Home        About       News       Library       Contact
1

Intergenerational Equity
An asset management philosophy which holds that since current users of an asset benefit from its use, they should pay their pro rata share of the costs involved in the future replacement of the assets.

Intergenerational equity seeks the following:
For example:
  • A roof has will cost $100,000 to replace when the building is 20 years old.  An owner who sells his or her unit when the building is 10 years old should have contributed their portion of $50,000 of the roof value for having benefited from the roof for 50% of its useful life. The new owner then takes over responsibility for the next 50% of the roof value.
Intergenerational equity is undermined by the following:
  • Short term thinking
  • Underfunded reserves. The new owner is now burdened with catching up on the underfunded balance.
1
Fig. Life stages of a building, during which various owners will come and go. 

See also:


(c) Copyright Asset Insights, 2000-2013, All Rights Reserved - "Insight, foresight and oversight of assets"