WHY CHOOSE LEARY AND PARTNERS TO PREPARE YOUR RESERVE FUND PLAN?
Leary and Partners have a long history of producing Reserve Fund Plans and similar maintenance funding plans throughout Australia.
In fact, Leary and Partners introduced the concept of strata maintenance cost forecasting to Australia in 1990. This is recorded in the Australian Institute of Quantity Surveyor publication The History of Quantity Surveying in Australia (2008).
The Strata Title Act 1985 was only recently amended to require designated strata companies to prepare 10 year plans, but we have been preparing these reports for Western Australian strata schemes since 2015. We continue to prepare 10 year Reserve Fund Plans for schemes of various sizes and complexity throughout Perth and surrounding localities.
The Act and Regulations do not specify who should prepare Maintenance Reserve Plans. Experience in the other states suggests very strongly that the most suitably qualified professionals are quantity surveyors. This is due in part to the pioneering work carried out by Leary and Partners.
The preparation of a Reserve Fund Plan begins with an inspection of the scheme. It is important that this inspection correctly identifies the expenses which are relevant to the purpose of the Reserve Fund Plan.
- ïIf the Plan contains 'routine maintenance' expenses that will be paid from the administrative fund, expenses that will occur outside the agreed time frame of the Reserve Fund Plan, or expenses that are speculative rather than reasonably ‘anticipated’, the resulting levy recommendations will be inappropriately high.
- ïThe inspector must be able to read and interpret survey plans. These documents are key to identifying the common property infrastructure to be maintained by the strata company. If the inspection fails on this point, the resulting budget recommendations will be unreliable.
- ï The scope of the Reserve Fund Plan inspection should be appropriate, taking into account factors such as the design, age and overall condition of the scheme (as per section 77(6) of the Regulations). This is a cost/benefit consideration. For example, commissioning a detailed engineering investigation when there is no reason to suspect the presence of major structural defects is a questionable financial investment.
Leary and Partners are very experienced in the collection of data to be used as the basis for preparing Reserve Fund Plans. We have been doing it since 1990 and have successfully inspected tens of thousands of strata buildings, some of which are amongst the largest and most complex in Australia.
Quantity surveyors have the professional skills required to assess the standard maintenance requirements of any strata building type. Equally important, they also have the professional skill required to prepare the financial forecasts that form the core of the Reserve Fund Plan. This cost forecasting process is a modified form of life cycle costing, which is a well-established quantity surveying technique.
Remember, the 10 year Reserve Fund Plan is, first and foremost, a financial management document. Section 100 of the Act, which contains the requirement for reserve funds and 10 year plans, has the heading “Administrative and reserve funds and contributions”.
The key purpose of the Reserve Fund Plan is to assist the strata company to determine the amount of money which the strata company should budget towards current and future maintenance expenses. The reserve fund and 10 year Reserve Fund Plan do not alter the strata company’s existing maintenance responsibilities. A competently prepared Reserve Fund Plan assists the strata company to comply with their existing maintenance obligation by ensuring the necessary funds are available to do the work.
It is of paramount importance that any service provider offering to prepare your Reserve Fund Plan fully understands the relevant strata legislation. Leary and Partners is fortunate to have Kaylene Arkcoll on the team. Kaylene is a director and her qualifications include a quantity surveying degree and a Master of Applied Law. Kaylene has consulted on the drafting of strata legislation in several states and filled positions on the legal panel with SCA Queensland. She is available for free phone consultations with all of our strata manager clients.
WA Reserve Fund Plans
Lot Owners, Strata Managers and other professionals in the industry may benefit from this in depth analysis of Reserve Fund 10 year plans and their relationship with Reserve Fund budget.