By creating an efficient maintenance program, your association can save money and reach its highest potential. Implement energy saving practices, use innovative building products, but most importantly, make sure your HOA is predictive, not reactive. By creating an efficient maintenance program, your association can save money and reach its highest potential. Implement energy saving practices, use innovative building products, but most importantly, make sure your HOA is predictive, not reactive.
The Financial Dilemma of Maintenance and Repair
Saving money for the association has come to the forefront of HOA concerns, affecting each person involved with the HOA from building owner to board member. One of the most costly expenditures for HOAs is maintaining and repairing the property, a responsibility delegated to the association by the Davis-Stirling Act. Historically, homeowner associations have spent similar amounts on their properties as private sector buildings, allocating an average of 25% of annual operating expenses to keep their buildings and common areas maintained. Unfortunately, in recent years many HOAs have chosen to defer their maintenance into future projects without allocating money to provide adequate funding, resulting in special assessments or buildings in complete disarray. But it’s not too late.
Your HOA can still get involved with a planned annual maintenance program that will save your association money in the long run and help your property reach the highest standard.
Troubles from financial hardships (assessment delinquencies, litigation, etc.) typically change an association’s annual budget for repairs to a “must-do basis”, also known or reactive maintenance. In other words, the HOA doesn’t shell out the money for repairs or maintenance until something actually goes wrong (pipes burst, roof leaks, etc.), but we’ll discuss this more later. For now, just know that deferring repairs often creates bigger problems that lead to larger projects which will require difficult special assessments. However, careful planning can relieve HOAs of this conundrum, allowing the association to complete the necessary work to meet the building’s needs while also providing benefits to the association that were previously unavailable.
How to Cut Costs on Maintenance and Repairs
Improving energy efficiency and building management is almost a sure-fire way to reduce the time and money spent on maintaining your HOAs buildings and common areas. The prospect of saving money should motivate your HOA’s boards of directors and building owners to make these changes—whether through reserves, capital improvement, purchased equipment etc. The most commonly adopted measures are the following:
- Staff Related– Educating community managers, homeowners and contractors.
- Equipment and Systems–Adjusting HVAC controls, updating systems.
- Lighting– Switching to energy-efficient lighting and/or control sensors.
- Exterior Building Upgrades–Using Energy Star or value-rated products: paints, roof material, windows and solar products.
Utilize Innovative Building Products
New building products have been introduced to the market, providing cheap, economical options that can benefit an association. These new products provide longevity to the life of the building and, in many cases, increase energy savings (which typically come with rebates), overall helping the HOA save money and reallocate funds. However, this means that buildings need the entire exterior to be maintained actively as a complete system, not just by component.
Here are some examples of innovative building products:
- Fiber Cement Siding – Used when replacing siding on an elevation of a building. Provides greater longevity as an alternate to wood products.
- Energy Efficient Windows – Used with the homeowner’s consent and expense. Energy efficient windows help regulate the unit’s temperature with insulation and reflective coatings to minimize the use of energy for heating and cooling.
- Solar-Reflective Roofing and Paint – Used on roofs, stucco, concrete, and sidings. Reflective roofing and paints utilize reflective qualities to provide additional insulation properties for a building.
In addition to energy savings, many manufacturers offer extended warranties on their products that provide future savings to HOAs.
Incorporate Energy Efficient Systems
According to the U.S. Energy Information Association (EIA), commercial buildings are responsible for 39% of all energy used in the U.S. and 76% of all electricity consumed. With energy costs rising steadily for the last 10 years, methods to save energy have becoming increasingly important. Campaigns by energy providers (i.e. gas and electric companies) to “Go Green” and save energy have flooded the mass media market, and as a result 65% of homeowners are paying more attention to energy efficiency and 85% say energy efficiency is a priority in their construction and retrofit projects.
So, how will the push to “Go Green” affect budgets and reserve studies?
Many boards of directors and owners are resistant to starting an energy-saving “predictive maintenance” program because they feel it requires a capital investment and is not a controllable cost. Common arguments are: “We don’t really waste that much,” and “Savings are never as high as promised.”
However, many business professionals and groups are approaching the market with promises of money savings for those managers and board members having a difficult time determining which products and services provide the best return on investment (ROI). There are the conventional resources such as architects, construction management firms and engineers, and additional resources such as manufacturers of building products, utility bill auditors, insurance companies, LEED-certified individuals and even financial consultants who offer analysis and rebates to benefit the associations and owners. There are many green amenities and conservation resources available to HOAs, such as solar panel installation and eco-friendly landscaping.
The Three Different Types of Maintenance Plans
There are three general approaches HOAs take when devising a maintenance plan: reactive, preventative, and predictive.
