The Capital Budget is a long-term financial projection based on a maintenance plan. The on-site analysis for a capital budget generally differs significantly from an analysis performed for a community association reserve study because most of our non HOA clients do have a formal maintenance plan and strong internal maintenance reporting. Accordingly, our on-site analysis is usually limited to reviewing and testing the accuracy of our client’s reports. We do perform spot checks and test of quantities and measurements and evaluation of condition of physical components. There is often no need for us to identify, quantify, and assess condition of all major components because our clients are often engineers or facilities maintenance experts who have already done this.
When we are hired for a capital budgeting engagement the primary reasons our clients hire us are:
(1) Strong capital budgeting conceptual knowledge
(2) Data management skills (our largest capital budget contained more than 60,000 line item components)
(3) Internet-based software that allows them to keep their budgeting system updated independent of our services
(4) Financial reporting skills. While our primary contacts for large capital budget projects are normally engineers or maintenance staff, the budget reports go to the financial staff, many times including CPAs who are accustomed to the strict financial reporting protocols promulgated by the AICPA. Our reports are designed to meet their requirements and in general include the core financial projection reporting protocols established by the AICPA more than a century ago.
Facilities Advisors is the premier provider of capital budgeting services precisely because we are the ONLY company that has the skills and software identified above.
Our competitor "reserve study providers" in the community association industry generally don't understand the difference between a reserve study and a capital budget. They often refer to the reserve study as a capital budget - it is not. Further, they don't usually posses the skills idenitifed above. Most of our competitors:
a) Are component centric engineers, architects or contractors who possess good component skills but have always treated the financial projection as a simple afther thought to the component analysis. They fail to understand that the primary objective is a budget, not some sort of component analysis
b) Have rarely dealt with a component database of more than a few hundred items. Based on our observations of their reports their ability to manage component data is weak, in part because of software limitatiuons
c) Are using an Excel-based template that they can use in house that is not appropriate for their clients to attempt to use
d) Are completely unaware of the existence of the standard financial reporting protocols for financial projections that have existed for more than 100 years. No two reserve providers produce reports that are even similar in content or format and often exclude significant capital activities because it does not meet the arbitrary limitations of their "four part test"