Condo's $17 Million Facade Repairs Put a New Spin on Project Management

The facts were in, and they weren’t easy to swallow. A 236-unit condominium on Manhattan’s East Side was grappling with its most recent Facade Inspection & Safety Program (FISP) report. The condo had been fine in the previous cycle, but since then the inspection requirements had changed. The result of this more rigorous testing was a Cycle 8 report deeming the building unsafe — and a punishing price tag of $17 million to do repairs. 

Sometimes a large reserve isn’t enough. “The condo had about $4 million in its reserves when it was notified that the building was going to be deemed ‘unsafe’ in this cycle,” recalls Richard Onde, director of project management at Gardiner & Theobald. Onde’s firm serves as an owner’s rep, and was hired to coordinate the multimillion-dollar project. The board held a meeting where residents were informed about the project and its cost. The decision was made to assess owners for the full $17 million, leaving the condo with an intact reserve fund in case other items surfaced.

A complex orchestration. The focus of the repairs was the condo’s balconies. Years ago, the concrete balconies were clad in aluminum, probably to fix or prevent damage to the concrete. That was “a quick, cheap fix,” Onde says. But now, the FISP inspection revealed that the concrete underneath the cladding was spalling. “Engineers and architects could literally just put their hands behind the cladding and pull chunks of concrete out,” he adds. “There had to be a full-blown repair of all the balconies, and possibly a full railing replacement on all of them as well.”

Projects of this magnitude need oversight beyond what a management company typically provides. Gardiner & Theobald’s role was large: “We add value to a project by acting like an orchestra conductor,” Onde says. “We make sure that all the consultants and contractors are following schedules, protocols, safety plans and all Department of Buildings requirements before a project even starts.”

One of the early tasks was securing access agreements and roof rights from neighboring buildings. The condo’s attorney secured these, and Onde’s firm helped supply the needed information. “We don’t write the agreements, but we consult on what it should cover and what the parameters and the duration of the project are,” he says.

Oversight adds cost, but the payback is savings. Adding another professional to a large project can seem counterintuitive to saving money, but the rigor of strict project management can prove beneficial. Onde’s firm charges a lump-sum fee for preconstruction, design, construction and closeout. Each month, the fee changes depending on the workload required, which usually comes in at around 10% of the total project.

The project savings come from maintaining schedules and monitoring, and renegotiating any change orders. “We make sure a project doesn’t run over months and months, requiring additional fees for sidewalk bridging and scaffolding,” Onde says. “And if a change order comes in for $200,000, we might reject it and negotiate a lower cost.” If Onde’s firm is part of the project at the request-for-proposal stage, it’s able to project unit costs on everything possible, keeping a handle on change-order expenses.

While a lot of project management firms use relationships with contractors to check prices, “we do it differently,” he explains. “Our cost managers are RICS trained, which is a British-based system from the Royal Institution of Chartered Surveyors that is a very stringent cost-management training system. We have a lot of benchmarking data we use that allows us to better define a project’s cost.”

Embracing reality can be painful, but it’s the right thing to do. When the condo board initially approved the $17 million project, unit-owners, not unexpectedly, pushed back. “The board explained that the fix wasn’t like improving the lobby, where you have a choice to do it or not,” Onde recalls. If the condo didn’t address the problem now, it was going to be worse down the road and cost 15% or 20% more. “I remember the board saying, ‘Let’s just get it done and do it right and bring in the right professionals to do it,’” he says. “Hopefully, the condo won’t have to touch the facade of the building for another 15 years.”