Capital Improvements
The Turner Construction Company recently released the Turner Cost Index report for the 1st Quarter of 2010. The index continues to decline, as it did all of 2009. Though the cost index is in decline, the rate of decline has slowed over the same quarter 2009.
The results of the Turner Cost Index report is a great reminder for community associations that this is a great time to plan for any Capital improvements and any repairs or replacements that may be necessary for their association. Construction costs, materials and labor are all down and cheaper than a year ago. We continue to see some contractors that are doing work for a “break even” price, just keeping their labor working.
Another upside to the decline in the Turner Cost Index is that it will ultimately translate into lower replacement costs and values on your building’s insurance. Check with your insurance agent to see when it will be the best time to have an insurance appraisal performed for your association. The lower appraisal will lower your insurance premiums.
While I am at it, lower costs will also affect your reserve calculations. The association’s reserve for repairs and replacements should be recalculated or rebalanced due to lower costs. You might find that you are over funded in some categories and that those excess funds be shifted to other categories that could be upped. Whatever the end result, of this recalculation, the reserve funding should go down. Maybe this is the time to have a reserve study performed to help in this effort.
Overall, with construction materials and labor costs being lower than just a few years ago, community associations, if they can afford it, should take advantage of lower costs and make the repairs and replacements that they had been delaying over the last few years.
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