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Physical Analysis (On-Site Inspection)
The purpose of the on-site inspection is to gather detailed information about
all of the association's capital assets maintained by its reserve budget.
Knowing how much each reserve component (roofing, paving, pool, tennis court,
etc) costs and how frequently these costs recur is the key to determining a
funding plan. Having a diligent physical analysis provides the
foundation for an accurate reserve study.
A photographic inventory of some of the reserve components, though not
required by State Civil Code 1365, improves the report appearance. (Note
that a report is only as good as its numbers, so don't be fooled by a reserve
study with lots of nice-looking photos but lacking in substance)... We do a
photographic listing on request and it has been particularly helpful in cases
where there is litigation involved against a developer, for example.
Reserve Component Photographic Record
ClayLite S-Tile Roofing - New a/o 2001
Asphalt Paving Showing Cracking
Pool Before Resurfacing
Pool Fiberglass Resurface Process
Stucco Showing Mildew on Patio Walls
Tennis Court Resurfaced in 2004
Reserve
Component Description
An
integral part of developing a good reserve component physical analysis is
documenting the essential facts and assumptions about each reserve component.
A
well-written narrative about each reserve component is one of the most
important attributes to look for in a reserve study because many of the cost
projections need extra explanation.
This cannot be emphasized
enough.
Many reserve studies
show only calculations and lack description (other than terse descriptions of condition of each
reserve component as
"good, fair, or poor"). This often leaves the next year's Board
scratching their heads trying
to figure out why certain reserve expense items were scheduled in a particular
way...
As
an example of the need for documentation, suppose your association is planning
to remove 10 large trees that have been a recurring expense liability of $2,000
in trimming costs every two years. If the association plans to remove two
trees per year at $600 each, there will be a $1200 line item called "Tree
Removal - 5-Year Phased" in the cash flow analysis for the next 5
years. After 5 years, there will be no more trimming expenses projected in
the cash flow.
At
the same time, the 'Tree Trimming Expense" line item
may occur as $2,000 in the first year and then $1,000 two years later, and then
zero thereafter as the trees are progressively removed. Absent adequate
narrative describing the assumptions made in the cost projections, the cost
projections may seem confusing to next year's board or to the management
company.
Providing
this level of detail is rather time-consuming and it is indeed much easier to
populate a report with nice pictures of every item from roofs to restrooms. Yet
the people who live in the association already know what these things look like.
Having
said that, following is a sample of the reserve component description section of
a report.
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The following pages contain
descriptions of each identified reserve component maintained by the
association. Each reserve
component is shown with its estimated useful life, remaining life, and
current cost to replace. Supporting
information is included where applicable.
This information is analyzed
by computer to produce the cash flow analysis and straight-line analysis
reports.
This component inventory and
condition assessment information was obtained during an on-site visit in October
2004 and via subsequent discussions with local contractors, board
members or agents for the board. No
destructive testing was done to determine condition of components that are
not readily accessible (for example, sampling plumbing lines or flat roof
core samples). Field
measurement is always done to determine quantities.
Only in cases where representative sampling is feasible will it be
done, for example, if there are 10 buildings of exactly the same design,
then painting surface measurement will be done on one building and
multiplied by 10.
Remaining life estimates are based on typical useful life expectancy minus
effective age of components (which may not be the same as chronological
age). Published costs and
life expectancies may also be used.
No representation is made as
to how much actual costs and actual
life expectancies at the time of future replacement may differ from
estimates contained herein. Because
actual contractor bids vary considerably, it is entirely possible that the
association may select a bid that is more costly or less costly than the
estimates provided herein. Contractor
estimates discussed on the following pages are not to be interpreted as
formal bids or as an endorsement of that particular contractor.
This on-site inspection is
not to be considered as a project audit or quality inspection.
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Tile
Roof - Phase I
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Location:
Tops
of Phase I residences.
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Quantity:
42,000
SF.
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Remaining
Life: 27
Years.
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Typical Useful
Life: 30 Years.
