Elements of an AMP

What is Asset Management?

Asset management is a form of long-term planning, more comprehensive than a capital plan. An asset management plan (AMP) is designed to manage a co-op's capital assets over time, to deliver a desired level of service at the lowest life-cycle cost. An asset management plan is typically grounded in a building condition assessment (BCA) carried out by a qualified professional. An AMP explicitly links a financial plan, the status of a co-op's physical assets (from a BCA), and on-going operations and maintenance practices.

In short, an asset management plan is designed to manage a co-op’s capital assets over time and to answer the question: “How much of our money should we spend on what, and when should we spend it to keep the co-op performing as we expect, at the lowest life-cycle cost?”

1. Engineering Reports

IRC Group is CHF BC's current partner engineering firm and has more than 30 years of experience. IRC can prepare building condition assessments (BCAs) and building envelope condition assessments (BECAs) depending on co-op requirements. IRC staff can offer other kinds of testing and assessment services as needed.

2. Member Input

When developing an asset plan for a co-op, CHF BC wants to hear from co-op members. At the start of the process, we offer co-op members a survey to share their observations of conditions at the co-op and their priorities and goals for the co-op. The AMP team incorporates those comments throughout its work.

We also seek feedback from the co-op board during the AMP drafting process and we schedule a workshop with the broad co-op membership to explain the AMP and the analysis that went into it. We take comments and make adjustments again before issuing a finalized plan.

3. Renewal Schedule

Based on the engineers' recommendations and the co-op members' priorities, the AMP team will create a renewal schedule. This is a schedule of capital works that takes into account what the co-op buildings need, what the members want, and the most effective way of grouping similar or related activities (like window replacements being timed with siding replacement).

The schedule will usually cover a 30-year period, the period covered by an IRC building condition assessment. It will make adjustments for inflation, and consider associated professional fees and taxes. The information from the optimized schedule will link to the overall financial plan for the co-op.

4. Financial Plan

The AMP team will create a cash flow for a period of up to 30 years. There will be two main parts: (1) a set of operating budget projections, and (2) a set of capital budget projections.

The heart of the asset management plan is an inter-linked set of financial projections: operating and capital. These allow the co-op to plan for the future, based on current conditions, anticipated changes in relationships with government (e.g. operating agreement expiries), debt obligations and using reasonable assumptions about future costs (inflation and interest rates).

The AMP team will analyze a client's situation and develop a recommended approach to looking after the co-op's buildings and finances. Sometimes the recommended scenario will include borrowing to supplement reserve contributions. This is a standard approach in business, but not all co-ops will need new debt. The AMP team will look at borrowing as an option on a case-by-case basis, and, if recommended, will forecast when best to look at approaching a lender.

To maximize a co-op's options, we attempt to ensure a co-op's financial position will satisfy lenders and meet the requirements of co-op regulatory bodies.

As always the co-op makes the decisions on how to proceed, but with an AMP it can do so with the information it needs. Plans should be updated every three to five years.

 

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NEXT: Financing