Volume 27, Issue Number 2, Winter 2022
Reserve Funds and Reserve Fund Studies

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Reserve Fund Study Report Card

Beware of “Work by Others” or “Owner’s Work” Clauses in an Elevator Modernization Contract

By Sophia Rojenko, Sally Thompson | Other articles by Sophia Rojenko, Sally Thompson

Site Description

The corporation consists of a high-rise residential building with over 200 residential units, constructed in the early 2000s.

Reserve Fund Assumptions

The reserve fund study included a budget to modernize the elevator controllers and replace the existing machines. The project budget allowed to add air conditioning to the machine room. The existing elevators were overhead, geared traction elevators. The reserve fund study provider timed the replacement of the fire alarm and the replacement of the automatic transfer switch (ATS) to coincide with the elevator modernization project.

The Reality

Elevator modernization contracts typically cover the cost of elevator work only. Modifications to other systems triggered by the work can add significant cost to the overall project. These are often concealed as “Work by others” or “Owner’s Work” in  an elevator modernization contract. These include:

  • Adding air conditioning to the machine room
  • For buildings constructed about 2009, adding smoke detectors in the elevator lobbies so that, upon recall, the doors do not open in a smoke-filled corridor. This often triggers the need to replace or upgrade the fire alarm panel.
  • Electrical modifications including new power supply to the elevators, new lighting in the hoist way and often new wiring to the ATS to handle pre and post-transfer signaling. This can trigger replacement of the ATS and may impact the generator.
  • The owner opted to change to gearless machines upon modernization at additional cost.

Lessons Learned for Reserve Fund Planners

Consider the age of the building and what related work might be triggered by modernization of the elevators. Sometimes full fire alarm panel replacement might be needed. If the panel is newer, it may have capacity or may be able to accept a “pony panel” added to the system. There may also be an impact on the ATS and generator. If no information is available at the time of your study, you might flag this risk.

Takeaways for Board of Directors and Property Managers

If you are planning elevator modernization, ask if your existing fire alarm panel and automatic transfer switch will require modification and sort out these extra costs before proceeding.

The reserve fund study covers “like for like” replacement of the common elements. Replacing the existing geared elevators with gearless elevators would be considered an addition, alteration, or improvement under section 97 of the Condominium Act 1998. The additional cost to upgrade the elevator machines to gearless would not be reserve eligible.

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Winter 2022
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