An asset management plan (AMP) is a long-term plan designed to manage a co-op's capital assets over many years in order to deliver a desired level of service at the lowest life-cycle cost.
An AMP has several elements:
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?"
Asset management is more than a capital plan.
Each generation of plan improves on the last.
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.
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.
Member feedback is especially important in considering renewals of unit interiors.
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.
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.
The table below summarizes the various phases of the planning process and its implementation. Phases B through E correspond to AMP Development and represent the period covered by the contract with CHF BC. If a co-op wishes to move forward with Financing (Phase G), CHF BC can help dealing with preparing a Loan Application and meeting regulator requirements.
Information and Education
The co-op learns about the Renewal Program and decides whether it wants to engage CHF BC to prepare an Asset Management Plan. CHF BC can answer questions to give the co-op the information it needs to make an informed decision.
Application and Intake
The co-op files an application, along with a small fee. The co-op will supply documents to CHF BC (including building plans and any past building studies) so the co-op's situation can be evaluated by the AMP team. If the service is appropriate to the co-op's needs, CHF BC prepare a contract for co-op review.
Signing of Contract
The scope of the Program services will depend on what documentation and history the co-op brings with it, and will be determined in consultation with the co-op. If the co-op signs and returns the agreement AMP services will begin.
AMP Development: Engineering
If a co-op lacks a recent building condition assessment or other recommended study, the AMP Team can commission one from our partner, IRC Group. (If the co-op already has the technical reports it needs, this stage will be skipped.)
AMP Development: Plan and Workshop
The AMP team will use co-op member surveys, engineering reports and other co-op documents to develop a draft asset management plan (AMP). When a draft is complete, CHF BC will send it to the co-op's board of directors for comments, and arrange a Workshop Session. The AMP team welcomes any interested co-op members to attend, to learn about the plan, offer additional feedback, and have questions answered. After the workshop, CHF BC will finalize the AMP.
AMP: Adoption and Implementation
Co-ops generally adopt the plan at this point, including any proposed housing charge increases. What follows will depend on the plan: if major projects or borrowing aren't required, the focus will be on general implementation: ongoing management and maintenance.
If a plan calls for borrowing, the co-op will need to approve a borrowing resolution. At the co-op's request, CHF BC can assist prepare a package to present to a potential lender, which may generate a letter of interest. The co-op must then:
Preparing for major work takes a lot of effort and co-ops will need professional assistance to get good results and meet lender requirements. Co-ops should use a qualified project manager and not rely on volunteer efforts. Lenders will usually also require a quantity surveyor. CHF BC recommends a Homeowner Protection Office publication to learn more: "Managing Renewals Projects in Multi-Unit Residential Buildings".
Ongoing management and maintenance
The importance of regular maintenance can't be overestimated, but carrying out maintenance (and good record-keeping) are beyond the scope of planning services.