Building Work – Know more about it

­­­­Building Work – Know more about it

­­Building work is generally a finite task, often called a job. The job has a clear start and end point. As such, an exact scope of work should be submitted for all work proposed in the building by outside contractors. Jobs can be broken up into multiple cost categories, such as work done by staff, work under $500, work between $500 and $1,000, work between $1,000 and $10,000, and work $10,000ish and above. Jobs can also be broken up by type, such as capital work, chargebacks, or shareholder caused repair work.

Staff Work                                                                                                                                                

Any work that can be handled by building staff on building time generally does not need a scope of work. Staff capable work includes most work “inside of the walls”, such as changes to basic plumbing fixtures, light bulbs, curtains, shelving, locks, window balances, and other carpentry related repairs. I have my staff work on jobs that take no longer than 15 minutes as a courtesy to shareholders. Anything taking longer than 15 minutes takes too much time out of their day and an outside contractor should be called in, unless the remainder of their day is empty.

Having staff complete work that would ordinarily require an outside contractor saves the building money. However, do not have staff do this during their own time, make sure they are paid during regular hours or overtime so building insurance covers them in the event of an injury. Don’t have your staff, regardless of their previous life’s experiences and skills; work on building plumbing or any electrical systems, unless they are separately licensed and insured. Save this work for outside contractors. Never let staff do work off of company time as it’s a liability for the building.

Staff work under the 32BJ contract is a mix between lightly instructed duties from management and the Superintendent’s and remaining staff’s willingness/eagerness to impress Boards. If you’re fortunate enough to have an active and forward thinking Superintendent, he’ll be open to doing just about anything you ask him to do as he’ll know it will help his year-end bonus. However, 32BJ staff cannot be mandated to paint a building, regardless of their available time. They can however be asked to paint a door here and there. It’s a grey area of the contract but if the staff is willing then it will save the building money.

If there’s a leak in the building somewhere, staff should try to pinpoint the leak by opening walls. Having a plumber open walls on the building’s dime is expensive and a waste of their time. Opening a wall is easy; it’s the repair part that takes time. After the in-the-wall repair is complete, bring in a carpenter to close and prime the wall. The final coat of paint or wallpaper is the owner’s responsibility, regardless of the cause.

Work Under $500

I like to ask Boards for their authority to make my own decisions about needed building work under $500. This allows me to act faster and involve them only for more important decisions. A $375 expense in a $1.3 million dollar budget should not involve the Board. Too much Board involvement slows down the machine. Low dollar figure expenses include Superintendent’s office supplies and machines, small staff uniform expenses, minor building touchups, and any other regular course-of-business expense.

Work between $500-$1,000

I don’t like to obtain multiple bids for work between $500 and $1,000 as I’ve bid so many jobs in the past and generally know the cheapest, best contractors. For work of this size, I generally run it by the Board President, briefly describing the scope and need, for their approval. I then sign off on the proposal ‘As Agent For [Corporation Name Here]’ and affix the Board President’s approval email to my records. If it’s uncommon work, I will bid the job out to 2-3 contractors and/or ask other managers around the office if the proposed number is reasonable.

Work between $1,000-$10,000ish

Work in this range generally falls under an entire Board vote if it is elective. This would include more substantial building painting, roof, elevator, or lobby enhancements, or other types of elective work. These jobs are generally requested by the Board. As such, 3 bids would be obtained, analyzed, and proposed to the Board, with Management pointing out which contractor is preferred for the job and why.

If the work is not elective, such as mandatory Category 1 elevator repairs, boiler or entrance door repairs, or any other type of immediate-need work, I’ll obtain the initial quote from the building’s go-to vendor for the type of work, then obtain at least 1 additional quote for verification / to keep the contractors honest. In some cases, such as with elevators or boiler filing requirement work, I can run the figures by third party witnessing firms. Quotes of this nature do not require full Board approval as they are mandatory, immediate, the building has no choice but to do them, and if the management company did their homework, the decision should be clear.

Work over $10,000ish

Based upon the need, this type of work is generally submitted by a sealed bid. If it’s for mandatory work and the figure comes in at $15,000 to repair elevators, it does not need to be a sealed bid as the initial cost is generally unknown until the proposal is created. However, if substantial façade, roof, or boiler replacement work is needed, the managing agent should bring in a building engineer to draw up a scope of work. If the work is sizeable, the agent may need to have 3 engineers bid for their right to draw up the proposal, followed by the approval of that engineer and their expense, concluded by the selected engineer bidding the full scope of work to approximately 5 contractors.

