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Capital Options Abound Targeted Repairs Can Extend Life Cycle
June, 2009
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BUILDING CHECKLIST
Go back and re-read the capital plans/reserve funds
• The plan should list out the age of all primary building components, benchmark the remaining service life against norms, and assign a budget figure to each component.
• Look for items that are missing
• Question the budget amounts assigned
• Budget for interim maintenance programs between general renewals (this may be carried in operation expenditures, or could be in the capital plan)
Walk through the building
• Call for help when you’re unsure of what you see
• Investigating a small problem could be a simple fix, while ignoring it could be a more expensive/complicated fix
Keep good records
• Record all maintenance activities and costs, and capture this information in concert with the capital plan
• Maintain a database of warranties (e.g., insulated glazing units, roofing, etc.)
• For leakage problems, keep track of locations, times/dates, weather conditions, take photos or make sketches, and get access to the space above, look for open windows, damaged finishes, etc.
Look for opportunities to combine work, such as:
• Weatherstripping replacement and operable window and hardware repairs
• Sealant replacement and cladding maintenance
• Window replacement and interior air sealing
• Replacing heating and cooling plants – account for building envelope changes and heat recovery systems
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By Diana Carr and Kevin Day
At the 20 to 30-year mark many building systems begin to wear out and need costly repairs and replacements. Increasingly, stakeholders interested in tenant retention and property value demand capital funds for things such as interior finish updates, as well as sustainable or green initiatives in order to compete with newer, greener buildings, while rising energy costs and tightening compliance issues add to the mounting concerns. At the same time, financiers now scrutinize capital more closely than ever before parting with funds.
Planning and organizing capital/maintenance expenditures, in combination with leveraging technology, support the best decision making to deal with escalating capital requirements, negotiating stakeholder’s needs and riding out the current economy. A capital plan or a reserve fund study for condominiums (RFS) is a road map for a facility’s long-term needs.
Capital plans should be dynamic documents where carefully considered decisions – both engineering strategies and business strategies – are captured for reference. They should take into account business needs, approaches to building maintenance and the facility’s time horizon. A good capital plan should: prioritize competing capital projects; avoid surprises; provide solid justification for spending; and help organize capital spending on a portfolio level.
Planners should start with interviews with the facility owner, manager, service personnel, etc. to gain an understanding of the expectations, the drivers behind the capital plan and performance issues of the various building systems. A document review should follow, including drawings, existing reports and any intrusive investigation reports previously completed.
Good record-keeping is an essential part of this process. Management records should include not only copies of the drawings and prior reports, but also specific dates, times, photos and other details of problems. This all provides great value in planning strategies for component repairs/replacements.
During a site visit, the condition of the individual systems will be evaluated visually, but often it is prudent to invest in physical testing as a low-cost option to narrow the budget range. Testing can include a broad range of measures, including thermal scans, roof cuts, concrete testing or even domestic water piping cuts.
MELD ENGINEERING AND BUSINESS JUDGMENT
Much of this evaluation requires engineering judgment. However, this is another area where the plan becomes a dynamic process.
Determine the component life cycle for each system and find out how to extend it. There are very few instances when something must absolutely be replaced immediately (i.e., perhaps a safety issue, or a legislated change). Consultants should explain all the variables.
Where there are a broad range of options for a particular renewal project, insist that the consultant provides all the options, not just the easy ones, so that the selected strategy is ultimately the best fit for the company’s business drivers. Lower costs can mean lower performance, whereas superior performance usually requires a higher initial cost, but may reduce future costs in either capital or operating.
When dealing with capital repair and replacement issues, a building manager will get the best value from consultants when insisting on:
1 Getting the full range of solutions explained, and the associated risks well qualified;
2 Ensuring that practicality and logistics deal with both the cause and symptoms of problems;
3 Not ruling out the opportunity to try small-scale repairs and then monitoring the performance; and
4. Viewing full scale remediation/replacement as a last resort.
REPLACEMENT ALTERNATIVES
Let’s consider a scenario where a garage condition evaluation finds chloride contamination and corrosion of reinforcing steel in the top four inches of a 12-inch suspended garage slab. Replacing the slab might be the easiest, but also the most costly and wasteful strategy. With two-thirds of the slab thickness still in decent condition, it’s like throwing the baby out with the bathwater.
Alternatively, repair options might include targeted local repairs or full topside concrete removal. Such targeted programs require more design work and, thus, a larger initial consulting fee, but the overall cost savings can be in the millions. It also generates less waste, keeping concrete, steel, piping, waterproofing systems etc. from landfill.
A full slab replacement will mean a much higher cost immediately, but with the expectation of fewer repairs needed in the following decade, while the lower initial cost-targeted repair may mean that ongoing maintenance and repairs will be required. Decision makers will have to weigh the differences in both opportunity cost and cash flow.
Capital plans can be particularly helpful management tools for the building envelop since property managers can get varied opinions from their consultants about how long their building envelope systems should last. Ongoing problems do not always require immediate system replacement provided the shortcomings are monitored in connection with maintenance and strategic repairs.
As with the garage slabs, deferring replacement with strategic repairs results in better cash flow and should be considered whenever possible. Simpler repairs can buy a few years of service, and, in some cases, more comprehensive repairs can buy another life cycle.
First, evaluate the risk and the extent and nature of damage. Risks must be properly assessed – i.e. water penetration, lost performance, life-safety, and/or other factors such as perceived property value. Then the capital plan or reserve fund should be structured to reflect whether the building envelope and structural components are at a satisfactory or marginal performance level.
MANAGEMENT INVOLVEMENT NEEDED
A building management team doesn’t need to know the peculiarities and idiosyncrasies of its various building envelope components, but does need to know three simple things:
1. What building envelope systems are in place?
2. What is their general condition?
3. What allocation has been made for maintenance, repair and/or replacement?
Every facility should have a capital project management program that matches its purpose, construction, history and proposed future. If building owners and managers don’t take an active role in the capital planning process, they may miss out on some important opportunities.
Each building system requires different levels of maintenance. Seek to understand them. Use consultants when expertise is needed, but push them to provide good value, and have them identify options/benefits/risks in concise reporting with less jargon.
Search for energy-saving opportunities that have small incremental upfront costs but greater operating/capital savings downstream. Remember that proactive maintenance can reduce life cycle costs and defer the need for costly replacements, which also promotes sustainability.
Diana Carr, P.Eng., is a project manager with Halsall’s Audits and Restoration team. Kevin Day is a building science and cladding specialist with Halsall. For more information, see the web site at www.halsall.com
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