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A reserve study (also known as a depreciation report) is a long-range financial planning tool that identifies the current status of the building owners' reserve fund. It also establishes a stable and equitable funding plan to offset the costs of anticipated future major expenditures, such as replacement of roofs and boilers.
The purpose of the reserve study is to ensure that adequate funds are set aside each fiscal year in order for renewal work to be carried out at the appropriate time before asset failure occurs and with minimal financial hardship for the owners.
RDH compiles an inventory of the building's assets, estimates the remaining useful life of each asset, projects the replacement costs in future year dollars, and records these in a cash flow table that displays opening and closing balances in each fiscal year.
RDH’s propriety software for Building Asset Management Services (BAMS) provides dynamic tracking of service life predictions, future cost estimates and reserve fund balances, allowing users to examine multiple funding models.
