All Associations are unique in nature and we as Reserve Professionals, need to be informed about your particular Association. Our Reserve Analysts' goal is to provide a thorough reserve study that also considers the goals and challenges particular to your community. Ample information provided to the Reserve Analyst will result in a completed reserve study that is more likely to meet our Client’s expectations. Listed below are items that can be useful in helping to inform your Reserve Study Analyst about your Association.
- Provide a Common Area Component List: These are the items that will be included in the reserve study - these would be items that are the Clients responsibility. The list should be as thorough as possible. The Reserve Analyst will have questions and the list may grow or shrink from here.
- Provide Common Component Information: This will include any available information related to vendor contact information, bids for planned work, cost records for past work completed and estimated useful life from vendor experiences.
- Provide Financial Information: This will include current reserve balances, projected reserve balances (for the start of the fiscal year the study will begin), interest rates on reserve accounts, and tax rates (if tax liability on interest is paid from the reserve account).
- Obtain Bids: If any of the common components are scheduled to be repaired/replaced and no bids have yet been obtained it would be beneficial for the Reserve Analyst as well as your Association to obtain these bids before the reserve study is initiated. This will help ensure the most reliable cost analysis in the reserve study as actual, up to date, contractor bids are the most useful tools in cost estimations for components. An example of this is listed below:
A recently completed reserve study was conducted by one of our Reserve Analyst in which we were provided with four wide ranging bids on the construction of a recreational building for the project. We utilized and averaged the lower bids as they best reflected the expectations of the Association and current cost estimates even though they were below recent year’s construction costs, during which time demand was much higher than historically typical.
- Provide Architectural Plans: When available, these are an additional sources that the Reserve Analyst can utilize to adequately quantify common components and identify items that are not visible (e.g mechanical equipment and systems in ceilings and buried.
- Provide a Prior Reserve Study: When available, a prior reserve study can be useful to the Reserve Analyst. Any remarks, from the Association, on the review of this prior Reserve Study, could be beneficial as it will help the Reserve Analyst better understand what the Associations goals and expectations are.
- Provide a Timeline for Future Common Component Construction/Repair: A timeline for future common component projects, such as playgrounds, swimming pools and recreational buildings will provide the Reserve Analyst with a timetable from which to base a funding plan from. Dates for planned repairs of common components should also be provided so the Reserve Study will adequately reflect effective ages and remaining economic life of common components which will be replaced in the near future.
Be Available on the Inspection Date
On the inspection date, the Reserve Analyst will be conducting a comprehensive visual inspection of the common area components. It is helpful for the Reserve Analyst to be notified of:
- Component Comments: Failures or issues which are not readily apparent, such as poor drainage on a dry day or known dry rot issues should be conveyed to the Reserve Analyst.
- Common Component Objectives: If it is known that a common component will be replaced with superior/inferior quality materials this can have an impact on the cost estimates and reserve projections. It is imperative to the outcome of the reserve study that the Reserve Analyst be informed of quality of material changes.
A good example is a reserve study that was conducted by one of our Reserve Analysts. The project's wood shake roof was in need of replacement but we were not informed of the Associations intent on replacing it with composition shingle roofing. The initial results in the reserve study were not in line with the Associations future costs estimates of this component and required revisions.
Review the Reserve Study
Review the draft Reserve Study and make suggestions or comments to the Reserve Analyst. This ensures the final product takes into consideration the long term goals of your Association and meets or exceeds all of the Association's expectations.
Written by Joel L Tax - Professional Reserve Analyst - 04/11/2016