Within a Reserve Study, it’s common to see multiple assets lumped together. For example, the roofs of several buildings or different pieces of common area furniture. It makes sense to group components that will need to be replaced at the same time. In the case of the roofs, they should have the same Remaining Useful Life (RUL) and Useful Life (UL). Same with the club house furniture – it may be the case that you would want to replace all the furniture at once to keep with a cohesive theme throughout the property. Grouping such assets together makes for a less confusing and more concise Reserve Study.
The bottom line: If Reserve Components have the same UL and the same RUL they can and should be grouped together.
Not to Group
We’ve updated Reserve Studies in the past and found inappropriately grouped components. We’ve seen the roofs of several building lumped together when in fact, one or more had failed and been replaced. It’s extremely important that those are pulled out and separated because they now have different UL and RUL.
In some cases we’ve encountered whole buildings lumped together as one component – roofing, exterior painting, interior painting, HVAC, flooring, furniture. Obviously the UL and RUL of these components are drastically different. Reserve Studies are supposed to be a valuable planning and budgetary tool for you and your community. There’s simply no way to accurately plan ahead when assets are inappropriately grouped together, projecting a large, singular future expenditure.
When you receive your Reserve Study, make sure you ask questions. Look for lumped assets and make sure they have the same UL and RUL. If your Reserve Analyst can’t explain to you why some components are grouped together, ask him to split them out. This could be a costly mistake down the line so make sure you’re asking the right questions and holding the Reserve Analyst accountable.
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