Following a CAPEX Plan

Reserves and contingencies should align with the capital expenditure (CAPEX) plan developed as part of long-term financial planning. The CAPEX plan outlines the projected expenditure for major maintenance projects, capital improvements, and lifecycle replacements over a specified period. Property managers should allocate funds from reserves and contingencies in accordance with the CAPEX plan, ensuring that resources are available when needed to address planned maintenance and unforeseen emergencies.

If you have a CAPEX plan your should follow it, don’t be tempted to getting into a trading game with leaseholders about which parts to include and exclude – that will lead to very real building maintenance issues in the future. You may very well find that the numbers in the CAPEX are incredibly high, much higher than the levels you have been collecting. This is because, unfortunately , a lot of the industry has decided short term harmony with leaseholders is more important than properly collecting funds to maintain buildings. This is clearly not going to end well in the long-term.