This article discusses DIY capital works plan, examining whether owners corporations should prepare their own 10-year plan or engage a professional to ensure accuracy and compliance.
Question: We are looking at carrying out our own 10 year maintenance plan. Should we be doing this ourselves or should we talk to a professional?
I’m one owner of a 2 lot Strata that have just started self managing our scheme. We are looking at carrying out our own 10 year maintenance plan. Should we be doing this ourselves or should we talk to a professional? What are the benefits of getting a professional to assist?
If we decide to carry out the plan ourselves, is there a sample or template Ten Year Capital Works Fund Plan that gives us an idea of how to do proceed?
Answer: We strongly recommend engaging the services of a professional.
Legislatively there is nothing stopping you from preparing the 10 Year Capital Works Fund Plan yourselves. I am not aware of any templates as most would consider IP of the preparer. We do however, strongly recommend engaging the services of a professional.
It is an intricate exercise and requires many years of experience to accurately reflect the future liabilities of the fund. We consider capital works not only within the ten years as required, but also beyond this timeframe to ensure consideration of such expenses by current lot owners. It is also standard practice in the market to produce a 15 year plan so that the report has a 5 year shelf life whilst still complying with the legislation.
It is important to consider escalation, tax and interest factors over the lifetime of the ten year plan. Sharp increases in construction costs or specific materials can dramatically affect the health of the capital works fund now and into the future, as we have seen recently all across the country.
We, like many others, complete thousands of forecasts per year. The data from this enables us to accurately estimate future works of a similar type, location and scope to those that your property will require now and into the future.
At the end of the day engaging a professional ensures peace of mind and an accurate result. As the SCA states, the purpose of a 10 year capital works fund plan is to ensure sufficient financial reserves are built up to avoid lot owners having to pay large, one-off levies that may cause financial strain. It is our role, or that of another suitably qualified Quantity Surveyor, to ensure the Capital Works fund is sufficient to meet future capital works of the property.
This post appears in the May 2022 edition of The NSW Strata Magazine.
Zac Gleeson GQS E: zac@gqs.com.au P: 0419 755 896