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The term ‘asset’ has various meanings throughout many industries and services.

Fundamentally, assets are of value to stakeholders because their current new-construction costing is used to determine the appraised value of a development, a value often contested but relied upon for tax and insurance purposes.

Conceptually, an asset can be interpreted as part of life-cycle maintenance and costing, as part of the total cost of ownership, as part of of specific systems’ costing and maintenance planning, and in many other ways that are different from what reserve fund planning determines an asset to be.

From a reserve fund planning perspective, an asset is a common component or element with a limited predictable expected lifespan, above a daily, weekly, monthly or yearly cycle, and a significant cost.

By focusing on major repairs and full or partial replacements of components, reserve fund planning excludes the minor repairs and the daily or monthly scheduled activities that take place more than once a year. More importantly, reserve fund planning costs components in terms of their remediation rather than their new-construction cost.

Reserve fund planning does consider regular or more than once a year variables. It does so in terms of their impact on the effective age of components, a concept that reflects the existing condition of the components at the point-in-time of the site-visit.

Best-practice depreciation reports focus on  specific assets in the life-cycle analysis of components. Reserve fund planning analyses components that are to be funded through the reserve fund, based on criteria used to determine the inclusion or exclusion of components in reserve fund planning.

About Author: Jean-François

With experience gained in construction, project management, field reviews, inspections, report writing and as strata president, J.-F. has cross-industry expertise guaranteeing that you will participate in a process geared to improving the corporation's finances and to setting the condo | strata board | council's planning to stand the test-of-time.