Robin Williams
Active member
@Kevin Cook @martinhoyle @Mark Brough
I need to share below with you, primarily the AoV project and the financial situation.
1. AoV Project.
A read of my recent postings on the ‘Project Management of AoV’ thread on the forum will explain. In brief, my main concerns:
Implicit in an annual budget is that most income (=mgmt. charges to leaseholders) and spend are evenly distributed across a year such that cash for the spend is always available. However, about 80% of this year’s £730k spend is forecast to be paid this first half-year such that , whilst we have the reserves at start of 25/26 sufficient to fund this imbalance, our cash position end August could be a (very low) £30k. I have assumed a ‘worst case scenario’ with little margin for error should assumptions prove to be optimistic.
Having said that, there are probable ways to avoid hitting ‘rock bottom’ such as deferring payments awaiting receipt of the half-year mgmt. fees, billed in September.
My point here is to advise you of this cashflow concern albeit with hope that the worst-case scenario can be managed at the time.
4. Leaseholders update.
Once we have reviewed/updated the current financial numbers with Alex, Mark and I will probably alert leaseholders early June with our concerns particularly as to cashflow. We do not want a situation whereby we suddenly have to first share 'bad news' with them in August with all that entails.
Content/explanation will be much as written in the prior two sections.
We will mention that we will have a better idea of the year’s spend and cashflow position end July.
5. Directors
You can imagine the above brings challenge to Mark and myself. As the ‘Finance’ lead, I have to say I am ‘feeling the responsibility and the pressure’ (as you are aware, in my own time) to try and manage all this. As far as I am aware, there is no-one ‘financial’ available with whom I can discuss/validate/interpret etc forecast numbers.
I need ‘financial management’ support, we need additional directors.
Relevant wording will be included with the above leaseholder update.
I need to share below with you, primarily the AoV project and the financial situation.
1. AoV Project.
A read of my recent postings on the ‘Project Management of AoV’ thread on the forum will explain. In brief, my main concerns:
- Trying to understand why 3 scaffolding towers cost almost £32k + VAT
- Why are we charged the quote of £55k+VAT for AoV servicing when, much of the AoVs was found to be ‘beyond repair’ and presumably not requiring the level for service envisaged in the quote.
- Recent notification that we must spend, additional to the original quote, a further unbudgeted £112k. This for 6 replacement control panels (albeit all 9 are now known to be in poor condition). I fail to understand why this was not identified at time of ‘quote survey’ such that the cost should have been reflected in the quote. Or to put it another way, all 9 were ok at time of survey but have deteriorated in the year or so between survey date and servicing date. Really?
- Kingspan will supply the replacement panels. Our project manager (=3Sixty) states their recent quote is ‘a third-party quote which cannot be tendered’. meaning we have no choice but to accept this quote with all that that means for us.
- Note that, following this additional spend, £37k of savings have been identified in the original quote. Total project cost is now forecast at £318k, or else £72k above that assumed in this year’s budget.
- I have to say I, now that ‘I know what I know’ since we accepted the original quote over a year ago, one recommended by our project manager 3Sixty, I do feel uneasy (and I worry) with how this project has progressed, not least with the cost of it. To be blunt, my gut feel is that we are being over-charged.
- Other likely unbudgeted or under-budgeted spend in coming months includes repairs to unsafe balconies, leaseholder claims arising from the LCS project (ref: my April 7 post on the LCS forum) plus the cost of the Safety Case report (ref: Alex D April 29 post on the Lendlease thread ) Total of these three items currently assumed as £70k.
- So, a total of £142k unbudgeted spend.
- However, this year’s budget has a contingency of £150k initially set aside for works not funded by Lendlease. For the moment (!), I assume this will cover the £142k.
- In total, I currently forecast a likely spend this year of £730k, slightly more than the budget spend of £715k.
- Along with Mark, I will meet Alex D early next week to review the forecast, particularly to ensure that the £730k does include all recent spend commitments.
Implicit in an annual budget is that most income (=mgmt. charges to leaseholders) and spend are evenly distributed across a year such that cash for the spend is always available. However, about 80% of this year’s £730k spend is forecast to be paid this first half-year such that , whilst we have the reserves at start of 25/26 sufficient to fund this imbalance, our cash position end August could be a (very low) £30k. I have assumed a ‘worst case scenario’ with little margin for error should assumptions prove to be optimistic.
Having said that, there are probable ways to avoid hitting ‘rock bottom’ such as deferring payments awaiting receipt of the half-year mgmt. fees, billed in September.
My point here is to advise you of this cashflow concern albeit with hope that the worst-case scenario can be managed at the time.
4. Leaseholders update.
Once we have reviewed/updated the current financial numbers with Alex, Mark and I will probably alert leaseholders early June with our concerns particularly as to cashflow. We do not want a situation whereby we suddenly have to first share 'bad news' with them in August with all that entails.
Content/explanation will be much as written in the prior two sections.
We will mention that we will have a better idea of the year’s spend and cashflow position end July.
5. Directors
You can imagine the above brings challenge to Mark and myself. As the ‘Finance’ lead, I have to say I am ‘feeling the responsibility and the pressure’ (as you are aware, in my own time) to try and manage all this. As far as I am aware, there is no-one ‘financial’ available with whom I can discuss/validate/interpret etc forecast numbers.
I need ‘financial management’ support, we need additional directors.
Relevant wording will be included with the above leaseholder update.