The work of a condo board never stops, and one major task facing Chicago board members is planning for their association’s future. This includes capital planning.
Capital planning is an important process for condo associations to ensure that they have the necessary resources to fund major capital projects and maintenance needs when those needs arise. Below are some key things association board members should know about capital planning.
What is Capital Planning?
Capital planning for condo associations refers to the process of identifying and prioritizing major capital projects and maintenance needs for the property, estimating the associated costs, and developing a plan to fund these expenses over time. When done well, capital planning ensures that condo associations have the financial resources they need when they need them in order to maintain and improve the property.
Steps Condo Boards Should Take When Capital Planning
By following a capital planning strategy, your condo associations can maintain the value of your property and ensure the ongoing satisfaction of your residents. Here are several steps to include in your strategic plan.
● Develop a long-term capital plan: Board members need to prioritize the here and now as well as the future. That’s where capital planning comes in. A long-term capital plan helps identify and prioritize future capital projects so you can best make plans for financing them. This plan should be reviewed and updated regularly to ensure that it reflects the changing needs and priorities of your association community.
● Estimate costs: Cost estimation is an important aspect of capital planning. Review your long-term plan and do your best to accurately estimate costs so you can begin saving for them. Working with industry experts such as engineers or contractors can help you obtain the most accurate cost estimates.
● Allocate funds: Once capital needs and costs are identified, the next step is to allocate funds to cover these expenses. This can involve using reserve funds, implementing special assessments, or obtaining financing. You can read more here about how to fund a capital improvement.
● Prioritize projects: With a long-term capital plan and funding in place, the next step is to prioritize projects based on their importance and urgency. This can involve evaluating the potential impact on the property and its residents, as well as the cost and feasibility of each project. Before any project gets approved, it will have to pass a board vote.
● Monitor and review: Capital planning is an ongoing process that requires regular monitoring and review. Keep an eye on the condition of your property and update your capital plan and funding as necessary to ensure that the association is prepared to meet future capital needs.
By following these guidelines, condo association board members can develop a comprehensive capital planning strategy that helps ensure the ongoing maintenance and improvement of their community.Board members looking for help and guidance with their Chicago condo association responsibilities should consider partnering with a full-service association management firm. Our team at First Community Management can help. Call us today at 312.829.8900 to ask your questions.