Reflection on Using Visual Thinking to Synthesize a Complex Problem    Challenge

I recently needed to communicate detailed and complex financial information about my  condominium building in a way that could be quickly understood by fellow homeowners in the  association. In effect, I was challenged to communicate what is (where things stand) and what if  (the outcome of alternative decisions) to help the group choose the future financial direction of  our condominium community. I chose visualization to inform and persuade my neighbors.

Shortly after being elected president of the homeowners association (HOA) at my condominium  community, I came to realize that our reserve account (funds set aside specifically to pay for  capital maintenance) was probably not sufficiently funded. I wasn’t certain of the extent of the  shortfall and wanted more information to help the HOA Board guide and recommend different  scenarios for homeowner dues. If the HOA Board recommended an increase, we’d need  approval from 2/3 of the owners – and we didn’t expect raising dues would be an easy sell.

I suggested that the HOA hire an outside engineering company to conduct a reserve study. The  purpose of this study is to give us an objective appraisal of the condition of the building systems  and associated costs and timing for maintenance or replacement. The findings from the study  were not unexpected: there is a lot of big-ticket maintenance work anticipated in the coming  years, and some of those years are coming soon. If we did not increase dues, owners could  anticipate regular individual annual “special” assessments of $15-20K, in addition to the regular  operating budget. In addition to providing us with a roadmap for capital maintenance plans and  expenses, the report also outlined recommended funding levels to avoid special assessments to  meet the anticipated financial need.

Selection & Application of Visualization Tool

The reserve study report is long (some 65 pages!) with technical detail outlining the age and  condition of the common elements of the building along with anticipated replacement dates  and costs. It is a lot of information to take in, and I was doubted that most owners would take  the time to read and absorb such a detailed technical report. Visual thinking helped me to sort  through detailed and complex information and clearly communicate that to owners in a way  that could be quickly and easily understood.

I synthesized the information from the report by “bucketing” anticipated projects for the short,  medium and long-term using the format shown at the top of the next page. Since the purpose  was to communicate the anticipated projects and associated monetary scope, individual project  costs were not included on this summary. This summary was sent to owners along with full  study report for those who wished to study the information in full detail.

Capital Maintenance Projects

Years  2020-2022  2023-2025  2026-2030  2031-2035  2036-2040

Estimated Cost  of Projects  $400K  $650K  $900K  $700K  $2.0M

Anticipated

Maintenance Items

Project 1  Project 2  Project 3  Project 4

Project 5  Project 6  Project 7  Project 8  Project 9  Project 10  Project 11  Project 12

Project 2 (b)  Project 10 (b)  Project 13

Project 3 (b)   Project 10 (c)  Project 14  Project 15  Project 16  Project 17  Project 18  Project 19

Project 1 (b)  Project 2 (c)  Project 9 (b)  Project 20  Project 21  Project 22  Project 23  Project 24

Insight

In the end, this problem is about money: who will pay for needed capital maintenance, and  when? Should the costs of future maintenance be borne by current residents or future  residents? Should capital maintenance be paid for through funds reserved over time or through  special assessments levied at the time of need? How the ownership chose to handle this issue  would ultimately affect both the desirability and the value of the real estate.

The opportunity to get owners’ focused attention to this issue came unexpectedly when the  roof of our then 13-year old building failed and could not be repaired – some seven years  before its life expectancy. Reserve funds were insufficient to cover the cost of replacement, so  the HOA assessed each individual owner for two-thirds of the cost of the new roof. Individual  assessments ranged from $3600-$5500.

Nearly all the owners agreed that the projected need of $1MM+ over the next six years was a  liability that would make our real estate less desirable – who would want to buy a condo in our  building if they knew there would be large variable expense every year, in addition to operating  expense? By the time we held a vote, all but one owner was persuaded that increasing monthly  dues to fund our building reserves according to the recommended schedule in the reserve  study was the right thing to do.

Approach

The communication of information was the starting point in this discussion with the owners,  and visualization was a great way to quickly and clearly communicate the information needed  for the board to make recommendations and for owners to make decisions. I incorporated  another visualization tool into the budget communication: a simple stacked bar graph that  showed the proportion of dues payments that would go toward funding the reserves, per the  recommended plan. Residents were able to see that our community is on the path to financial  stability – and were willing share the costs with future owners by paying higher monthly dues  now rather than risking responsibility for a large assessment in the future – or having a hard-to- sell real estate investment.


