Board governance glossary
Definition
What is Reserve study?
A reserve study is a long-term assessment of major common-property components, their remaining useful lives, expected replacement costs, and the funding needed to pay for future work.
What it means in practice
A typical study combines a physical analysis of assets such as roofs, façades, elevators, and mechanical systems with a financial analysis of reserve balances and projected contributions. Boards use it to plan capital work and reduce reliance on unexpected special assessments.
A reserve study is a planning tool, not a guarantee. Conditions, construction prices, inflation, regulations, and project scope change, so the study should be updated at intervals appropriate to the building and local requirements.
Key points for boards
- Inventory major components and estimate remaining useful life.
- Project repair or replacement costs using stated assumptions.
- Compare expected expenditures with reserves and planned contributions.
- Update the study as conditions, costs, and legal requirements change.