With the cost of inflation presenting financial strain for even the healthiest reserve funds, your condo board might be tempted to defer capital work. Here we share the truth about deferring capital work and whether it’s ever okay to use this tactic as part of your maintenance strategy.

When Inspections Say It’s Okay

Feasibility studies are often based on expected lifecycles, leaving room for error. If you haven’t experienced issues, an assessment could show the system is good for another five to 10 years.

Ongoing assessments provide a clear picture of the condition of building components and systems. For example, when your latest reserve fund study tells you it’s time for a domestic water riser replacement, yet nothing indicates issues exist, an assessment of the system will tell you whether deferral is a viable option.

Don’t Defer Scheduled Maintenance

Proper maintenance and parts replacement can add as many as 15 years or more to some types of building systems. Therefore, when dealing with recommended maintenance schedules, deferral is never wise.

For example, chillers typically require an overhaul at the 12-to-15-year mark to keep the system working at peak performance. Something such as undetected bearing failure can lead to major component failure, damaging the entire unit. As a result, you face early system replacement not accounted for in your reserve fund schedule.

Calculate the Impact on Future Capital Work

The reason you’re considering deferring capital projects is that inflation is causing budgetary challenges. However, the gradual decline of these building components will only lead to ballooning refurbishment or replacement costs down the line.

Therefore, it only makes sense to defer work by first calculating the impact today’s deferments will have on future capital work. If you find savings opportunities in projects that reduce the risk of decline, you’ll help ensure you have budgetary coverage for deferred projects.

Always Mitigate Risk

Another important consideration is how the current condition of systems and components impacts safety and energy efficiency. If your budget is negatively impacted by operational costs related to sub-standard materials or systems, deferral is not the smartest approach.

The same can be said for anything that is not up to the current building code and safety standards. These outdated standards can put you at higher risk of liabilities related to personal injury or resident property damage.

Avoid Exponential Damage

Certain materials and building components are more vulnerable to exponential damage, especially where water is a factor. For example, a lengthy deferral of window replacement can increase the risk of window leaks and condensation that cause unit damage.

Understanding alternative approaches such as increasing waterproofing application on concrete or considering seal replacement for windows can prolong material life to counteract the risks of exponential damage.

Avoid Bandage Solutions

Avoiding bandage solutions such as replacing windows based on resident complaints is a short-term solution that eventually strains your budget. In this case, deferral makes it impossible to complete an entire window replacement project leading to long-term damage not accounted for in your reserve fund.

The most critical aspect of deferral success lies in smart short-term decisions that create long term savings. Using ongoing assessments to understand current conditions, applying preventative maintenance best practices and reviewing alternative solutions to replacements that provide unexpected savings can all contribute to a more efficient building and healthier reserve fund.

The condo experts at CPO Management Inc, a full-service property management company in Toronto and the GTA, have had tremendous success helping condo corporations achieve financial health.

Reach out to us today to learn how we can implement capital projects and achieve cost savings and efficiencies for your corporation.