Question 1

Estimated Costs

Accepted Answer

Estimated Costs Q: We have received a letter with regard to major works on the building that we were told were to be flooring and decorations to the communal areas of the block. The areas of concern are: 1 They have estimated a cost. My understanding was in a Section 20 the costs could not be estimated, plus they have also given a contingency amount. 2 They are also saying they do not have the tenders in for the flooring. 3 Notwithstanding the above, they have already issued an invoice. My understanding was they could only do this after the consultation period and when all the tenders had been put in for the total amount. FPRA Director Bob Slee replies: My reading of the processes that your managing agents have followed suggests that they are compliant with the requirements of the Section 20 procedure. To take your areas of concern in turn: 1 The only estimated cost in the managing agents’ calculations relates to the contingency element for minor works arising from the Fire Door Inspection. In Section 20 terms this would be regarded as separate work from the redecorating project and at £1000 plus VAT would fall below the Section 20 threshold in its own right. It is relevant that the agents’ supervision fee relates only to the redecorating project and not the additional minor works. It is perfectly reasonable therefore to estimate these costs and they have provided an assurance that adjustments will be made once the work has actually been completed. The amount included in the calculation for redecorating itself related to the lowest tender received. The final cost following the current phase of consultation can only therefore be higher in the very unlikely event that a majority of lessees insist that a contractor who has tendered with a higher quote than the lowest should be selected. 2 Again, in Section 20 terms, the floor covering project is separate from the redecorating project. Once the agents have received tenders for flooring (presumably from contractors other than the decorators who have bid to do the painting work) they will consult with lessees again specifically on that element. It should be noted that if the identified cost of the flooring is less than £250 per flat then the Section 20 procedures will not strictly be relevant to that element. 3 The invoice issued clearly relates only to those matters for which an appropriate stage in the section 20 procedure has been reached, ie the lowest tender in relation to redecorating plus the agents’ supervision fee on that amount plus an element for minor works arising from the Fire Door Inspection which in any case falls outside of Section 20 procedures. [Submitted December 2019]

Question 2

Estimated Costs

Accepted Answer

Estimated Costs Q: We have received a letter with regard to major works on the building that we were told were to be flooring and decorations to the communal areas of the block. The areas of concern are: 1 They have estimated a cost. My understanding was in a Section 20 the costs could not be estimated, plus they have also given a contingency amount. 2 They are also saying they do not have the tenders in for the flooring. 3 Notwithstanding the above, they have already issued an invoice. My understanding was they could only do this after the consultation period and when all the tenders had been put in for the total amount. FPRA Director Bob Slee replies: My reading of the processes that your managing agents have followed suggests that they are compliant with the requirements of the Section 20 procedure. To take your areas of concern in turn: 1 The only estimated cost in the managing agents’ calculations relates to the contingency element for minor works arising from the Fire Door Inspection. In Section 20 terms this would be regarded as separate work from the redecorating project and at £1000 plus VAT would fall below the Section 20 threshold in its own right. It is relevant that the agents’ supervision fee relates only to the redecorating project and not the additional minor works. It is perfectly reasonable therefore to estimate these costs and they have provided an assurance that adjustments will be made once the work has actually been completed. The amount included in the calculation for redecorating itself related to the lowest tender received. The final cost following the current phase of consultation can only therefore be higher in the very unlikely event that a majority of lessees insist that a contractor who has tendered with a higher quote than the lowest should be selected. 2 Again, in Section 20 terms, the floor covering project is separate from the redecorating project. Once the agents have received tenders for flooring (presumably from contractors other than the decorators who have bid to do the painting work) they will consult with lessees again specifically on that element. It should be noted that if the identified cost of the flooring is less than £250 per flat then the Section 20 procedures will not strictly be relevant to that element. 3 The invoice issued clearly relates only to those matters for which an appropriate stage in the section 20 procedure has been reached, ie the lowest tender in relation to redecorating plus the agents’ supervision fee on that amount plus an element for minor works arising from the Fire Door Inspection which in any case falls outside of Section 20 procedures. [Submitted December 2019]

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