Where do the cost estimates come from?
The cost estimates come from various sources. However, Marshall Swift cost data services is generally thought to be the most comprehensive data service. We also use the National Construction Estimator. Additionally, if an association has a recent construction bid to perform a construction project, we will use that price quote. Sometimes, we encounter an uncommon reserve item without a good published number. In these cases, we try to research the reserve item and will sometimes have to call an outside company to become familiar with the cost and expected life of the item.
How do I make the most of a reserve study?
Associations do different things with their completed reserve study. Probably the most important thing they can do is read about the overall financial rating of their association. If they receive a poorly-funded status, they really should take not that they need to fund reserves in a stronger way. Another very useful part of the reserve study are the pages that show the quantity of the reserve item, the cost, the remaining life, and the expected life when new. Also from this page, the association can see what their most pressing reserve items are to replace.
What does the reserve analyst need from the association to complete the report?
The reserve analyst needs an agreed upon list of reserve items from the association. Additionally, the reserve analyst needs the financial details of the association. It is typical for the reserve analyst to ask for the last two balance sheets and the current year’s budget. With this information, the reserve analyst can estimate the projected starting balance for the next calendar or fiscal year. A third piece of information that is very useful is access to capital expense records. Some associations are very good at keeping old records and invoices of major (or minor) replacements. The more detailed the records are, the more this will help the reserve analyst get the proper sizes, components, and costs into the reserve study report.