Data collection includes the review of the financial statements, budgets, contracts, governing documentation, asset register, insurance schedules, and more to get a good understanding of the community’s infrastructure components and health.

One of the main goals of the data collection process is to identify and quantify all the items (components) in the community that needs to be maintained (services and replaced from time to time) as part of the infrastructure management process.

We offer a choice of two service levels as part of the data collection process:

Option 1: Desktop Analysis

The community common elements and other items that could potentially form part of the Component List are identified from information supplied and available from existing community records. These could include the Community Asset Register, Financial Statements, Supplier Invoices, Insurance Schedules and more.    

Option 2: Physical Analysis (in addition to the Desktop Analysis)

An on-site inspection is performed to evaluate all the community common areas, in order to quantify and add to the Component List as compiled as part of the Desktop Analysis phase. Where possible additional component information like photos, GPS coordinates and more is captured.

The Component List is the foundation of every reserve study and maintenance plan. A comprehensive Component List identifies which expenses are expected to occur, when, and at what cost.

The compilation of an accurate, fit for purpose Component List is probably the most time consuming and challenging task in the reserve study and maintenance plan process. 

The first step is to qualify if a component should in fact be included in the Reserve Study or Maintenance Plan. The NRSS (National Reserve Study Standards) recommends the following four-part test to identify which components should be funded through reserves. According to the NRSS, an expense must meet all four criteria to qualify as a reserve expense:

1. Community Responsibility: The expense must be the financial responsibility of the community. These expenses are typically associated with the common elements as defined by the Community’s governing documents.

2. Limited Useful Life Expectancy: The component or an element of it must have a “reasonably anticipated” limited useful life. The useful life limit does not have to be due to physical deterioration but may reach the end of its useful life due to aesthetics (out of style), economic obsolescence (no longer energy efficient), or other reasons.

3. Predictable Remaining Useful Life: The next occurrence of the expense must be reasonably predictable. Estimating when the expense will next occur can be based on the association’s history (i.e., historical frequency or patterns of repairs), your judgment or qualified outside opinions. The remaining useful life must always meet the “reasonably predictable” test, which means one should always be ready with a "why".

4. Minimum Threshold Cost: Finally, the expense must be more than what can be readily absorbed by the association’s ongoing annual operating budget. 

Once the components to be included in the Reserve or Maintenance Plan have been identified, the following is determined for each component as a minimum requirement for the Reserve Funding Plan:

1. Current Maintenance/Repair/Replacement Cost Estimates: The current (if it had to be done now) maintenance, repair and/or replacement cost of each component is determined. 

2. Useful Life (UL): The Useful Life of each component is determined, which is the time in years until the component will have to maintained, repaired and/or replaced.

3. Remaining Useful Life (RUL): The Remaining Useful Life of a component is the time in years until the component will have to be maintained, repaired or replaced with reference to the Reserve Plan base (first) year. A component could for example have a Useful Life of 5 years, but at the time of the study, it has been in operation for 2 years already, meaning the Remaining Useful Life of the component is 3 years.

Capital Improvements (Projects) 

The NRSS define a capital improvement as an addition to the common elements that previously did not exist.

Planned and even potential Capital Improvement Projects can be identified and the capacity of the community and impact on the existing reserve fund (if any) evaluated.

The Reserve Fund Strength Analysis is performed in order to gauge a community's level of preparedness to be able to fund the projected reserve expenditure as identified in the Component List Compilation phase.

The community's available reserve funds at the time are evaluated against the projected costs. All the community's current reserve funding sources are considered in the study, which can include current reserve contributions, depreciation funding, other contributions, penalties and fines and reserve funds available. This is reported in terms of Percent Funded (F%), which is basically the reserve funds available as a percentage of the projected costs over the 30-year period.

A Reserve and Maintenance Funding Plan is a multi-year contribution plan based on current Reserve Fund strength (Percent Funded) that allows for component maintenance, repairs & replacements to be completed in a timely manner, while avoiding “catch-up” funding sources like special levies.

The forward projection is typically 30 years for HOA Reserve Studies and 10 years for Sectional Title Maintenance Plans.

Having enough (or to be "Fully Funded") means the Community can execute its planned reserve projects in a timely manner with existing reserve funds at any point in time. Not having enough typically creates deferred maintenance or special levies.

According to NRSS (National Reserve Study Standards), there are three Funding Principles to balance in developing a Reserve Funding Plan:

1. To design a plan that provides sufficient cash to perform the reserve projects on time.

2. To achieve this with a stable contribution requirement. Reserve contributions that are evenly distributed over current and future owners enable each owner to pay their fair share of the association's reserve expenses over the years.

3. To develop a plan that is transparent and fiscally responsible, providing evidence and confidence to the community members that their board has fulfilled their fiduciary responsibility in providing for their reserve needs.

There are two calculation methods for developing a reserve and maintenance funding plan: the Component Method, also known as “segregated” or “straight line,” and the Cash Flow Method, also known as “pooling.” We follow the Cash Flow Method when developing Reserve and Maintenance Funding Plans for Clients.

A plan maintenance and continuous improvement service is offered to Clients with whom a Reserve or Maintenance Funding Plan have been completed.

This service includes the monthly review of the Community's Component List (or infrastructure status in general) and the updating of changes to the Component List.

This aim of this service is to ensure that the Community's infrastructure is maintained as per the Reserve Plan and to keep the Component list current, resulting in a more accurate Reserve Study at the end of the next period.