Construction inflation is putting pressure on condo boards to find strategies to make up for significant cost increases in refund studies. Inflation could mean making some hard decisions, including introducing common element fee increases or special assessments, putting further financial strain on condo owners. Here we offer tips to help your condo board prepare for 2024 reserve fund study sticker shock by taking a more proactive approach.

Do Not Rely on Existing Reserve Fund Study Pricing

For 2024 and 2025 capital repair projects, consider scheduling an updated engineering study to ensure the pricing is accurate. Relying on pricing from even a year or two ago will likely see budget deficits by as much as 40.5% according to data from construction tenders gathered between January 2020 and August 2023. In some cases, such as paving, the increases can be as high as 50% to 100%.  

Find Alternative Solutions and Savings Opportunities

Speak to your engineer or contractor about possible cost-saving solutions for material substitutions. You can also look at projects that will help achieve energy savings so you can gain from the improvement and use those savings towards another project. Asking sooner than later will provide the insights you need to pivot quickly and find the savings you need for both upcoming projects and those further in the future. 

Award Work Faster – But Be Prepared to Delay

Inflation is seeing material costs change quickly. As a result, make your tendering decisions fast. Waiting beyond 30 days increases the risk that the submitted costs can’t be honoured. 

At the same time, it’s important to keep up with construction prices as you might find increases for some materials are only temporary. In this case, you might consider delaying the project or material purchases until you see reasonable prices restored. 

Adopt a Proactive Maintenance Plan

Being proactive reduces costs over the long term. Something as simple as a leak today can lead to serious widespread deterioration in the future using a reactive maintenance strategy. For example, proactive maintenance might seal building envelope cracks to reduce energy loss and prevent water damage to help defer building envelop restoration. Another example is regularly sealing and repairing damaged pavement in parking lots and other exterior structures to help maintain the supporting fill, deferring total pavement replacement. 

Avoid Deferring Critical Maintenance Processes

Avoiding or putting off maintenance might see immediate cost savings but is also a critical mistake that will cost you far more in the future. Examples of critical maintenance processes you shouldn’t ignore include:

• Regular HVAC equipment assessment and servicing
• Chemical treatments for the heating loop and cooling tower
• Scheduled parking garage membrane washing 

Defer Projects Wisely

Although you want to reduce costs, you can’t completely ignore crucial projects. Choosing a minor repair program for the garage for example, is not a permanent solution that allows you to skip the major garage renewal. This will ultimately lead to a special assessment. You also can’t defer projects that directly impact owners’ enjoyment of their units, such as choosing to do window retrofits when a window replacement is definitely quired. 

You also want to avoid unnecessary work whenever possible. For example, if you have certain capital projects scheduled, have the system reassessed to confirm the immediate need is there. 

These tips can help you maintain a healthy reserve fund and avoid placing further financial burden on condo owners.

The condo experts at CPO Management Inc, a full-service property management company in Toronto and the GTA, have had tremendous success helping condo corporations manage their reserve fund studies effectively. Reach out to us today to learn how we can achieve cost savings and efficiencies for your corporation.