Jennifer Pinck
Why do retrofit and rehab projects pose greater risks than equivalent size new construction?
The answer: hidden risks. Many hidden risks result from “magical thinking” – what you can’t see, doesn’t exist. These risks can include structural deficiencies, code requirements as buildings change uses, and insufficient utility capacity.
Effective risk management requires identifying potential problems early. Experienced eyes can identify these well before construction – bringing developers, owners and facility managers greater peace of mind.
Here are five critical strategies to expose hidden project perils, incorporate into plans and budgets and reduce risk.
Investigate, Investigate, Investigate
Short-cutting an existing conditions investigation during planning and budgeting can be costly. Telltale signs of settlement, moisture problems and other results of deferred maintenance offer vital information. Doors that stick, mold in odd locations and filthy air return vents can be clues about possible deficiencies necessitating costly remedies.
Prior renovations (especially in multi-family dwellings) are often the source of hidden conditions. If possible, vacate a unit to poke holes in key locations—e.g., kitchens and baths. In numerous buildings we found earlier renovations had accommodated piping by cutting structure. Opening floors revealed serious deterioration and unsafe structural conditions.
Occupancy Matters
Don’t assume current occupancy is legal occupancy. Understand the code requirements for proposed uses! We have commonly discovered major discrepancies between the local authority’s records and who or what is in the building. Mixed-use buildings are particularly challenging – especially with long-term tenants using spaces in ways never originally permitted.
Tenants: beware of promised build-out and fit-out allowances that may not take into account dramatically different code requirements for different uses – i.e. educational and office uses, or laboratory and office uses.
Carefully consider special uses. Large conference space may be considered “assembly space.” This may require additional or different regulatory oversight resulting, at best, in the need for additional permits, or costly additional redesign and construction, at worst.
Assessed Values Alter The Playing Field
Exceeding certain ratios of construction cost to assessed value can result in upgrades for code compliance. A flag should go up when the rehab cost is projected to be more than one-third of assessed value.
Localities may not maintain current assessments on tax-exempt properties. The combination of artificially low assessed valuations and rising construction costs can mean the one-third ratio is quickly reached. A limited rehab at one large housing development exceeded the ratio by a sufficient amount to trigger major fire protection upgrades. An updated appraisal eliminated this costly scope of work.
Know Thy Utilities
Nothing blows a budget faster than uncertainty about utilities. Make sure you identify:
What utilities are available? What is the existing service capacity? Where do utilities enter/exit the building?
Your project manager, site surveyor and engineer should determine and document this. The engineer should project service demands as early as possible.
Even as heating, cooling and electrical loads drop due to improved energy efficiency, the type of service, size of the lines and capacity must be assessed carefully. Waiting is dangerous – delays in turnover will result. Bringing in new utilities requires time and patience.
Ownership, Covenants And Restrictions, Oh My!
Make every check possible to determine ownership and restrictions (e.g., searches by address, name, ZIP code, etc.). For a local medical center about to commence a major project, an historic preservation restriction was recorded under the name of the former board chair – not the corporation. Even the title examiner missed it.
Result: overall design plans had to be modified late in the game – forfeiting valuable program space and requiring additional work to accommodate the restriction, exceeding the original budget.
Finally, always budget for the unforeseen. No matter how much investigation you do, assume you will encounter some hidden conditions.
Jennifer Pinck is president of Roxbury-based project managers Pinck & Co.
