September 12, 2018

What is a Sinking Fund Forecast?

Put simply, a Sinking Fund is a cash reserve held for the future maintenance and repair of a building. In order to create a financial plan that allows for funds to adequately cover these future costs, a Sinking Funds Forecast is required. This Forecast is a maintenance schedule which ensures the body corporate allows for sufficient financial reserves and, in turn, minimises the risk of insufficient funds, creating a safety net for both the body corporate and the building itself.

What time period does the Sinking Fund Forecast cover?

The new Strata Title Amendment Bill 2018 states that every strata company for larger schemes will need to prepare a 10 year maintenance plan and to have a reserve fund in place. Rawlinsons (W.A.)'s reports can detail the expected yearly costs for up to 15 years, however, we recommend the Sinking Fund Forecast be reviewed annually to include any changes arising from extraordinary expenditure, inflation, local market factors and the general building condition.

What is included? 

A Rawlinsons (W.A.)'s Sinking Fund Forecast covers expenditure of a capital or non-recurrent nature including periodic replacement of major capital items and other spending that may reasonably be required for the safe operation and upkeep of the buildings. It does not include expenditure on capital improvements.

How is a Sinking Fund Forecast different to an Administration Fund? 

The cost of maintenance contract items are normally included within the administration fund, therefore they are excluded from the sinking fund forecast. These items include, but are not limited to:

·        Garden maintenance

·        Cleaning

·        Testing of services

·        Minor plumbing works

·        Minor works that are maintenance in nature

Is the Forecast easy to read? 

It certainly is, our comprehensive report will explain how we have estimated the expected life of the items, the included and excluded items and a summary of costings.

Why choose a Quantity Surveyor to compile your Sinking Fund Forecast? 

Rawlinsons (W.A.) Quantity Surveyors are professionals who are highly trained in estimating construction costs. As the creator, researcher, editor and publisher of the Rawlinsons Australian Construction Handbook and Cost Guide, there is no company better sourced to correctly estimate costs.

Contact Rawlinsons (W.A.) today for an obligation free quotation.

Written by
Kirsty Maxted for Rawlinsons