Where are we on the amenities?

 It's quite hard to consider the facts of the amenities project and conclude that it's either on schedule or on budget. But the more interesting issue--at least to me--is who is being held accountable.

Just to recap. In March 2021, the Owners approved the comprehensive amenities project by a slender margin (11 vote if I recall correctly). The bottom line is that the Board promised to deliver a new fitness center, a renovation of the Dye Clubhouse and a new tennis facility for $14.8 million, and the Owners approved a $16.5 million budget (which included a $1.7 million contingency). Just to be clear, the contingency covers the first 11.5% of cost overruns. The Board also promised a schedule:

• Tennis Center: complete 4Q21($1.5 million--including contingency)
• Fitness Center: complete 1Q23 ($8.5 million--including contingency)
• Dye Renovation: complete 3Q22 ($6.5 million--including contingency)

We won't know until next month (11 months after the project was approved) how much the projects will actually cost, or when they will be completed. But the Board's minutes indicate that cost overruns are likely and it's obvious that nothing will be done on schedule. 

There are three possible reasons for the delay:

• The Board made promises that it couldn't keep.
• The project was poorly executed.
• The Club had "bad luck."

As far as "bad luck" goes, I doubt if many of us found this a persuasive excuse during our working lives. I wasn't able to find an index for commercial construction costs for the southeastern US, but the Bureau of Labor Statistics publishes a "producer price index" for "lumber and wood products." 

Date	Value
November 30, 2021	303.11
October 31, 2021	290.74
September 30, 2021	274.28
August 31, 2021	280.74
July 31, 2021	332.93
June 30, 2021	441.40
May 31, 2021	453.90
April 30, 2021	386.90
March 31, 2021	362.40
February 28, 2021	344.40

Source: https://ycharts.com/indicators/us_producer_price_index_lumber_and_wood_products

As you can see, there's no question that lumber prices sharply increased during the spring of 2021. The lumber price index increased from about 350 during the vote in February-March 2021 to about 450 in May 2021. But by July 2021, the index had decreased to lower than it was during the vote and has remained lower since (although it has recently increased again).

A couple of caveats. First, lumber prices are not a perfect proxy for construction costs. And second, a national index does not necessarily represent the local market. But the national index is the best I could find. 

I also found a report by a consulting firm that indicated that construction costs had increased by about 4.5% nationally between the first and third quarters of 2021. RLB Construction Report. https://s31756.pcdn.co/americas/wp-content/uploads/sites/4/2021/09/Q3-2021-QCR.pdf at 2. The RLB Report also noted that construction costs in 12 major US markets had increased between January and July 2021 by between 3% and 9%. Id. at 6.

The data indicate that current lumber prices are slightly lower than they were when the amenities vote occurred. So there's some evidence that even if you are inclined to chalk overruns and delays up to "bad luck," the "bad luck" was transitory.

Who is accountable for the lack of progress on the amenities? As near as I can tell: no one. At least to me, accountability means that the responsible party is rewarded for success and sanctioned for failure. Perhaps the Board can explain how accountability exists with respect to the amenities projects.

I know what you're thinking. All right--what would you do? I'm glad you asked--here's a modest proposal:

1. Define the Club's amenities needs in light of the current competitive environment and market
2. Define the schedule, scope of work, and budget, including milestones (e.g., permits, break ground)
3. Get written buy-in from management on the schedule, scope of work, and budget
4. Seek Owner approval, including whether the recommended projects should be undertaken sequentially or simultaneously
5. Once the Owners decide what to do, provide management with the appropriate consequences (both positive and negative) to deliver the approved projects on schedule, to scope, and within budget.
6. Eliminate the "amenities oversight committee" and fully delegate the project to management.
7. Get out of the way except for the Board reviewing milestone achievement and holding management accountable.

We should be at step 3. It will be interesting to see what the Board believes is appropriate for steps 3-7. Speaking only for myself, I can't imagine a worse way to manage a major project than to have volunteer committee members shielding management from accountability for delivering the project on time, to scope, and within budget.