Is there Ever a Reason to Replace a Component Early?

Interesting question, with an answer that is not obvious. Most associations deal with the problem of replacing components too late, resulting in deferred maintenance and related costs that make the project much more expensive than if it was done on time (think of the cost of replacing siding or trim that could have been avoided if the building was painted on time, or the water damage that could have been avoided if the roof was replaced on time).

A professional Reserve Study preparer hopefully sees the association as a whole, guiding the board towards decisions that minimize cost and disruption at the association.

This subject came up when a client told us that they had a structural engineer report that approximately 75% of their siding needed to be replaced. Thus they were telling us that the siding “didn’t need to be done all at once at this time” as we had recommended in their prior Reserve Study. They were building their case that most could be done now, and the rest could wait to be done in a few years. They were telling us there was no need to replace 25% at this time. It was still in acceptable condition.

But a good Reserve Study will see the association as a whole, coordinating appropriate projects in order to minimize cost and disruption. If 75% of the siding needs to be replaced, it is still our recommendation to replace all at once (for a consistent appearance throughout the association, and to minimize disruption in the future for the last 25%). While the structural engineer did their job to evaluate the siding’s condition, that last 25% is not far from needing to be replaced. It may only be good for another 3-5 years or so. If that is the case, it is much more cost-effective to replace all at the same time, and it saves the association from becoming “checkerboarded”, which is what we call it when different areas of the association present a different “look”. Such a look is distracting to the eye, drops the association’s curb appeal, and leads to political tension (why does your unit look better than mine… I pay the same dues as you!). If there is no (good) reason to leave some areas old and create a two-tiered look throughout the association, don’t!

So we’re not talking about throwing money at a project early because you’ve got money to burn. We’re talking about doing a complete siding project, a complete fence replacement project, a complete roofing project, a complete repaint project, etc. In the best interests of the association, sometimes you replace (or repaint) something before it absolutely needs it, because the majority of the association needs it done.

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2 Responses to Is there Ever a Reason to Replace a Component Early?

  1. Steve says:

    Choosing to under-reserve is not recommended and a risky option if a Board is short of money and does not want to special assess. What happens if a Board wants to take that option anyway, and even go a step farther and under-reserve and also not hurt its Reserve Fund Strength? Take for example roofs that have reached the end of their useful lives. The Board has other projects on which they would rather spend money. They ask their roofer to assess the roofs. The roofer reports that because of their age, the roofs could cause problems at any time, but that they appear to be in generally good condition. The Board decides not to replace the roofs, and also tries to make a case that the roofs’ useful life can be increased. Extending the useful life here may accomplish the Board’s spending goal, but what about the integrity of a meaningful Reserve Fund Strength?

    • Steve – agreed. I can’t think of a reason to under-Reserve. Hopefully a credentialed professional Reserve Study preparer is involved, so that the Component List is presented accurately, not “wishful thinking”. See the article on our website “Don’t Reserve the Truth” by clicking here. It was published in a number of publications across the country back in 2011.