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Functional Reserve Study

A form of reserve study prepared by Certified Reserve Planners (CRPs) based upon a methodology developed by REIC - the Real Estate Institute of Canada.

A functional reserve study is intended as a "business plan" that attempts to balance the focus on the physical analysis and the financial analysis.

A functional reserve study is generally characterized by the following:

The two cornerstones of a functional reserve study are:
  • The Benchmark Analysis - this is a one page spreadsheet that employs the sinking fund method of computing future replacement costs
  • The Deficiency Analysis -

  • 2.  The deficiency analysis -  It is very important to know the difference between a reserve fund that is "deficient" vs. one that is "adequate". A reserve fund can be deficient yet still adequate. The model is designed to plot the point when the reserve fund is no longer deficient and can then rely on a constant and flat contribution with no annual increases.

Listed below are the four different grades of reserve study:

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Fig. Interviews and surveys

See also:


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