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Comments:
The
association re-roofed half of the buildings that had defective tiles with
Clay-Lite S-Tile in Oct 2001-Feb 2002, consuming most of the association's
reserve funds. Roof tiles
last indefinitely. Aside from
occasional breakage, the primary long-term expense will be replacing the
roof underlayment and flashing after about 30-35 years. Cost is $4.25/SF to remove
tiles and stack, then replace underlayment and then reinstall tiles.
Note building plans cited 65,441SF of total roof area, but measured
SF was 84,000 SF.
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Current Replacement Cost: $178,500
at $4.25 per SF. Cost
Source – Local Contractor.
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Preventative Maintenance: Routine
inspection. Roof maintenance
programs can extend roof longevity.
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Tile
Roof - Phase II
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Location:
Tops
of Phase II residences.
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Quantity:
42,000
SF.
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Remaining
Life: 10
Years.
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Typical Useful
Life: 30 Years.
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Comments:
The
association re-roofed half of the buildings that had defective tiles with
Clay-Lite S-Tile in Oct 2001-Feb 2002. The contractor states that the
other half of roofs can last about 10 years more.
Aside from occasional breakage, the primary long-term expense will
be replacing the felt underlayment after about 30-35 years. Cost is
$4.25/SF to remove tiles and stack, then replace underlayment and then
reinstall tiles. Note
building plans cited 65,441SF of total roof area, but measured SF was
84,000 SF.
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Current Replacement Cost: $178,500
at $4.25 per SF. Cost Source – Local Contractor.
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Preventative Maintenance: Routine
inspection. Roof maintenance
programs can extend roof longevity.
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Pool Composite Shingle Roof
-
Replace
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Location:
Top
of pool restroom building.
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Quantity:
900
SF.
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Remaining
Life: 27 Years.
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Typical Useful
Life: 30 Years.
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Comments:
The
pool roof has a mix of tile and 30-year composite asphalt shingle under
the solar panels. This line
item is for the composite shingle roof replacement under the solar panels.
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Current Replacement Cost: $2,655
at $2.95 per SF. Cost Source – Local Contractor.
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Preventative Maintenance: Routine
inspection. Roof maintenance
programs can extend roof longevity.
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Pool
Solar Panels - Reinstall
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Location:
Top
of pool building.
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Quantity:
1
Reinstallation for 10 Panels.
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Remaining
Life: 27 Years.
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Typical Useful
Life: 30 Years.
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Comments:
The
pool solar panels must be removed and reinstalled the next time the pool
building is re-roofed. The
pool solar contractor said removing & reinstalling the solar system
costs about $1,500 if asphalt composite shingles are used. If other roof materials are used, roofers often require
installation of flashed 6" steel pedestals in the sub-roof to support
panels.
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Current Replacement Cost: $1,500
at $1,500 per Reinstallation for 10 Panel. Cost Source – Solar
Contractor.
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Preventative Maintenance: Routine
inspection. Roof maintenance
programs can extend roof longevity.
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Roof
Vent Pipe Caulking
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Location:
Tops
of structures.
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Quantity:
1
Caulking job.
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Remaining
Life: 3 Years.
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Typical Useful
Life: 6 Years.
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Comments:
The
roof pipe vents should be inspected every 5-7 years for cracking and
re-caulked with mastic where needed.
Tiles should also be inspected in the process.
Local roofing contractors have quoted approximately $100 per unit,
or $4000 for 40 units, to have a roof repair person walk carefully on the
tiles and re-caulk around all the pipe vents.
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Current Replacement Cost: $4,000
at $4,000 per Caulking job. Cost Source – Local Contractor.
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Preventative Maintenance: Routine
inspection. Roof maintenance
programs can extend roof longevity.
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Asphalt
Sealcoat
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Location:
Paved
Areas.
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Quantity:
43,220
SF.
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Remaining
Life: 0 Year
(within next 12 months).
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Typical Useful
Life: 3 Years.
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Comments:
Was
done in January 1999 for $3,500 after most of the association had new
petromat overlay done in December 1998.
Was then done in 2002 for $3950 by a different contractor.
