CAI-NJ Nov. 2021(w)

FINANCIAL HEALTH... from page 18.

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b. Timing of Projects – When plan- ning an upcoming capital project, it is important to not only look at the project at hand, but also to look at the projected expenses five (5) years out to ensure the current plan includes sufficient funds to cover the anticipated projects. When comparing your association’s finances to the reserve estimates of the engineer, there are a few important keys to note: Annual Funding Recommen- dation: Included in the cash flow projection of the study will be a fund- ing recommendation. Typically, the engineer will provide multiple fund- ing options ranging from aggressive to conservative and will provide a 30-year cash flow projection for each funding option. There are some key things to remember when it comes to the annual funding: a. Changes in Cost – Even if your asso- ciation has been following one of the recommended funding methods of the engineer, it does not guar- antee that sufficient funds will be available when the time comes for large capital projects. It is important to remember that the amounts includ- ed within these studies are estimat- ed based on information available at the time which the study was prepared. In recent months, actual replacement costs have far exceed- ed initial assumptions as a result of pricing increases related to the COVID-19 pandemic. The cost of

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