Unforeseen Costs

Unexpected damage may be discovered during the repair work.  When and if this does occur, it is important to have a procedure in place to authorize work and ensure costs are controlled.  The construction contract will detail one of two ways to pay for the unexpected work:

Unit Pricing:  A price to remove and replace each unit of “unexpected work” is agreed upon by the parties.  Examples of units are a square foot of stucco, a linear foot of lumber.  The number of damaged units is multiplied by the unit price.

Time and Materials:  The unexpected work is charged at the cost of materials plus the time to remove the damaged materials and install the new material.

To ensure that the association has control over the work, the construction contract should have a procedure in place that requires authorization by the   association.  This procedure may be:

  1. The contractor submits an estimate to the construction manager.
  2. The construction manager reviews the estimate and passes it on to the Board.
  3. The Board reviews the estimate, and if they agree that the work is necessary, will authorize the request.

At the time the construction contract is being prepared, the association needs to review the provisions for approving unexpected work, and the pricing method.  This is an area where some associations have gone way over budget.  A 20% to 30% contingency in the budget is not uncommon for major projects and should be included.

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