The proposals should be sent to two places, the Board President and the building’s attorney. As a property manager, I would not want to be involved in someone claiming I did something dirty. A property manager’s reputation is all he or she has. Once the proposals are obtained, they should be delivered by the building’s attorney and all opened at once in front of the full Board and managing agent. The bids should be analyzed by the engineer to determine if they satisfy the bid spec. A determination can then be made on who to use.

Capital Work

Capital work is generally categorized as any work done to a building that increases its value. When an item is replaced or repaired, regardless of the cost, it is, by definition, not a ‘capitalized expense’. If work is a true building improvement, taxes may not need to be paid on the bill.

Contrary to the definition of capital work, buildings often elect to have sizeable jobs booked as capital jobs, so as not to throw the operating budget off. Repair jobs booked as capital can include riser and stack repairs, sizeable sidewalk repairs, or any repair invoice in the multiple thousands of dollars range. Buildings often fund this type of repair (non-classically capital) work from their reserve fund. From an accounting standpoint, capitalizing work that is not classically booked as capital only helps to satisfy accuracy of the approved operating budget.

Chargebacks

When bills related to work done in or for a shareholder’s or owner’s apartment consists of repairs from damage they caused or are responsible for, engineering alteration reviews, or legal charges such as collections or other suits, the bills should be paid by the building then charged back to the owner’s account.

Alterations to apartments consisting of substantial plumbing or electrical work, wall demolition or construction, washer or dryer installation, or wet-over-dry circumstance creation (such as when a bathroom is created and the floor below is not a bathroom, new plumbing must be run and has the potential to leak into the ‘dry’ room below), an engineer should review the plans prior to approval/start of any work. Once approved, the engineer should view the work in the middle of the process and also sign-off on it at completion. All of these charges should be billed back to the shareholder. These expenses, once paid by the shareholder, should be noted in the building’s monthly financials as income so the two wash each other out, keeping your budget on track. This applies to any chargeback expense; make sure the payback from the owner is reflected in the financials to balance the financial report.

Any legal work associated with attempts to collect delinquent maintenance or common charges should be billed back to the owner’s account. Unless the owner files bankruptcy, these legal fees should be recouped in the suit to follow.

Shareholder Caused Repair Work

These situations are generally terrible. Shareholders will cry, yell, fight, you name it. In the event of a leak in an apartment or other type of apartment-caused problem, the source must be obtained and if possible photographed as quickly as possible. Determination of the cause of problems is one of the most important tasks of a building Super.

For instance, if water originating from unit 5E leaks down the entire E line, causing $100,000 of damage, who foots the repair bill? The question to the answer lies in who caused the initial problem. Proprietary Lease language generally states that anything ‘in the walls’ is a building expense (excluding electrical lines after the breaker box) and anything ‘from the paint in’ is a shareholder expense. However, if the apartment had a prior alteration where the plumbing was changed within the wall, there’s a good chance the owner is responsible. That is where the pictures come in.

If the cause of the problem is determined to be an owner expense, their insurance carrier must be ‘put on notice’ as soon as possible, as well as the building’s insurance. Since the cost will be theirs, their insurance company (hopefully they have one, else your building’s insurance may need to foot the bill then sue or subrogate for the repair money if the owner doesn’t pay) will bring in an appraiser, followed by the managing agent bidding the job to multiple vendors. Generally, the managing agent will receive a check for the amount of the appraisal, of which the job will be done, the remainder of which either the full amount wasn’t initially granted to the agent or it can either be kept or returned (I recommend returning the difference if the actual work comes in lower than the appraisal, else an audit on the building’s expenses may turn up foul play).

Paying

To pay for work, if the figure is small, the contractor will generally expect payment within a month. For higher figure bills, if your operating account doesn’t have much cash, your managing agent can call the contractor to arrange a three or four time segmented payment of the bill. I’ve never had a problem with a contractor agreeing to this. Often, they’ll ask for a deposit for work up front, which is okay, but the timing for the remainder of the payment can be negotiated.

If work is not done satisfactorily, have your agent withhold payment in full from the contractor until satisfaction is met. I’ve had to do this on a number of occasions. When a contractor is missing money, it’s quite a motivator for them to correct the issue at hand.

(images - handyman from jackoftradez.com, money from infrastructurist.com, crying from gamehounds.net)