Capital projects like roof replacements or elevator modernizations are essential to your building’s long-term value, and involve many moving pieces: preparation, team and project management, budget oversight, and communications coordination, to name a few. We asked some industry experts for their advice on getting through the process as smoothly as possible. 

Purposeful Planning

Project planning starts with assessing the scale of what needs to be done. “For a smaller project, having regular meetings to decide who is doing what” creates accountability, says Giulia Alimonti, VP of New York for The Falcon Group engineering firm. “For larger projects, construction management software is helpful to track deadlines, coordinate meetings, and set milestones.”

Building the Team

Once the mission is defined, selecting the right team of professionals for a capital project sets the tone for the entire process.

“Ideally, boards will appoint one contact person–often the property manager–to help set up the team and act as the external point of contact for the board,” says Alimonti. This allows the manager to be the central point of communication and accountability. 

Alimonti implores managers to do their due diligence before the first hammer falls. “Interview contractors, check references, have an attorney review contracts, make sure insurance is in order,” she says. “Planning ahead helps avoid delays or surprises that could add expenses to a project.”

“At a minimum, you should be getting three to five estimates,” adds Ralph Westerhoff, CEO of NYC-based property management firm Brickwork Management, noting that sometimes the best contractor for the job is the one you’ve already built a relationship with. He recalls a recent facade project in Chelsea: “They brought in a company they had worked with before because they knew they could trust them, and even though that company may not have had the most competitive bid, it was still worth paying a little more.”

Figuring Out Funding

After the initial planning, funding tends to be the next big hurdle boards run into when tackling capital improvement projects. Westerhoff says, “As property managers, we have to be the stewards of our clients’ money. Depending on the complexity of the project, you’ve got to make sure you’ve figured out what the best financing options are.”

​Boards typically have two options for paying the bill on a capital project: borrowing, or assessing residents. “Whether it’s a roof, boiler, or other major capital improvement, the useful life of these projects is typically anywhere from 20 to 50 years,” explains Harley Seligman, senior VP of National Cooperative Bank. “Taking financing aligns with the time horizon of the project, spreading out the cost across the owners in the building throughout the life of the project, rather than an assessment, which is put on the shoulders of the people who live there now.”

One of the most important recommendations Seligman makes to boards is to increase maintenance fees gradually, rather than all at once. “If you're used to seeing your bill at $99 a month and one day it jumps to $107, you're going to be upset,” he says, “but if it goes from $99 to $100 to $101 to $102, it's mentally easier for people.” However, Seligman does note that economic conditions have made even incremental increases difficult. “Between insurance, real estate taxes, utilities—everything has gone up. Even with a small increase in maintenance, most co-ops are still underwater.”

Getting Ahead of the Unexpected

Along with careful planning and competent oversight, having a financial contingency plan can help prevent a funding shortfall from abruptly derailing scheduled work.

According to Seligman, boards sometimes refinance existing loans, but decline to establish a line of credit because of the additional closing costs. This, he says, is a mistake. “What they don't realize is that for a couple extra thousand dollars you can have this line of credit in your back pocket as a rainy-day fund. It’s a very powerful thing to have,” he explains, noting that a line of credit provides immediate access to funds in the event of an unexpected emergency. “It saves you that ’oh no, the boiler blew and we need to come up with $100,000 tomorrow’ moment,” he adds.

Communication is Critical​

Clear communication with residents is crucial during any project to stay on schedule, manage expectations, and quickly address any issues that may arise. Providing updates on projects—both before and during the work—through newsletters, emails, or other notices keeps everyone informed.​ 

The main challenge, says Westerhoff, is that communication is never perfect. Even when managers think they are staying on top of everything, issues will inevitably come up—but setting a tone of transparency and accessibility from the start goes a long way toward minimizing those issues.

 With the right team in place and proper preparation, capital projects are more likely to stay on time and on budget, increasing property values well into the future.