Power Point Presentation issues:
Slide 22 states:
"Calculations show that projected material cost increases due to oil volatility and escalated decaying structural framing components and the cost of labor will nearly double the cost of the project exponentially over a projected 15 year period vs. completing the project within 5 years."
OK... I'll bite... show me the calculations!
Where the heck are they getting this "projected material cost increases due to oil volatility" crap? I would think at most you'd have to assume a 10% increase per year for materials. However, the majority of the cost of doing a roof is the labor, NOT the materials. In fact, I've heard that the roof covering materials are only about 10% of the cost. So, if 10% of the total roofing cost increases by 10%, what's the impact on the cost, assuming all else stays the same? It calculates out to be 1%!!! Don't believe me? Do the math:
- Assume a re-roof of a quad is going to be $100,000
- Ten percent of this cost is materials, or $10,000
- Increase this by 10%, and you get $11,000, for an increase of $1,000
- Now figure the percentage of this $1,000 increase to the total cost of the job which was $100,000, or 1,000/100,000, and you get 1%
So needless to say, any cost increase in materials is negligible to the total cost of the project.
This leaves us with labor cost increase.
For this, check out:
http://www.buildingteamforecast.com/article/CA6486846.html?industryid=43720
and also:
According to this site, it says:
"On a year-over-year basis, construction labor charges have risen +3.6% according to the installation component of RSMeans’ Construction Cost Index (CCI) and by +4.1% according to RSMeans’ measure of average hourly labor rates for skilled workers. The year-over-year change in the materials component of the CCI was +5.3% in July."
At 5% increase per year, the $100,000 job will cost $127,628 in 5 years, and $147.745 in 8 years. So, waiting 8 years as opposed to 5 years will add about $20,000 to the cost of the job, or 16%.
On the Reed Construction Data site it states:
"Annual labor cost increases appear to be ranging between +3.5% and +4.1%, depending on the measure."
It also states:
"Material Cost Increase Negligible in Latest Quarter"
This data is based on 2008 numbers.
So much for the scare tactic of the material and labor increases doubling the cost of this project!
On another note... why are they comparing the cost of the project over a 15 year period to doing it in 5 years? Why not compare the 5 year plan's cost to the 8 year plan's cost? They got bids for both the 5 and 8 year plans (see slide 6), and yet they want to compare the 5 year to the 15 year.
For the sake of argument and to enable us to view actual numbers, let's assume the cost of roofing a quad today is $100,000. Let's also assume an increase in total cost to be at a rate of 4% per year. This is certainly within the realm of possibilities based on the above data, and is in fact being generous.
OK, this means in 5 years the cost of the roof will grow to $127,628, with 8 years putting it at $147,746. That's an added $20,118 for waiting an extra 3 years. That's an increase of just under 16%.
So they're asking us all to shell out close to $13,000 in order to crunch this 15 year plan down to 5 years, and not consider the 8 year plan as this might be 16% more costly?
I think at this point if we are to rush the project along, let's AT LEAST back it off to an 8 year plan.
Also, do you realize that we will be paying AWT, the inspectors of this project, $1 million over the next 5 years? This equates to over $9,433 per quad, or $2,358 per unit, FOR JUST INSPECTION!!!
So do you think AWT has any sort of vested interest in our roofing project? Is it no wonder that they want us to hurry along and get this thing done within 5 years? THIS ONE PROJECT WILL BRING THEM $1 MILLION, assuming that they don't raise their fees over the next 5 years, at which case it will be even more!
I say we get bids for inspectors!!! This is not rocket science. I'm sure AWT is a fine company, and have done an outstanding job in creating the reserve study and have some very useful information. However, why pay the experts to walk around and inspect the construction? You wouldn't think of paying a ton of money to have the head engineer who designed your car to work on it when it needs repair as you know there are plenty of highly qualified people out there who can work on it for a lot less money. So let's get less expensive, well qualified inspectors!
Slide 6 says that bids will be asked for both 5 and 8 year plans. What would be the cost savings going with an 8 year plan compared to the 5 year one? If we throw out the assumption of 10% increase per year of dry rot due to NO data to back it up, and figure that an extra 3 years is not really going to significantly effect the cost of the project, then let's look at the 8 yeat plan.
I also don't understand why ALL of the remaining quads, which total 106 at this point in time, can't be ventilated prior to the roofing being done. Doing so would have three benefits:
1) If there is indeed an excess of moisture in the area under the roof coverings, then adding ventilation will help curb whatever increase in dry rot may be occuring
2) Doing the work now will be cheaper than doing it later when the cost of labor may be higher
3) Doing it now will mean it won't be needed to be done by the roofer later, thus the cost of the roofing will be cheaper. Also one less thing to inspect, hence another savings.
So, let's shave $1 million off the project by getting rid of the overly expensive inspectors.
Then let's move this out to an 8 year project instead of a 5 year one. Also let’s add the needed ventilation now, and curb any potential increase in dry rot. While we're at it, let's adhere to the CC&R, which states that the roof structure is the home owner's responsibility.
And what if instead of jumping on this roofing project right now, we wait a year! Why? Well, let's say for the sake of argument that we have $10 million sitting in reserve, ready to be spent on the project. Let's also say it can earn 5% interest. That comes to $500,000 in interest earned! Dang, that'll pay for a few quads!
Of course, I don't know how taxes work on all this, but you get the point.
And if we wait a year, maybe we can use that time to get the remaining quads properly ventilated, and also inspected for possible major damage so as to better assess the condition of the units prior to re-roofing. Seeing some potential major damage will better prepare the home owner to the upcoming expense.
It seems to me we're all being scared into a need to jump on these roofs right now, and not wait one extra minute. But this advice is coming from a company that stands to earn $1 million over the next 5 years... should it proceed. Conflict of interest? Uh, ya think?
And while we're running scared by the advice of a company that stands to gain a lot of money, we're to go against the CC&R and shell out $13,000. Why are we being so quick to make a decision in this moment of panic?
It's already caused us to crunch a 15 year plan down to 5, caused us to defy the CC&R, basically creating an illegal resolution, and on top of that we are to gamble $13,000 of our money!!!
I'd say, if anything, instead of forging ahead, WE NEED TO PUT THE BRAKES ON AND STOP!!!
The sky is falling, the sky is falling... AHHHHH!!!!
But it's not falling!
OK, there have been some REALLY bad quads out there, but so what? Do they really represent the norm?
Don't forget too that we live in
Take another look at the data presented here.
So let's wait one year, and make it through one more rainy season.
Why make a long term, expensive plan in face of running scared, instead of moving on this in a more efficient, methodical way that is not hinged on the advice of the group that is going to make $1 million?
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