A sinking fund forecast identifies future expenditures of replacement, maintenance and/or repairs of the body corporate building components, all shared facilities and its assets. It will also take into consideration of any major capital expenses that the body corporate may be planning. Once the future expenditure and anticipated life expectancy of each component are collated the sinking fund contribution amount per annum is identified.
Whilst the Body Corporate and Community Management Act 1997 (QLD) requires all schemes to have a 10-year sinking fund forecast in place, it is best practice to have the forecast reviewed and updated at least every 3-5 years to take into consideration the current market conditions.
In addition, it is highly recommended that the forecast is reviewed and updated when major works, i.e painting, are carried out to establish if future contribution levies are realistic and will meet the needs and demands of the body corporate.
It is important that when preparing this forecast that the consultant engages consults with the committee, members of the body corporate and/or caretaker as they are likely to have invaluable historical information and knowledge of future projects that may encompass capital works.