Most communities realise the need for a reserve plan of some sorts and aim to budget for future common area maintenance costs in some or other way. Although it is a great start and far better than not planning at all, failing to do a professional study will most likely miss the mark and result in a similar undesired outcome.

The following are the high level elements of a professional reserve study based on the NRSS (National Reserve Study Standards) from the USA. Did your reserve study cover each of these items in enough details?  

1) Component List Compilation

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

A Component is an item that is identified that needs maintenance and/or replacement (in other words it has a useful life). Multiple components make up a system, asset or building, for example, the roof is a component of the clubhouse.

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

2) Reserve Fund Strength Analysis 

To gauge a Community's level of preparedness to be able to fund the projected reserve expenditure as calculated in the Component List Compilation.

The Community's available reserve funds at the time is evaluated against the projected component maintenance and replacement costs, typically over a 30-year period. 

This is reported in terms of Percent Funded (F%), which is basically the Reserve Fund Balance (RFB) as a percentage of the Fully Funded Balance (FFB).

3) Reserve Funding Plan

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