In this final post of a three-part series from the 2023 NAA Apartmentalize panel session entitled Renovation Challenge: Reducing the unknowns and unexpected, we focus on predictability in renovation programs.
The NAA panel featured Daniel Kughen, SVP Construction and Facilities at The Barvin Group; Kyle Smith, SVP and Managing Partner at Guardian Construction; and Mike Gorman, Division President – Indianapolis Division at Edward Rose & Sons. The panel was moderated by Brad Chandler, SVP of Sales and Operations at FacilGo.
During the session a poll was conducted asking session attendees their thoughts on assessing success during a renovation. Results showed that attendees value schedule execution vs. plan at 57%, the highest indicator of success during a renovation, while 35% stated actuals vs. pro forma was their most important factor in gauging success. 8% say they go by their gut feeling to indicate whether or not a renovation is successful.
Predictability is Good for Everyone
According to Fannie Mae, more than one million apartment renovations have taken place in the last two decades. Renovations are said to be less risky, more stable and more consistent year over year versus new construction, providing a good alternative to building from scratch. With so many renovations taking place, predictability in a renovation plan is key to reduce risk in the unknown and for creating efficiency and time and money savings
Both property maintenance companies (PMC) and general contractors (GC) were represented on the panel, and both sides stated that predictability in a renovation program benefits everyone. Kyle Smith with Guardian Construction said that by mapping out a renovation schedule his company is more easily able to forecast and front-load supplies for cost savings and help reduce lag time in jobs.
Daniel Kughen with The Barvin Group said that by knowing the full project scope ahead of time and by making sure that all renovation materials are available when needed, their process improved and became more efficient with both time and money. He also suggested building in due diligence as part of the asset to help allow for more advanced planning and financial modeling and said this model helps with changing interest rates.
Helpful Tips for Creating Predictability
Mike Gorman with Edward Rose & Sons indicated that predictability means everything in the renovation process, however there are a few situations such as anomalies in typical floor plans within a given property and unexpected move outs that can throw a wrench in the spokes of renovation planning. Even with these hindrances, there is still much to forecast to make the process more efficient.
Here are a few tips that were given by the panelists as being beneficial in the planning process:
- Know the duration of the project and stick to your schedule
- Be sure vendors are held accountable for the scheduled project timeline
- Make sure vendors have access to the units being renovated
- Communicate clearly with on-site staff about what work is being done on each unit
Technology tools like FacilGo Renovations are also very helpful in creating automation and predictability. FacilGo Renovations allows you to plan and model a project and establish a pro forma with cost, duration, and rent increase. This helps to assess ROI, NPV and payback with defined cost of capital, investment period, and hurdle rate.
Additionally, with the FacilGo Supplier Network, property operators can save time and ensure procurement compliance. The FacilGo Supplier network allows PMCs to quickly identify MRO and service providers in their markets, have access to a vendor rating system, make simple payments using FacilGo, and have easy access to bid and contract management directly in the platform.
Interested in learning more about FacilGo? Contact our team to learn how our single solution platform can help automate and streamline your renovation and maintenance program.