The steps required to prepare a Reserve Fund and Depreciation Report is a process.
A step by step procedure starting with input and ongoing communication with the strata corporation to insure goals are met.
Problem Identification; The ground work often referred to as due diligence concerning the property details and background research.
Property Identification: Determine the area (s) of the property that are open to all strata owners. This would include but not necessarily limited to elements such as common entrances, hallways, meeting rooms storage areas and parking. The Common property also would include landscaping and roadways.
Lifecycle analysis: The lifespan analysis involves analyzing the lifecycle of each reserve component. This requires projecting the normal lifespan of the reserve component, as well as estimating its effective age and remaining economic life.
Cost Analysis: After the list of elements and their effective ages has been compiled, the estimated cost of replacement of each element must be determined.
Financial Analysis; The financial analysis required for depreciation reports involves establishing the cost estimates to be used in the reserve fund’s financial analysis. This step is divided into three sub-steps (a) Project the future cost of replacement of reserve components; (b) Project the future value of current reserve funds; (c) Calculate the current reserve fund annual/monthly contributions required.
Communicating Results: The final step in the reserve fund study process is communicating results to the clients and stakeholders.