Fully-funded | Full Funding
Simple percentage or measurement being calculated and used in different, conflicting and proprietary ways that often do not meet certifying associations’ methodology.
It also doesn’t help that certifying bodies base the calculation on different component inventory definitions.
The component inventory on which the calculation is made may include expenditures that happen over the next thirty-years only, over the next 3 to 30 years, with or without contingencies etc. rather than over the economic-life of the development.
Moreover, the calculation is sometimes based on current replacement costs rather than on current replacement requirements, thus inflating immediate contributions required, especially if no benchmark was produced.
Lack of knowledge of best-practice functional reserve fund planning leads to these errors.
This makes it very difficult for the typical stakeholder to figure out how the fully-funded or full funding calculation was made, since many reports do not provide their rationale.
Having said this, the ‘benchmark fully-funded’| ‘benchmarked scenario’ is the simplest way to compare two developments, as it is a measurement that is independent of the size or age of the development as well as of the position of the reserve fund.
Best-practice depreciation reports focus on the benchmark, on the reserve fund position and on the reserve fund standing based on fiscal-year adjusted cumulative variables. This is the basis on which managing risk and sound reserve fund planning scenarios are made.