When should I update my Capital Works Plan?
As mandated by the Strata Schemes Management Act 2015 No 50 section 80, a capital works plan needs to be reviewed every 5 years:
“(3) An owner’s corporation may, by resolution at a general meeting, review, revise or replace a 10-year plan prepared under this section and must review the plan at least once every 5 years.”
What happens when Capital Works Plans are not reviewed?
If a Capital Works Plan is not reviewed properly, it may not reflect the actual aging and works of the building, as well as any changes in circumstances within the common property and the allocation of funds.
Essentially this results in Owners’ Corporations paying too little or too much in levies. Too little often results in special levies or works put off due to tackle of funds, or the need for loans to complete the works.
Too much, and owners are folking out their hand-earned cash that isn’t being utilised in maintaining the common property.
Why is 10 years better than a 15-year Capital Works Plan?
A 15-year Capital Works Plan covers an extended timeframe for projecting future expenditure. As a result, it is more susceptible to inaccuracies compared to a 10-year Capital Works Plan, as too many things change in a building over that time for the plan to reflect accurately what is actually happening to the property as it ages and works are carried out.
Also, a 10-year Capital Works Plan is mandated by the Strata Schemes Management Act 2015 No 50 section 80:
“(2) An owners corporation is to prepare a plan for each 10-year period following the 10-year period to which the first plan applied.”
What changes in our recommendations if the plan is reviewed every 5 years?
A regular updating of the capital works plan ensures that:
- The elements are captured in the report to include any changes the OC have done.
- The costings reflect the changes in the construction industry especially in the wake of Covid-19 which has saw escalation in construction costs well and above previous industry norms.
- The effective lives of the elements reflect their actual wear and tear.
- More accurate levy recommendations.
Don’t delay – update your Capital Works Plan now and ensure your building’s longevity.