We recommend getting a reserve study report updated every 3 years and certainly not any more than 5 years. It also advisable to get one sooner if there has been changes to the property or membership base. Reserve studies are meant to be a useful planning tool that reflects the long term assets of the community. Getting them updated is an important part of managing and maintaining the property.
When it is time for the reserve study update there are a few tips to keep in mind to get the most out of the updated report.
1. Go through line items individually.
In the previous report, there should be a tabular list of all items and their costs. This is the perfect starting place to discuss the items with the reserve analyst. Discuss any specific items that have changed since the last report.
2. Have a discussion if any items should be removed or added.
Often times the association may not want a reserve item to be on the schedule any more. An example is landscaping. Some associations choose to handle landscaping solely through their operating and maintenance budget, which is fine. This scenario may come up when an association is relatively new and they realize that they already fund certain items through their operating account, making that reserve funding redundant.
3. Review bids that have come in over the last few years.
Any actual bids that have come in to the association are incredibly handy for a reserve study because they reflect actual costs, rather than just a projection. They will also be helpful in determining the scope of work for the construction project.
4. Talk about any items that are aging more rapidly than expected.
Sometimes reserve items wear out more quickly than expected. Shortening the remaining life of these items will allow the association to fund for their replacement, just at an increased rate.
5. Talk about any renovation or construction projects on the horizon.
Many times associations know that they want to replace or renovate an item in X amount of years. Informing the reserve analyst of this plan will help coordinate the funding in the report accordingly. Good communication and teamwork is necessary to make the reserve study report as accurate as possible.
Keeping these tips in mind will help the association accurately update the reserve portion of the budget and should help to have the proper funds available when they are needed to replace reserve items.