When planning a large project – be it in the construction industry, an upcoming marketing campaign, or any other industry-related business project – one of the first questions anyone asks themselves is: how much is this all going to cost?
It’s also one of the hardest questions to answer, from the get-go. While former experience and some clever and educated guesswork can give you a very probable ballpark number, the truth is that you’ll come nowhere near an actual, properly-estimated total cost without first doing the work to determine what is needed and for how much you can get it all going.
That’s a lot of work, however, and in some cases, it will only detract from the energy you need to pour into the actual project itself. That is why specialists like Facilities Advisors exist to provide you with actionable financial data and accurate budgetary forecasts in the form of a reserve analysis.
What is a Reserve Analysis?
Also known in the real estate industry as a reserve study, a reserve analysis is an accurate financial document that takes existing and potential costs into consideration when creating or maintaining a project, and then plans out a budget that covers these costs and ensures the proper maintenance is performed to uphold local standards and regulations, as per Realty Times.
There are government standards and association standards tied to the perceived quality and necessary rigor of a reserve study, although typically, these act as a bare minimum – so you’ll want to work with a services provider that prides themselves on going above and beyond what is considered the standard. Otherwise, as per ZumBrunnen, you’ll face the consequences of a low-quality service that does improper site investigation and analysis.
According to the State of California’s own guidelines, for example, a quality reserve study has to:
1. Identify what is needed in project creation or maintenance.
2. Develop a plan through which needed components are actually used and implemented.
3. Find out how much each component costs, and furthermore, what labor costs to consider regarding the work phase of project creation and maintenance.
4. Calculate the potential costs over a projected number of years, and finally:
5. Disclose and implement the results.
While this specific document entails the lengths through which an association has to go to determine how much money is needed to maintain a property such as a condominium, or a townhouse association, the principles apply to any large project.
Why You Need a Reserve Analysis
The simple reason why you need to invest in a quality service provider for reserve and budgetary services is simple: to save money. It may cost you money to find out how much you should be raising and how to spend it, but the alternative is either to overspend, or worse yet, end up with not enough to finish the project, and thus be faced with the prospect of putting it on hold for an extended period of time, wasting precious resources and potentially even risking the death of the project.
To avoid that at all costs, a reserve study is needed – and by working with the right service, you can not only save money, but save your project.