Construction Defect Remediation

Inclign is your Construction Defect Remediation partner.

MAINTENANCE VERSUS CAPITAL IMPROVEMENTS

Note: get professional help from your CPA about what tax deductions apply in your situation.

Maintenance Expenses often are tax deductible.

Capital Expenses often are not tax deductible.

Generally, Maintenance means the upkeep of the property to its current state and Capital Improvements is changing the property enough that it has added value to the user. However, some repairs may be considered Capital Improvements if an entire component is replaced and “enhances” the value of the property.

Again, consult with a tax professional.

CONSTRUCTION DEFECTS

4 Definitions of Construction Defects:

Faulty materials – problems with a manufactured product used to build with.
Faulty Design – problems with how the constructor was directed to build.
Faulty Construction Installation – problems with how the constructor applied or installed products.
Faulty Maintenance or Operation – problems with how the building has been kept or serviced since construction completion.

Common Defects > mostly the result of water infiltration from; weather, ground or vapor.

The Envelop – the underlayment assembly system that keeps the outside weather out, behind or around the following; roof, siding, windows, exterior doors, any building structure that interrupts the cladding plane.
- This defect allows water to infiltrate through the exterior assemblies causing rot damage to structural or interior elements and contributes to mold growth.
Exterior structures – Exterior appurtenances to the main structures, decks, stairs, carports.
- This defect allows water to infiltrate exterior assemblies enough to rot damage structural elements.
Energy and moist air control – Weather stripping, insulation, ducting, ventilation
- This defect allows water to condense inside interior assemblies causing rot damage and mold growth.
Drainage and Soil bearing – conducting water through; storm (roof) drains, ground water (footing) drains, surface water (trench) drains, etc.
- This defect allows water to erode bearing soil or infiltrate sub-grade structures.

REMEDIATION PLAN & SCOPE DEVELOPMENT

Inclign can help you manage this process from beginning to end.

At this stage you may have determined there is a problem that needs attention. The plan and scope development identify the defects and creates a plan for how the defects need to be corrected.

Inspection and Report – We recommend a resident survey be conducted for issues condo residents have observed then we enlist the services of specialists to inspect various suspect building components. As needed, intrusive testing may be performed. Finally, we present you with our report and recommendations.

Scope – We will create an initial scope of work that addresses the findings in the report.

Design – With your input, we will enlist the services of licensed design professionals to provide repair plans for jurisdiction permit approval for the repairs needed.

Pricing – Based on the approved plan design we will finalize the scope and budget of the needed repairs.

Construction – When you’re ready to proceed with the repairs Inclign is available to perform the construction repairs needed.

Your next steps will depend on what type of property you have. A condominium property where each individual unit is privately owned will require a different approach than a rental apartment property.

LEGAL CONCERNS

Inclign can recommend professional consultants to assist with determining the right course of action.

Condominiums vs. Apartments
- Types of Property Ownership
  - Individually owned condominiums have Home Owner Association agreements that require monthly dues to pay for expenses, the property incurs, outside the individual units. There may be variations on this arrangement.
    - Washington State requires Condo associations to perform annual Reserve Studies to ensure they maintain appropriate levels of funds for repairs, etc.
      - Inclign can recommend Reserve Study specialists to assist with this.
  - Rental apartment owners have a more direct responsibility for the upkeep and remediation of their property.

FUNDING & CLAIMS CONCERNS

For condominium Home Owner Associations, it can be overwhelming to deal with a multi family project that requires the cooperation of so many participants. It’s important that proven strategies are utilized to ensure the desired outcome. There may be a wide range of options to explore and it really helps to have a knowledgeable team on your side to assist.

Claims – We work with claims professionals that can help determine your eligibility for an insurance claim. They can also help represent your case for the claim.
Special Assessments – We recommend our specialists who help the HOA membership negotiate any special assessment needed to assist with the funding.
Loans – The specialists we recommend also connect your HOA to lenders familiar with funding these types of projects.

Having a strategic plan in place for funding the remediation needed, provides the confidence needed to move forward.

CONSTRUCTION COST CONCERNS

Finding the bottom line and holding that line steady is very important.

Inclign helps put the budget together and keep the budget predictable.

