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REVIEWING THE COMPONENT LIST – AN IMPORTANT STEP


A client's thorough review of the reserve study’s component list is an essential step in the overall process for a tailored, accurate and reliable reserve study for any particular community or organization.  .


National Reserve Study Standards

The reserve analyst will compile a thorough list of common area components that meet National Reserve Study Standards four part test.

1. Is the component a responsibility of the Association (review governing documents)?

2. Does the component have a predictable useful life?

3. Does the component have a predictable remaining useful life?

4. Is the cost above a minimum threshold set by the Client?

When all parties understand and follow this four-part test the component ​list should be extremely similar for different reserve study companies and boards requesting the services of a reserve professional. There will no doubt be changes to the component list over a long period of time as components maybe added or removed and the governing documents may be revised.


The Component List is the foundation for which the Study is Built Upon.

The component list, once compiled, is the foundation which a reserve professional will develop funding plans that are tailored to a specific community​. If the component list is not accurate or not in line with a Client's expectations the corresponding funding plans developed will not likely be accurate or in line with the long-term goals of the community. A review of the reserve study by the client and ensures that all parties are on the same page with respects to the “foundation “component list which the funding strategies are developed for. It can be somewhat problematic overtime if Boards of reserve professionals have different opinions as to what components are to be included in the reserve study. It's been our experience that reliance on the guidance of the National Reserve Study Standards, published by the Community Associations Institute, are the most accurate, reliable and beneficial standards to follow in the industry.

 

A thorough review of the reserve study as well as a discussion of the results and opinions with the reserve professional ensures the most reliable and tailored reserve study possible.

 

Written by Joel L Tax - Professional Reserve Analyst - 05/17/2016