STEP ONE – INFORMATION GATHERING
The more you know about your common components/assets the better.
How many and which components/assets is your community responsible to maintain, repair or replace.
What is the current cost of each of these items.
When were the components placed in service or were last repaired, replaced, maintained.
What is the useful life expectancy of the components.
Where do you get this information? If you have a past, hopefully recent, reserve study this will expedite your reserve study project. Many communities battle over which components to include in their reserve study. In most cases the community CC&R’s or state statutes will give guidance on this topic.
Once you establish which and how many components are common property and need to be reserved for it is time to research pricing. Depending on the age of your community and its history you could refer to the DRE (Department of Real Estate) budget for clues to the cost of your community components because this should contain the cost the developer paid for the items. If your community is more mature you will have historical records of not only pricing for the components but also the useful life information of when they were repaired, replaced or maintained over the life of the community. If you just had a component repaired, replaced or maintained you will have the actual bill that would solidly establish the current cost. You can also contact local contractors and request pricing, telling them that you are gathering information for future repairs. Reserve Analyst© also offers 3 component cost databases which contain several thousand component assets and their cost.
Knowing when each component either was originally placed in service or the last time it was repaired, replaced or maintained leads to how long it will last before it will need attention again. It is my not so humble opinion that knowing the useful life information of your components is the Holy Grail of reserve study preparation. Just how long will it last? Believe it or not, it is only a best guess. There are several factors to take into consideration when deciding on the useful life of your components that will affect their useful life. Some of these considerations are: quality of product at purchase, was it properly installed, is it inside our outside, what are the weather conditions it endures, how much traffic or use does it receive. In some cases the manufacturer will have guidance on the average useful life, the contractor or individual(s) who installed the component might also have historical data on the product and the average life expectancy in your local area. In the bigger picture, however, it is still anyone’s best guess.
Okay, so by now you know more about your components that you expected you would ever want to know. The good news is that you’ve already waged over half the battle with your reserve study. Now it’s time to start using the software.