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Create a building roadmap with a life-cycle analysis, prioritize projects, and explore financial options for compliance, transparency, and cost-effectiveness. Communicate decisions with stakeholders.
AUTHORChristopher Alker, Vice President, Building Operations and Compliance, AKAM
First things first. In order to prepare for a project necessary to meet a local law or any other capital improvement project, what’s most important is that you have a projection for what your building needs to do in the next 5, 10, 20 years. People don’t realize that. They think, “Oh, you build a building, and it’s great, and it’s like a piece of stone, and it just sits there, and nothing happens to it.” As soon as you build that building, it starts falling apart. As soon as that last brick is laid, weather, gravity, water, sleet, snow, hail start to pound your building into submission — or I should say pound it into old age.
The question facing boards is how to prioritize what needs to be done. One way is to focus on those laws that will most affect a building’s bottom line if it doesn’t comply, and another way is to prioritize by considering life safety and liability issues. That could mean rather than a lobby renovation you might have to do work on your facade. If it’s a million bucks for your facade, a million bucks for your lobby, you’ve got to do the facade.
Step-by-step. Creating a roadmap is very important. You can use the concept of life-cycle analysis which means understanding the useful life expectancy of the finishes, fixtures and equipment of your building, and then allocating conservative estimates for those replacement costs. It makes it a lot more digestible if you know that in five years you’re going to have to spend a quarter million dollars to replace that boiler. You can start to plan for that and also figure out how to replace the boiler in a way that also complies with carbon emissions. Should you get a better boiler? Should you switch to electric? Oil to gas? It’s all intertwined.
Once you’ve identified the order of your projects, then your management company can bring all the different financial options to the table, whether it’s refinancing, construction loans, assessments or exploring other revenue streams in the building, like charging for storage or using the gym or renting out the community room for events.
Sales Pitch. Transparency is a really important thing. Boards need to share the information they have received from their management company and other professionals, and how they’ve elected to move forward. Like, “Hey, look, we’ve decided we’re going to put our building, our parking garage and our facade inspection project on the exact same cycle so that we can use the same professional to cover everything at the same time to save on mobilization costs and streamline the process,” for example. And the board can sell this by saying, “As a result of doing this, maintenance is only going to increase 1% rather than 3%.” Or, “We don’t have to assess this year because we’re able to find a way to make this more cost effective.” Or, “We used the mom-and-pop shop. We didn’t need to use the mega-corporate engineer on this one because it was a smaller project.”
Throughout the process, communicating with shareholders or unit-owners is really important. In addition to annual meetings, we often advocate town halls and newsletters so boards can explain their decisions and the reasons behind them.