This article discusses capital works maintenance costs, explaining why capital works fund plans include non-recurrent maintenance items to support long-term asset planning under NSW strata legislation.
Question: NSW legislation requires the preparation of a plan of anticipated major expenditure to be met from the capital works fund so why do plans always include maintenance costs which are not major?
Section 80 of the NSW legislation requires the preparation of a plan of anticipated major expenditure to be met from the capital works fund so why do plans always include maintenance costs which are not major and historically are to be charged to the Administration Fund?
Answer: A Capital Works Fund Plan serves the purpose in assisting a strata scheme to financially plan for the expected maintenance/replacement of capital works of a non-recurrent nature.
Items of a non-recurrent (greater than 12 month frequency) capital nature should make up a Capital Works Fund Plan. A Capital Works Fund Plan serves the purpose in assisting a strata scheme to financially plan for the expected maintenance/replacement of capital works of a non-recurrent nature. These items may fall due for replacement in 30- 50 years.
Like getting a car serviced when due, by maintaining these items they will serve their purpose better and last longer. For items of a recurrent nature, such as regular garden/ lawn maintenance, pool cleaning etc., these would be paid out of the administrative fund and should not form part of a Capital Works Fund Plan.
This post appears in Strata News #582.
Dakota Panetta Solutions in Engineering E: dakotap@solutionsinengineering.com P: 1300 136 036