Value Engeneering in Co-ops

Value Engineering is a useful concept. In the article below it is applied to co-ops but can be applied to any building practice.

Saving Green, and Greening, Too
Value Engineering Analysis helps condo owners and environment

It’s no secret that the current trend in home greening has been a boon
for developers and homeowners, as well as the environment. Energy-
saving features not only lessen the drain on our natural resources, but
provide compelling economic incentives like lower energy costs and
long-term savings. Kipcon Inc., a full-service engineering firm based
in North Brunswick, has come up with a new benefactor for this doubly
helpful practice: the community association.
People who live in co-ops, condos, and the like, are collectively
responsibile for the replacement and maintenance of essencial building
components such as roofs and boilers. In order to plan for the purchase
and care of these high-ticket items, community associations create a
reserve schedule in which money from each resident is saved in a combined
account according to the demands of the property. Target savings amounts
can be determined by partaking in what is known as a reserve study.
“In a typical reserve study, we only evaluate the physical elements of the
building, typically, just the capital replacement items,” explains Kipcon’s
president, Mitchell H. Frumkin. “For example, a reserve study may find
that the roof of a condo has a $100,000 replacement cost and a 20-year
lifespan. The analysis would suggest that the homeowners put aside
$5,000 every year, so when it comes time to replace the roof, the money
will be there.”
While a reserve study alone is an invaluable tool for a community
association, Kipcon has taken this service one step further with the
introduction of its Value Engineering Analysis. “Rather than simply
assessing the costs of replacing or maintaining capital replacement
items, Value Engineering seeks alternative options,” says Frumkin.
Kipcon takes a holistic approach by looking at the capital replacement
items, the relationship between the items and the cost of their
maintenance, and the cost of energy. These three factors are then
compared with one another in order to save the community
association money over time.
Builders are realizing that if they can create a greener
building, it will add another highlight to their sales
“If a building has an inefficient boiler that still has five years left
in it, we would suggest that the homeowners save for a high-efficiency
boiler,” explains Frumkin. “The new boiler might cost slightly more,
but will save residents money in the long run by reducing energy needs.”
With approximately 80 percent of new residential developement
falling somewhere into the category of multi-unit residential projects,
the community association market is booming. Value Engineering
Anaylsis can also be advantageous to developers during pre-construction,
in that it can help developers gain an edge over their competitors as well
as help homeowners save money in energy costs and reserve requirements.
According to Frumkin, “Most builders want to get the lowest cost
possible for their building, because they need to sell units. However,
more and more builders are realizing that if they can create a greener
building that will also save homeowners money, it will add another
highlight to their sales proposition.” –By Jodi LaMarco

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