“If it’s not broke, don’t fix it.” This wait-and-see approach, or don’t do anything until it fails approach, requires reactive maintenance and usually at an increased cost. Many boards fall victim to this type of maintenance when they become financially stressed or when unforeseen financial constraints prematurely use allocated maintenance monies and force bigger problems and more costly decisions. We do not suggest this maintenance program.
Some associations have taken another approach to the economic challenges: planned monthly and annual maintenance programs to provide stability to the buildings. This type of maintenance approach is known as a preventative maintenance program, and will have some type of regular service or maintenance cycle scheduled. Examples would include general decay repairs, deck coating, regular paint cycles, pool equipment maintenance, gutter cleaning and light bulb replacement. This method can become a problem for communities if the board or management companies changes. Often a new manager or board member will not read the warranty requirements, unknowingly voiding one or more warranties.
Consistent monitoring of the buildings, its components and equipment, allows for early detection of common problems and promotes efficiency, life expectancy and planned budgeted repairs. Associations are trending to this approach and finding great results over a specific time period. But this also requires an implementation of the three predictive maintenance rules.
Three rules for predictive maintenance:
- Monthly property site inspection of the building components. The newest resources to accomplishing this goal in conjunction with visual inspections include the use of infrared thermal imaging cameras for structures and the use of handheld ultrasound units for evaluating mechanical components, HVAC units, pool equipment and fountains or other pumps and motors.
- Maintaining building components and building systems on a regular cycle in accordance with the manufacturers’ specifications and requirements.
- Maintaining a log of all product warranties and contractor warranties to promote the continued life cycle of each product or installation.
Using predictive maintenance programs allows for better tracking for financial and energy savings. Most of the repairs can actually be broken down to the exact cost of repair and the actual savings return. Predictive maintenance programs are the most reliable way for HOAs to manage their maintenance responsibilies, and we highly recommend it.
Switching from a Reactive to a Predictive Maintenance Program
The following list of items can be a useful tool for getting a property from a “Reactive Status” to a “Predictive Status” program:
|✔||Properly kept maintenance logs|
|✔||Risk exposure evaluation|
|✔||List of areas that require on-going maintenance|
|✔||List of unique property components|
While this list is a good start, your HOA’s board of directors should have a firm understanding what each of these items looks like. Here are some breakdowns to common questions regarding a predictive maintenance program.
What Does a Properly Kept Maintenance Log Include?
What sort of items should the board or manager keep on its maintenance log? What is required to “properly keep” the log? Here are the essential items and actions necessary for an effective maintenance log:
- Product warranties
- Unit by unit history
- Documentation of vendors that have provided services of repairs
- Dates of required maintenance to maintain warranty
- Monthly inspections on property
- Items noted that require maintenance and setting an action item
- Follow up to ensure the corrections or repairs are completed
How Do You Evaluate Risk Exposure?
Ever wonder what steps to take to ensure every element of your association’s risk exposure is identified? Here, we have the answers:
- Site survey of property
- Determine priority issues
- Create a budget
- Develop a plan
- Establish a timeline
- Get started
What Areas Have On-Going Maintenance Requirements?
While this list isn’t comprehesive, it should give your board members a general idea of what on-going maintenance elements look like. Keep in mind that some items are deferred to later maintenance and must be documented and planned for future repairs.
- HVAC, large system water heaters, fire-sprinkler systems
- Parking lot reseal and striping
- Deck coating systems, elastomeric paint systems
- Windows that are monitored for leaks and energy loss
Also, if your association has gone through a reconstruction, reserve studies are mandatory since repaired items will require active maintenance to keep warranties active.
Evaluate Your HOA: Are You Doing What It Takes?
Last but not least, evaluate your association to ensure it is taking an active role in maintenance and repairs. Ask questions about your HOA like:
- Do you keep logs on-site? Are you self-managed?
- Have you read what your management company has provided you?
- Are you asking questions?
- Are you utilizing resources that are free to the association?
- Do you review these items with your insurance agent?
- How relative is your reserve study? (When was it last done, was it for a general or specific plan, what was included, etc.)
Today, the challenge for associations is to get their properties from “Reactive Status” to “Predictive Status.” The first step is identifying the current methods your association has adopted for its maintenance plan, an essential starting point for a successful program. The second step is taking a hard look at where your association currently is and what your goals are for the next couple of years. Using industry professionals, new technology and a good plan to maintain your property and protect your investment will help your HOA along the way to effective maintenance and repair.
And after designing and implementing an efficient program, the next step to a well-managed maintenance schedule is making a Maintenance Responsibility Chart to organize and designate repair responsibility to the appropriate party.
Adapted from an article by Regan Brown and Mark Greening. Brown is a founder and principal owner of the GB Group Inc., a general contracting and consulting firm located in Morgan Hill. Greening is the president of the GB Group. The company is a member of ECHO, and both authors have had a long-time involvement in ECHO activities.