Volume 25, Issue Number 5, Summer 2020
Repairs, Maintenance and Renovations


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Interior Design Wants Versus Needs

A Study of the Discrepancy Between Reserve Fund Studies and Actual Improvements

By SABINE GRIMES | Other articles by SABINE GRIMES

Before we dig too deep into the subject, let's quickly touch base and see what we need to put a firm plan in place for building improvements:

  • A firm understanding of your budget (usually available in the reserve fund study)
  • Understanding operational challenges
  • A vision that you would like to move forward with (design)

All of the above should be understood and studied in detail before deciding how to move forward. It is possible to move forwards with building improvements without taking time to understand the design, but it would be as short sighted as pulling vegetables out of the ground and slapping it on a plate to call it 'dinner'. Design would be the process of taking the time to wash, prepare, cook and plate the vegetables and possibly, even season it before sitting down to dine. Design is a great tool to assist in portfolio planning and help the owners visualize and prioritize items to move forward with.

I should start off with saying that it is not necessary that there be a discrepancy between reserve fund studies and the actual construction costs. Sometimes the reserve fund study and the proposed design are quite similar, sometimes not. WHY do discrepancies exist at all and why are some discrepancies acceptable?

The reserve fund study is a projected budget that is put together to help guide the condo corporation in budgeting and spending. All condo corporations have reserve funds for necessary spends to maintain the building. They do an excellent job in projecting anticipated necessary spends, ensuring that the funds needed are in place. As they are responsible for guiding such a broad asset, it is necessary to recognize that they guide anticipated spends in a big picture way and should not be used verbatim.

The engineers that completed the reserve fund studies are not wrong, but we must remember that they put the studies together for guidance only. It is not wise to expect any consultant to be experts in all domains. Existing condominiums need to have a consortium of consultants in place at specific times to maintain their value. The consultants should be engaged when necessary to ensure that the work that is needed is carried out in a way that adds value to the building. The team of engineers, designers, maintenance personnel, residents, security consultants all have a large amount of influence of how the property exists over it's lifetime and it's important that you select ones that understand the term 'value'.

If you took the reserve study fund verbatim and followed instructions based on the anticipated improvements then everything that is done to a building would be seen merely as 'a new version of what existed before' or 'replacing the same thing that originally existed'. It is important to note that real estate is not a stagnant asset but is very much alive and needs to morph and change just as the city changes around it. If you take time to make sure that you are re-adjusting the asset, then you are doing more than maintaining – you are redeveloping.

The amount of money that is in a reserve fund for interior improvements is linked to an assumption that all materials / design elements used in a building are per market standard. Your condominium is measured against many others that are like it – age of building, type of build, location, etc. The reserve fund study does not acknowledge the unique characteristics of your building. The reality is that buildings are just like us when we age, the older we get the less generic we become and the more character we build. The nuances, quirks, atypical living patterns that these seasoned buildings (and the consortium of residents) have, all need to be acknowledged, understood and appreciated when contemplating building improvements.

Often, when I am invited to prepare a design proposal for a condo board that is contemplating a renovation, I am asked to put preliminary construction budgets together to support my design proposal. The main reason why the request exists is because the board wants to make sure that we will be on budget or close to the allowance that is outlined in the reserve fund study. There are a couple things that I thought should be acknowledged. Firstly, a good designer should have the capabilities to put forth a design that respects the prescribed allowance, whatever that might be. Budgets should be acknowledged by designers, but designers should not follow the reserve fund studies verbatim.

Design describes a process and not the end result. The word 'design' is a verb and refers to a process. Design does not mean aesthetic, yet aesthetic is part of design. it is impossible for a design to be presented on the first meeting and be deemed 'complete' for various reasons. The designer should be able to articulate their design vision and understand the cost implication of suggesting certain design details. The most important part of the design process is the productive dialog that the designer and the client have. As it relates to the renovation of condominiums, design is the process of interjecting a suitable aesthetic and folding in the operational needs and conversations about the related costs, like the allocated costs that are in the reserve fund study.

Design is planning, design is being thoughtful. Design is understanding the issues and digging deeper.

For newer developments, when reserve fund studies are put together, there is seldom an acknowledgement or credit for timeless design or for materials that are of good quality. It is anticipated that all finishes, details, furniture have the same lifespan and the reserve fund is usually built up overtime to prepare for the renovation / improvement of interior elements, typically in 10-year increments. When designing a new development, it is advantageous to have the items of great quality and monetary value that are able to transcend trends and be timeless. While there are costs allocated to replace these elements, these are elements of quality that you will want to keep.

I often go into buildings that have that distinctive '2005 lobby design' or '1998 suite entrance detail'. When the board is contemplating the renovation of these spaces, they typically want to remove most things and start again. Trendy designs can be useful when marketing a building but seldom bring endured value to condominiums. On the contrary, I have been pleased when walking into some older buildings to find a stone floor that has a timeless quality (still in great condition!) that has outlived the projected life prescribed in the reserve fund study. It is nice to know that although there are funds to remediate these items, that remediation is not needed. Funds can then be allocated other areas that will bring value to the building and quality of life of the residents.

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Summer 2020
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