Reserve Funds

June 22, 2023 Published by Toronto and Area Chapter - By Samantha Kenkel, Justin Tudor

Reserve Fund Study Report Card - Standard Unit Prices Don't Always Work

From the Summer 2023 issue of CCI Toronto Condovoice Magazine.

Be Careful With Unit Prices!

Site Description
The corporation consists of a 45-storey high-rise residential building with over 300 units, constructed in 2022. Some major mechanical equipment that is too big to be brought up via the stairwells or elevators is located in a rooftop mechanical room and on the roof.

Reserve Fund Assumptions
The reserve fund study must include budgets for replacement of equipment on the roof and in the mechanical penthouse. For a shorter building, the budget would typically include for costs to rent the appropriate height crane and close the streets to accommodate lifting the new equipment to the roof. In the case of this condominium, the replacement budgets include for costs to lift the equipment to the roof by way of heavy-lift helicopter. The study also assumes that all rooftop equipment will be replaced at one time, even though some of the equipment could have different service lives, to minimize duplicate craning costs.

The Reality
Replacement of common element components is not always straight forward. For large equipment on very tall buildings, astute reserve fund planners should realize the limitations of mobile cranes and plan to replace the unit by heavy-lift helicopter or temporary rooftop derrick crane. In the case of this condominium, the location is immediately adjacent to a restricted air space and additional costs for acquiring required permits, negotiating with the regulatory authority, and completing the move in an expedited fashion are sufficiently significant and must be accounted for in the reserve fund study. Additionally, there is only one helicopter regionally available that could provide this lift at this site.

Lessons Learned for Reserve Fund Planners
Access costs can be a very large part of the cost of a component replacement project. When estimating repair and replacement projects, it is important to consider not just the cost for the equipment, but also how that component will be accessed and any other special mobilization considerations. Always take note of the existing site conditions for each condominium. Purposely consider the implications and effects of how you envision this project will be conducted. When considering using a helicopter, research the invisible lines dividing areas where it’s hard to fly from those where it’s really hard to fly. Sometimes a temporary derrick crane may be the better solution.

Estimates that use standard unit costs and “normal” access costs often overlook challenges that can have significant impact on the cost of the forecasted work, such as:

• Are roof anchors installed, certified, and permissible for use for construction?
• Can swing stages be easily set up?
• Are there high voltage wires in front of the building that would need rerouting at major costs?
• Is equipment in mechanical rooms that are located midheight of a supertall structure truly accessible for replacement?
• Is it feasible to replace the equipment like-for-like or are modifications to the system required for replacement?

Takeaways for Board of Directors and Property Managers
When reviewing forecasted costs for capital projects, challenge the consultant on what is included in the budget. Generic costs per square foot do not typically account for mobilization and do not consider special site conditions. As a rule of thumb, if complicated access is not being discussed in the report, it is likely not being considered in the cost. It is also important to know the biggest access constraint on your building and understand what components are affected.

Samantha Kenkel P.Eng., Keller Engineering
Justin Tudor P.Eng., Keller Engineering