During the preconstruction phase, project managers engage in extensive research and evaluation of materials and suppliers. By carefully selecting the right materials and suppliers based on cost, quality, and availability, project managers can make informed decisions that impact the project budget. Negotiating favorable pricing agreements and establishing long-term relationships with reliable suppliers can result in cost savings and ensure that the budget accurately reflects the expected material costs.

Constructability and Value Engineering

     The preconstruction phase provides an opportunity to assess constructability and explore value engineering options. By engaging with contractors, subcontractors, and other industry experts, project managers can evaluate design plans and identify potential improvements to optimize construction efficiency, reduce the likelihood of change orders, and lower project costs. Value engineering focuses on achieving the desired project outcomes while maximizing value for money. Conducting constructability reviews and value engineering exercises during the preconstruction phase enables project managers to make informed decisions that enhance project quality, reduce waste, and maximize returns on the community’s investment.

Effective Communication and Stakeholder Engagement

     Successful construction projects require effective communication and stakeholder engagement from the outset. During the preconstruction phase, project managers engage with various stakeholders, including owners, architects, engineers, and local authorities. Clear and consistent communication ensures that all parties are aligned with project objectives, budgets, timelines, and expectations. Engaging stakeholders early on allows for collaboration, problem-solving, and the identification of potential challenges or conflicts before they impact the construction phase. Effective communication and stakeholder engagement foster trust, transparency, and a shared commitment to project success.

Risk Identification and Contingency Planning

     The preconstruction phase allows project managers to identify and assess potential risks that could impact the project budget. By conducting comprehensive risk assessments, project managers can anticipate potential challenges such as site conditions, weather, permitting delays, and unforeseen complications. Based on these assessments, contingency plans can be developed to account for potential cost impacts. Including appropriate contingencies in the budget ensures that unexpected expenses can be managed without disrupting the overall project timeline or exceeding the allocated budget that the board has committed to.

Promoting Transparent Decision-Making

     Implementing a preconstruction assessment encourages transparent decision-making within the condominium association. By involving residents in the financial planning process from the early stages, board members foster a sense of transparency and community engagement. Residents become informed stakeholders, actively participating in decisions related to the preconstruction phase, which can include crucial considerations such as project scope, budget allocation, and selection of contractors. This level of transparency fosters trust and ensures that residents’ concerns and preferences are taken into account, leading to a more cohesive and harmonious living environment.

Ensuring Long-Term Financial Stability

     By collecting funds solely for the preconstruction phase, board members can establish a solid foundation for long-term financial stability within the association. A well-planned budget enables the association to anticipate expenses and set realistic, well-informed, and appropriate assessment levels, ensuring the sustainability of the community and preventing undue financial strain on residents over the long run.

Conclusion

     The implementation of a preconstruction assessment offers significant advantages for association board members. The preconstruction phase is vital to the success of any construction project. It allows project managers to lay a solid foundation by proper planning, accurate budgeting, constructability assessment, effective communication, and risk mitigation. Investing time and effort into the preconstruction phase sets the stage for efficient execution, cost control, and a smoother construction process, ultimately leading to the timely delivery of a high-quality project that meets stakeholder expectations.

     DSS Condo has found that funding preconstruction first is the best way for association board members to head off conflict and debates when a large restoration assessment is required.

Adam Snitzer, Chief Financial Officer

DSS Condo LLC

     Adam Snitzer is chief financial officer of DSS Condo LLC, South Florida’s leading construction project management/owners’ representative firm specializing in serving condominium and homeowner communities. “What I love most about my job,” he says, “is working with such dedicated and knowledgeable construction professionals who are passionate about saving our clients’ money.” He can be reached via email at adam@dsscondo.com. For more information about DSS Condo, visit www.dsscondo.com.