This article discusses amending capital works fund plan, explaining whether a strata committee can revise a CWFP before presenting it to owners for approval at an AGM or EGM.
Question: Does the committee have to accept the CWFP, or can we recommend changes when or before we present it at the AGM?
Our Capital Works Fund Plan (CWFP) has been updated by consultants. A few committee members disagree with some of the line items and the impact these have on the strata levies.
Does the committee have to accept the CWFP, or can we recommend changes when or before we present it at the AGM?
Answer: Consultants should allow you to revise/ amend the CWFP before you take it to the owners for approval at the AGM/ EGM.
The CWFP is legally required by the owners corporation (OC) under Section 80 of the Strata Schemes Management Act 2015.
The OC needs to ensure that they have a plan that is in date and reviewed such that they can always see at least 10 years ahead.
However, the CWFP is not a hard and fast document that is gospel for the next 5 years of your building. We all understand that priorities change, building elements sometimes need repair earlier than anticipated, and sometimes (regularly) OCs have unexpected costs that take priority.
Consultants should allow you to revise/ amend the CWFP before you take it to the owners for approval at the AGM/ EGM. Often, the timing of maintenance, the funding or the scope of certain works can be discussed and changed with your consultant so long as the building is still being appropriately maintained according to the legislation and the CWFP still meets the requirements of the Act and Regulations, e.g. you cannot simply remove an item from the CWFP because the OC doesn’t want to think or plan for that cost.
Our role as consultants is to anticipate and plan out the foreseeable repair and replacement costs for your building and project the required funding to meet these expenses over a timeline.
Ultimately, once completed by the consultants, the committee should review the CWFP and ask for revisions, changes or amendments to the timing of line items, scope etc.
Then, once a finalised version of the CWFP is received, the OC committee should take this to the owners at the AGM or EGM to agree upon the year/s ahead, budgets, levies etc with the appropriate resolution.
Over the last few years, construction, maintenance and labour rates have changed dramatically. As such, CWFP revisions should occur more frequently, ideally every 2-3 years. Otherwise, the amount suggested for certain maintenance/ repair projects within the CWFP will be incorrect and superseded, meaning you will not be collecting or raising a realistic amount of money.
Similarly, the Design and Building Practitioner’s Act has had implications for certain repair and replacement items within a standard CWFP. Your CWFP needs to factor this in, or you will risk a shortfall in funding.
This post appears in Strata News #729.
Dakota Panetta
Solutions in Engineering
E: dakotap@solutionsinengineering.com
P: 1300 136 036
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