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Under-Reporting / Under-Stating
Failing to properly quantify the unfunded liability in a reserve study due to factors such as:
  • Capex-opex spillover
  • Insufficiently comprehensive asset inventory that does not include certain assets and therefore does not contemplate some capital costs.
Under reporting occurs when a cost is eliminated from the capital budget on the assumption that:
  • The cost will always be carried in the operating budget in future years. As a result, the cost disappears from the capital load and the operating load over the 30-year planning horizon. The problem of "future incumbents" does not guarantee that the cost will show up in future budgets.
  • The cost is not material as it falls below a capital cost threshold, either defined by the owner or the consultant.
Under reporting may result in:

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