Module #5 Assessing Importance of Components as “Big Ticket” or “Small Beer” Items
In order of importance / priority, Council’s considerations of upkeep of the strata property should be –
- SAFETY / HEALTH / SECURITY
- ESSENTIAL SERVICES PROVISION (water, power, gas, telecoms)
- STRUCTURAL INTEGRITY & COMPLIANCE
- COSTS IMPACTS UPON OWNERS / AFFORDABILITY
- AMENITY / FUNCTIONALITY / CONVENIENCE
- VALUE FOR MONEY FROM EXPENDITURES
- AESTHETIC EFFECTS / IMPROVEMENTS DIVIDENDS
Use the “Big Ticket / Small Beer” matrix template provided here to construct a high-level overview of likely component repair / replacement cost impacts over the next 5 years.
The purpose of this analysis is to provide a reference for focusing priorities of funding measures.
Why 5 years? Firstly, because 5 years is the mandated period between each Depreciation Report compilation. Secondly, 5 years is usually an adequate period over which to accumulate necessary funding build-up for identified major works. Also, 5 years is an acknowledged ‘best-practice’ projections & planning period adopted by major corporations and government organisations.
Refer to the D.R.’s list of common strata property components, and make assessments of which components are likely to present major repair / replacement capital cost issues, and which are likely to be handled as periodic “running repairs” from the operating expenses budget.
Also, based on your knowledge or estimation of the current state of repair / condition of components, determine whether they are “Probably” going to require attention and cost in the next 5 years, or just “Possibly” going to require attention and cost in the next 5 years.
For example, this matrix defines which components best fit into which quarters / cells of the matrix.