Reflection on Using Visual Thinking to Synthesize a Complex Problem Challenge I recently needed to communicate detailed and complex financial information about my condominium building in a way that could be quickly understood by fellow homeowners in the association . In effect , I was challenged to communicate what is ( where things stand ) and what if ( the outcome of alternative decisions ) to help the group choose the future financial direction of our condominium community . I chose visualization to inform and persuade my neighbors . Shortly after being elected president of the homeowners association ( HOA ) at my condominium community , I came to realize that our reserve account ( funds set aside specifically to pay for capital maintenance ) was probably not sufficiently funded . I was n’t certain of the extent of the shortfall and wanted more information to help the HOA Board guide and recommend different scenarios for homeowner dues . If the HOA Board recommended an increase , we ’d need approval from 2/3 of the owners – and we did n’t expect raising dues would be an easy sell . I suggested that the HOA hire an outside engineering company to conduct a reserve study . The purpose of this study is to give us an objective appraisal of the condition of the building systems and associated costs and timing for maintenance or replacement . The findings from the study were not unexpected : there is a lot of big - ticket maintenance work anticipated in the coming years , and some of those years are coming soon . If we did not increase dues , owners could anticipate regular individual annual “ special ” assessments of $ 15 - 20 K , in addition to the regular operating budget . In addition to providing us with a roadmap for capital maintenance plans and expenses , the report also outlined recommended funding levels to avoid special assessments to meet the anticipated financial need . Selection & Application of Visualization Tool The reserve study report is long ( some 65 pages ! ) with technical detail outlining the age and condition of the common elements of the building along with anticipated replacement dates and costs . It is a lot of information to take in , and I was doubted that most owners would take the time to read and absorb such a detailed technical report . Visual thinking helped me to sort through detailed and complex information and clearly communicate that to owners in a way that could be quickly and easily understood . I synthesized the information from the report by “ bucketing ” anticipated projects for the short , medium and long - term using the format shown at the top of the next page . Since the purpose was to communicate the anticipated projects and associated monetary scope , individual project costs were not included on this summary . This summary was sent to owners along with full study report for those who wished to study the information in full detail . Capital Maintenance Projects Years 2020 - 2022 2023 - 2025 2026 - 2030 2031 - 2035 2036 - 2040 Estimated Cost of Projects $ 400 K $ 650 K $ 900 K $ 700 K $ 2.0 M Anticipated Maintenance Items Project 1 Project 2 Project 3 Project 4 Project 5 Project 6 Project 7 Project 8 Project 9 Project 10 Project 11 Project 12 Project 2 ( b ) Project 10 ( b ) Project 13 Project 3 ( b ) Project 10 ( c ) Project 14 Project 15 Project 16 Project 17 Project 18 Project 19 Project 1 ( b ) Project 2 ( c ) Project 9 ( b ) Project 20 Project 21 Project 22 Project 23 Project 24 Insight In the end , this problem is about money : who will pay for needed capital maintenance , and when ? Should the costs of future maintenance be borne by current residents or future residents ? Should capital maintenance be paid for through funds reserved over time or through special assessments levied at the time of need ? How the ownership chose to handle this issue would ultimately affect both the desirability and the value of the real estate . The opportunity to get owners ’ focused attention to this issue came unexpectedly when the roof of our then 13 - year old building failed and could not be repaired – some seven years before its life expectancy . Reserve funds were insufficient to cover the cost of replacement , so the HOA assessed each individual owner for two - thirds of the cost of the new roof . Individual assessments ranged from $ 3600-$5500 . Nearly all the owners agreed that the projected need of $ 1MM+ over the next six years was a liability that would make our real estate less desirable – who would want to buy a condo in our building if they knew there would be large variable expense every year , in addition to operating expense ? By the time we held a vote , all but one owner was persuaded that increasing monthly dues to fund our building reserves according to the recommended schedule in the reserve study was the right thing to do . Approach The communication of information was the starting point in this discussion with the owners , and visualization was a great way to quickly and clearly communicate the information needed for the board to make recommendations and for owners to make decisions . I incorporated another visualization tool into the budget communication : a simple stacked bar graph that showed the proportion of dues payments that would go toward funding the reserves , per the recommended plan . Residents were able to see that our community is on the path to financial stability – and were willing share the costs with future owners by paying higher monthly dues now rather than risking responsibility for a large assessment in the future – or having a hard - to- sell real estate investment .