Component
The individual line items in the Reserve Study developed or updated in the Physical Analysis. These elements form the building blocks for the Reserve Study. Components typically are:

1) Association responsibility,
2) with limited Useful Life expectancies,
3) predictable Remaining Useful Life expectancies,
4) above a minimum threshold cost, and
5) as required by local codes.

Component Assessment And Valuation
The task of estimating Useful Life, Remaining Useful Life, and Repair or Replacement Costs for the Reserve Components. This task is accomplished either with or without on-site visual observations, based on Level of Service selected by the client.

Component Inventory
The task of selecting and quantifying Reserve Components. This task is accomplished through on-site visual observations, review of association design and organizational documents, and a review of established association precedents.

Component Method
A method of calculating Reserve contributions where the total contribution is based on the sum of contributions for individual Components.

Deficit
An actual (or projected) Reserve Balance less than the Fully Funded Balance. The opposite would be a Surplus.

Effective Age
The difference between Useful Life and Remaining Useful Life. Not always equivalent to chronological age, since some components age irregularly. Used primarily in computation.

Field Inspection
A site visit which includes a visual inspection of all components. In cases where plans of the property are unavailable it would also include the quantity survey.

Financial Analysis
The portion of a Reserve Study where current status of the Reserves (measured as cash or Percent Funded) and a recommended Reserve contribution rate (Reserve Funding Plan) are derived. The Financial Analysis is one of the two parts of a Reserve Study.

Fully Funded
100% Funded. When the actual (or projected) Reserve Balance is equal to the Fully Funded Balance.

Fully Funded Balance (FFB)
Total Accrued Depreciation. An indicator against which Actual (or projected) Reserve Balance can be compared. In essence, it is the Reserve Balance that is proportional to the current Repair/Replacement Cost and the fraction of life "used up". This number is calculated for each component, them summed together for an association total.

Funding Goals
Independent of methodology utilized, the following represent the basic categories of Funding Plan goals:

Baseline Funding -
Establishing a Reserve Funding Goal of keeping the Reserve cash balance above zero.

Fully Funding -
Setting a Reserve Funding Goal of attaining and maintaining Reserves at or near 100% funded.

Statutory Funding -
Establishing a Reserve Funding Goal of setting aside the specific minimum amount of Reserves
required by local statues.

Threshold Funding -
Establishing a Reserve Funding Goal of keeping the Reserve Balance above a specified dollar or Percent Funded amount. Depending on the threshold this may be more or less conservative than "Fully Funded".

Funding Plan
An Association's plan to provide income to a Reserve fund to offset anticipated expenditures from that fund.

Inflated Expenditures
The combined annual expenditures for a given year inflated to reflect their estimated future replacement cost.

Inflationary Multiplier
The number by which the annual expenditure is multiplied to estimate the future replacement cost. If inflation was currently projected at 3%, the initial year multiplier would be 1.00, Next Year 1.03, Next year 1.061, etc.

Methodology
A statement which addresses the procedures and methods used to prepare a Reserve Study.

Minimum Balance
A minimum Reserve Balance established by the client.

Percent Funded
The ratio, at a particular point of time (typically the beginning of the Fiscal Year), of the actual (or projected) Reserve Balance to the Fully Funded Balance, expressed as a percentage.

Physical Analysis
The portion of the Reserve Study where the Component Inventory, Condition Assessment and Life Adjustment and Valuation tasks are performed. This represents one of the two parts of the Reserve Study.

Quantity
The total quantity of each component.

Remaining Useful Life (RUL)
Also referred to as "Remaining Life CRL). The estimated time, in years, that a reserve component can be expected to continue to serve its intended function. Replacements anticipated to occur in the initial or base year have "zero" Remaining Useful Life.

Reserve Assessments
The portion of assessments contributed to the Reserve Fund, also called Reserve Contribution.

Reserve Balance
Actual or projected funds as of a particular point in time that the association has identified for use to defray the future repair or replacement of those major components which the association is obligated to maintain. Also known as Reserves, Reserve Accounts, Cash Reserves, Reserve Fund.

Reserve Study
A budget planning tool which identifies the current status of the Reserve fund and a stable and equitable Funding Plan to offset the anticipated future "major common area expenditures". The Reserve Study consists of two parts: the Physical Analysis and the Financial Analysis.

Special Assessment
An assessment levied on the members of an association in addition to regular assessments. Special Assessments are often regulated by Governing Documents or local statutes.

Straight Line
A formula used to calculate the annual reserve fund contribution for a specific component. Projected replacement cost divided by the useful life equals the annual payment.

Surplus
An actual (or projected) Reserve Balance greater than the Fully Funded Balance. See "Deficit".

Unit Cost
The cost of a component. The unit cost is multiplied by the Component's quantity to obtain the total estimated replacement cost for the component.

Unit of Measure
Refers to the method of measurement applied to a particular component. The following are examples: Square Feet, Lineal Feet, Each, Square Yards, Lump Sum and Squares.

Useful Life (UL)
Total Useful Life or Depreciable Life. The estimated time, in years, that a reserve component can be expected to serve its intended function in its present application or installation.