Costs to expect will vary greatly depending on the project. Here are cost factors that may be triggered;

Permits and Fees
Construction Manager
Reserve Specialist
Civil Engineer
Geo technical consultant
Ecologist/Biologist
Architect
Envelop Consultant
Structural engineer
Acoustician
3rd Party Special Inspectors
Industrial Hygienist
General Contractor
Subcontractors
Vendors
Shipping fees
CPA and taxes
Temporary housing

Your construction defect hopefully has minimal unseen effects. However, often the defect has connection to other unseen defects. Water tends to be the main culprit. Water infiltrates behind exterior surfaces and rots structural wood or promotes mold growth. What may appear to be minor issues may in fact be very expensive to repair. Building assemblies are put together in a certain manner and the defect repair may require dismantling components that have no damage in order to fix the underlying problem. This can cause expenses to rise quickly. The sooner defects are addressed the better. Do not ignore signs that defects may be occurring. Telling signs to look for;

Discolored mold patches
Rust stains
Blistered walkway or deck coatings
Water condensation on windows
Ventilation screens missing or damaged
Water stains where it shouldn’t be
Burning smell
Clothes dryer not drying the clothes
Loud fans
Water overflowing gutters
Water seeping into building
Crack in pavement
Crack in foundation
Crack in the drywall
Pest droppings
Loose railings
Sagging structures
Broken windows
Doors not latching or getting stuck
Loose stair treads
Decayed deck boards
Cold drafts inside
Crack in stucco or plaster walls
Water stains streaking from behind siding
Ceiling fans dripping water
Soft floors where it shouldn’t be
No smoke detectors
No carbon monoxide detectors
Obvious structural damage
Caulking missing or cracked

RESIDENT CONCERNS

Inclign respects the safety and concerns of those in our work environment.

The tangible effects of a construction project, to those closest to it, require careful consideration.

Safety – It is important that every phase of the construction process is analyzed for its impact on the resident’s safety. Areas to study are:

Parking
Walkways
Doorways
Air pollution
Noise pollution
Over-head hazards
Shoring hazards
Material handling hazards
Crime prevention
Warning signage
Safety notices
Logistics – Several factors must be considered to ensure a smooth construction process;

Construction access
Work activity notices
Moving personal items
Staging material and equipment
Delivery drop off areas
Work zones
Property protection
Construction schedule
Relocating residents temporarily
Market – For condo owners, real estate professionals will be the best resource to analyze the effects of the construction work on their property values.

PRODUCT SELECTION

To understand best the products that you select, compare them to at least two other alternative products. Reliance on your design professionals for product selection is understandable and sensible.

Durability – most construction products should have testing data that you can research.
Warranties – a comparison of warranties will help.
Availability – Confirm with suppliers the lead time to have the products delivered

Inclign helps; order, manage, store, protect and confirm products

CONSTRUCTION TEAM

Inclign is available for a few roles on this team, see (*).

Be ready to assign certain tasks to competent persons on your team and understand who will be responsible for what.

Owner’s Team
- Asset Manager – confirms scope and budget corresponds to the contract agreements and monitors any changes, keeping the owner informed.
- Property manager – Notifies owner/HOA and construction team of updates. Notifies tenants or residents of construction schedule.
- * Owner’s Representative – Hired to confirm contractor/s meets all contract obligations.
* Construction Management Team (General Contractor)
- Estimator – Acquires bids and puts the budgets together.
- Project manager – Once the contract is active, manages the project for the GC. Confirming subcontracts are awarded as needed, maintain construction budget control.
- Document Control (Project Engineer) – Ensures all communication document protocols are on track.
- Superintendent – Ensures all on-site activities are performed according to contract documents.
Design Team
- Architect – Provides the blueprints, detailing existing conditions and all new construction to be completed. The architect is responsible to incorporate all supplemental engineering plans into their blueprints. Architect firms may also offer Construction Management services.
- Engineer – There are a variety of engineers. They provide detailed construction instruction plans for specific fields; civil, structural, mechanical, electrical, conveyance, plumbing, etc.
- Interior Designer – Among other specialized designers, interior designers are often hired to assist with finish product planning and selection. Other designers may include; lighting, landscape, acoustic, staging, signage, etc.
3rd Party Oversight
- Envelop consultant and designer – These specialists are integral to most Construction Defect Remediation projects. They provide expertise and detailed plans for how the envelop assembly should be constructed. Their plans will also be incorporated into the main architectural blueprints.
- Special Inspectors or Testers – There are a few sensitive construction assemblies that require in-progress inspections that the permitting jurisdiction does not have time to monitor. So, a non-biased third-party inspector will have to be hired to submit reports on their observations. Some special inspections and testers include; sealant pull test, window water test, epoxy grout anchors, concrete slump samples, reinforcing steel core samples, asbestos air scrub test, etc.

ENERGY REBATE PROGRAMS

$ – Note: significant savings are available if these programs are utilized.

Be sure to factor in costs to manage these programs.

Lights and HVAC Recovery
Appliances
Solar Easements
Sustainable building

Search Energy.Gov for more information.

Inclign can help you manage your Construction Defect Remediation project.