Major construction and repair projects can take a significant toll on the
sanity of even the most experienced associations and managers. Repair
prioritization, contractor selection, and funding options present just
a fraction of the various elements that must be weighed and considered
prior to commencement of work. Whether conducted post-litigation or simply
as a result of deferred maintenance, all Boards face the same preliminary
question when it comes to reconstruction and repair projects: Where do we begin?
1.Understand What Needs to be Repaired
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 other
case file documents that must be reviewed and considered. Expert reports
provide a comprehensive analysis of deficiencies throughout the development
as well as preliminary cost estimations to remedy the defective elements.
While different attorneys use markedly different techniques in developing
these reports, review and analysis of reports for both the association
and the developer can provide insight as to the elements requiring immediate
attention. If elements are consistent in scope and have a similar cost,
both sides generally agree that those elements contain legitimate defects
and require repairs.
Where an association is not conducting reconstruction projects post-litigation,
but instead due to deferred maintenance or as a comprehensive maintenance/repair
package, expert reports will not be available but alternative documentation
to assist in this step likely exists. Reserve studies indicating deficiencies,
homeowner correspondence, maintenance records, and routine visual property
inspections can all provide important insight as to which elements require
Finally, it is important to consider the difference between life safety
elements (fire sprinkler systems, ingress/egress, etc.) which require
immediate repair versus aesthetic elements that do not require immediate
2.Issue Requests for Proposals
After gaining a general understanding as to the elements requiring repair,
associations should issue requests for proposal (RFP) packages to pre-construction
service providers. The pre-construction service provider, preferably a
licensed general contractor specializing in association reconstruction
projects, will review all documentation and assist the association in
further refining which repairs require immediate attention, based upon
the association’s reconstruction budget. The pre-construction service
provider will then develop a bid package based upon the various scope
of work items discussed with the Board and solicit bids for the various
It is important to have legal counsel assist throughout this process. Counsel
will ensure the scope of work coverage is proper, and verify the competitiveness
between the pre-construction services provider and other bidders.
3.Review and Analyze Reserves
During the pre-construction process, it is important to identify all reserve
components which may be affected by construction 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 implicate the amount of reserve funding, as some reserve
funding may be expended or added depending on the level of construction
to be 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 / reconstruction in the near future. Contactors
build general conditions and mobilization fees into each bid, irrespective
of the amount of work that is performed. In some instances, associations
can actually save money on these fees by having the contractor conduct
additional work under the current contract, as opposed to waiting for
the end of the useful life of a particular component to conduct the necessary
maintenance / repairs.
4.Select Contractor and Negotiate Contract
After a comprehensive bid package is created by the pre-construction service
provider and put out for competitive bidding, the Board should review
proposal packages and conduct interviews of some / all of the interested
contractors. It is worth noting, the lowest price should not automatically
determine the winning bid / contractor. A big-picture approach should
be taken, considering not only price but previous projects of similar
size and scope. Remember, usually 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 the
scope of work inclusions / exclusions, project duration, homeowner coordination,
and warranty provisions. After a contract has been executed, the reconstruction
contractor should provide a schedule to the Board / manager and any homeowner
coordination issues should be discussed and planned for immediately.
One of the most important and often overlooked considerations when conducting
reconstruction or repairs 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 homeowners. Failure to proactively
maintain the improvements can ultimately cause an association to end up
back in the same place it was in before the repairs.
Additionally, and importantly, many product warranties contain provisions
requiring periodic maintenance and are voidable if the required maintenance
is not performed. To address this issue, the association / manager should
work with the contractor to develop a comprehensive maintenance plan and
budget for the various repairs.
While all of this may seem overwhelming, take solace in the fact that all
associations will face major repairs or reconstruction at some point during
their existence. Building a team of legal, pre-construction, and construction
professionals that are experienced in the various intricacies of reconstruction
will assist with a smooth project from start to finish.
Profile for attorney Andy G. Ronan: Prior to attending law school, Andy
worked for multiple general contractors in the construction industry.
He has experience in the areas of field supervision, scheduling, estimating,
pre-construction services, and business development. Andy has worked in
various capacities on projects ranging from $5,000 to over $100M.
**This article is republished from HOA Quarterly Magazine, Summer 2017
Edition - an HOA Publication published by West Coast Management**