This article is about the implications of rising inflation for Australian Strata Schemes.
Table of Contents:
- QUESTION: Should committees be ensuring that their 10 year plans reflect the current surge in the price of building related materials and labour?
- QUESTION: Due to rising costs and to avoid inflation, should we act sooner rather than later to get the building repainted? We’ve estimated this should be done sometime in the next year or 2.
Question: Should committees be ensuring that their 10 year plans reflect the current surge in the price of building related materials and labour?
Given the recent spike in inflation (CPI) at a national level, combined with the immense surge in the price of building related materials and labour, should committees be ensuring that their 10 year plans reflect these increases?
How often should a committee focus on getting their 10 year maintenance plans revised?
Answer: Anyone who had a maintenance plan or sinking fund completed prior to covid should most definitely get this updated to reflect the current cost of completing maintenance.
The general consensus amongst government bodies and industry experts is every 3 -5 years. The reason being is that the cost of materials and processes can change quite drastically. We have had numerous instances where our painting contractor colleagues advise a quote done a year ago is now a few hundred thousand dollars more.
What we would also strongly emphasis and that we are in the middle of investigating (with an article hopefully to come out in coming weeks) is the significant impact Covid has had on construction and materials. Anyone who had a maintenance plan or sinking fund completed prior to covid should most definitely get this updated to reflect the current cost of completing maintenance. Whilst he effects of covid may not last for the next few years you must ensure that you have the right amount of money in your fund allocated for these expenses.
Admin Update: The article referred to by Dakota above is now available and can be accessed and downloaded here: Your Strata Could Be Under-Insured Without Even Realising.
Dakota Panetta
Solutions in Engineering
E: [email protected]
P: 1300 136 036
This post appears in Strata News #566.
Question: Due to rising costs and to avoid inflation, should we act sooner rather than later to get the building repainted? We’ve estimated this should be done sometime in the next year or 2.
Answer: Inflation may result in a much higher job cost in future years.
The effects of the Covid Pandemic are certainly being seen within the construction industry with incredible cost escalations occurring and even more significant the delay in labour and trades. Given that in Australia, more than 80% of our paint is made locally (according to the APMF 2020) costs of the actual material have not yet skyrocketed but the constraints on the labour force will be your biggest challenge.
We know that most painters/ painting firms are booked solidly for the next 18 months given the increased demand for construction and the labour shortage.
If you are able to secure a painting contract to paint your building, it would be advisable to complete this sooner rather than later as inflation may result in a much higher job cost in future years. These increases will not necessarily be due to the cost of the paint but also the painter’s cost of doing business: ladders, scaffolding, brushes, paint tins, work vehicles, fuel (all currently being affected by the global supply logistics) all of which will be passed onto the end customer.
Dakota Panetta
Solutions in Engineering
E: [email protected]
P: 1300 136 036
This post appears in Strata News #564.
Have a question about implications of rising inflation for Australian Strata Schemes or something to add to the article? Leave a comment below.
This article is for reference purposes only and is not intended to be a comprehensive review of the developments in the law and practice or to cover all aspects of the subject matter. It does not constitute legal, financial or other advice and should not be relied upon this way. Readers should take legal, fianancial or other advice before applying the information contained in this publication.
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- VIC: Q&A Protecting Your Building’s Superannuation
- QLD: Q&A What is a sinking fund in a body corporate
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