Don’t Confuse Trivia with Significance

Within a Reserve Study, the Reserve Component List contains life and cost estimates for the major assets the association is obligated to maintain, thus establishing the scope and schedule of Reserve projects. Typically, this list gets longer and more complicated as stray projects got added to the Reserve Study, making the Reserve Study gradually more unwieldy, unworkable, and as a result, unimportant. This can be avoided with a commitment to focus on the objective of keeping it a Reserve Component List, not an inventory and history of every stray asset that has been purchased.

Fundamentally, a Reserve Study reveals current status of the association’s components, Reserve Fund, and serves as a budget preparation guide. There are and always will be, exceptions to every well-laid plan. The wisdom is in knowing when the plan needs to be adjusted, and when adjustments should not be made (by ignoring projects that are exceptions and can be better served outside the Reserve Study). Time is saved, and money is saved, when projects can be accomplished with economies of scale and in a consistent, repeatable manner. The opposite is what we call “checker-boarding”. This is when exceptions are allowed to become the norm, and uniqueness becomes commonplace throughout an association. If allowed to happen, it begins to take more time to manage the assets, and more money to replace the assets.

Surprises will always happen. Memorializing an exception by adjusting the Reserve plan is a mistake. Do the minor project, ignore it, and move on. Yes, the newer 3rd floor carpet will not need to be replaced when it is time to replace all the other 10 floors, but go ahead and replace that still “fair” 3rd floor carpet with the rest of the building. Similarly, replace all the pool furniture at the same time, even that one chaise lounge that you needed to restrap last year!

When a minor project occurs, that does not mean you should revise the Reserve Study or your plan to replace all of that asset as one project at the next opportune cycle. This is where you choose to control the Reserve assets, instead of letting them control you. The Reserve Study is a budget plan. Let exceptions remain exceptions. Keep the integrity of the plan. The key is seeing the Reserve Study as a planning guide, not a record-book. Don’t confuse Reserve planning with an accounting or asset-tracking task.

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