Sinking funds use estimates of both Effective Life & Remaining Life of a building and its elements. The effective life is the total life of each element of the building. The Remaining Life is based on the Effective life, the current age of the building and current condition at the time of site inspection, relevant defects and works completed or in progress. In compiling the Sinking Fund calculations, we create a cash flow forecast for the next forty years as per industry standard and government recommendations. However, we generally focus on the first ten years and present a graphical representation attributed to the age of the building, number of Lots & current sinking fund balance.

If a negative balance is met within the first twenty years, the following options may be applied by an experienced Quantity Surveyor to overcome this situation:

1. Increase the contribution; Archi-QS Pty Ltd is committed to deriving the lowest possible gradual contribution.

2. Revise and re-assess the Effective Life of critical elements, moving away from the generic/textbook guidelines and using the Quantity Surveyor's discretion.

3. Revise and re-assess the quantities and rates used to prepare the costing.

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What is Sinking Fund?