The Challenge
A condominium association preparing its required five year reserve study received an initial draft projecting over $7 million in fully funded needs and recommending $2.54 million in annual reserve contributions. This would have required owners to pay $384 per month—a level the Board believed was unrealistic and based on inflated cost assumptions.
Their Approach
Instead of accepting the consultant’s estimates, the Board took a hands on, market driven approach:
- Requested competitive bids from qualified contractors
- Replaced industry “book values” with actual vendor pricing
- Had contractors inspect the property to provide scope accurate proposals
- Challenged assumptions that didn’t reflect current market conditions
This ensured the reserve study reflected real replacement costs rather than theoretical estimates.
Key Results
1. Major Cost Reductions
Competitive bidding produced dramatic savings across multiple categories:
Total reduction on major items: $2.28 million (43% savings).
2. Overall Reserve Study Impact
Owners avoided nearly $4,000 per unit per year in unnecessary reserve contributions.
Why It Worked
This Board demonstrated that reserve studies are planning tools—not fixed invoices.
By validating assumptions with real bids, they:
- Corrected inflated consultant estimates
- Ensured market accurate replacement costs
- Protected owners from excessive financial burdens
- Increased transparency and confidence in long term planning
Takeaway
Boards can dramatically influence the accuracy and affordability of their reserve studies.
This case shows that when a board challenges assumptions, seeks competitive bids, and insists on real world pricing, the result can be millions in savings and far more realistic funding requirements.
Active oversight isn’t just good governance — it’s smart financial stewardship.
For more tips to make your community smarter and safer, reach out to Melissa Esham, Deeley’s Community Association Advisor. Call or text her today at 410.213.5779.