Consider doing on a 2-year cycle to build up a thick protective
layer where raveling has occurred. As
sealcoating may not be done by Fall 2004 and some surfaces have mud stains
which would make sealcoating less effective, consider doing sealcoat in
spring of 2005.
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Current Replacement Cost: $3,950
per actual 2002 cost (contractor says price hasn't increased).
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Preventative Maintenance: Regular
sealcoat. Keep clean to
reduce abrasive effects of grit.
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Asphalt
Overlay - 1998 Phase
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Location:
Paved
Areas.
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Quantity:
14,440
SF.
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Remaining
Life: 8 Years.
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Typical Useful
Life: 12 Years.
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Comments:
14,400
SF of asphalt had a 1.5" petromat overlay applied in September 1998.
Actual 1998 cost for paving, less sealcoat & stripe was about
$16,000. A typical petromat overlay can last 12-18 years,
depending on how well the surface was prepped and if proper binding was
accomplished between the new and old layers. Because of
expansive-contractive soils here assume only 12 years useful life.
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Current Replacement Cost: $17,328
at $1.20 per SF. Cost Source – Local Contractor.
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Preventative Maintenance: Regular
sealcoat. Keep clean to
reduce abrasive effects of grit.
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Asphalt
Overlay - Entrances
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Location:
Paved
Areas.
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Quantity:
6,060
SF.
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Remaining
Life: 6 Years.
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Typical Useful
Life: 12
Years.
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Comments:
The
asphalt sections at the two entrances had an overlay applied in 1996.
Currently good condition, with about 5-7 years remaining life.
Petromat overlays do not last as long as full remove & replace,
but cost less. A typical
petromat overlay can last 12-18 years, depending on how well the surface
was prepped and if proper binding was accomplished between the new and old
layers. Because of expansive-contractive soils here assume only 12 years
useful life.
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Current Replacement Cost: $7,272
at $1.20 per SF. Cost Source – Local Contractor.
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Preventative Maintenance: Regular
sealcoat. Keep clean to
reduce abrasive effects of grit.
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Asphalt
Overlay - 2002 Phase
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Location:
Paved
Areas.
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Quantity:
22,720
SF.
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Remaining
Life: 10 Years.
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Typical Useful
Life: 12 Years.
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Comments:
This
area includes the two small parking lots, plus miscellaneous parking bays,
plus the SE corner the main private drive near the RV Parking Lot. All of
these areas were paved with a petromat overlay in September 2002. Total
cost $25,000 per contractor.
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Current Replacement Cost: $27,264
at $1.20 per SF. Cost Source – Local Contractor.
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Preventative Maintenance: Regular
sealcoat. Keep clean to
reduce abrasive effects of grit.
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Asphalt
Curbing - Replace
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Location:
Paved
Areas.
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Quantity: 695
LF.
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Remaining
Life: 10
Years.
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Typical Useful
Life: 30
Years.
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Comments:
The
asphalt curbs are in fair condition, but will eventually need replacement
as they are showing significant raveling such that whenever a sealcoat is
applied, it flakes off in a year or two.
Tree roots have cracked the curbs in numerous places as well.
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Current Replacement Cost: $6,255
at $9.00 per LF. Cost Source – Local Contractor.
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Preventative Maintenance: Regular
sealcoat. Keep clean to
reduce abrasive effects of grit.
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Paint
Exterior Wood Trim
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Location:
Exterior
Trim surfaces.
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Quantity:
17,250
SF.
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Remaining
Life: 0 Year
(within next 12 months).
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Typical Useful
Life: 6 Years.
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Comments:
The
wood trim was painted in summer 1999 for $16,300 by the association's
preferred painting contractor. Has
been done on a 6-year cycle. Assume
$19,000 adjusted for inflation and per recent contractor bid.
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Current Replacement Cost: $19,000
per actual cost 1999 adjusted for inflation.
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Preventative Maintenance: Regular
inspection and paint touch up to protect surfaces.
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[...]
And the list continues for all identified reserve
components...
As you can see, the narrative section serves as a
repository for cost history information that can be passed on to future board
members. Many clients make notes in this section in order to have a
centralized record of repair history and preferred contractors.
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Stone
Mountain Corporation 