The STSM act  regulations states certain minimum criteria for a LTMP(Long-Term Maintenance Plan). But what must it look like? Below you will find the answer.

The components as inter-related subsets of a LTMP platform enables the best strategic, tactical and operation capability for managing property infrastructures

The components that embodies the informational needs needs to be considered from a legislative and business perspective . See more details on these perspectives further below 

Taking a leaf from IIMM and ISO55000 and combining it with other international best practices suggest the following framework(document pack):

  1. Asset Register consisting of an asset list that include condition , capital value and life cycle dimensions
  2. Activity register  that is essentially a list all activities that needs to be implemented necessary sustain and maximize the infrastructure .
  3. Financial forecast that is detailed provision or requirements per year and per cycle, as well as key value and costing metrics that informs decision-making and optimize funding and sourcing(contributions) .
  4. Risk profile is a risk assessment per structural item depicting financial implications and failure probability, as it drive funding, activity prioritization,  and negate/minimize cost escalators. Think this is not important…40-60% of your current expenses could have been avoided, if you had a risk profile for your structural items.

There is other aspects such as owner preferences, other compliance standards & legislation , budget constraints  that needs to feature in the whole framework.

The LTMP needs to be revised annually to ensure that it stays current and enable fine tuning to improve further efficiencies and drive predictive capacities. This all translate into cumulative cost gains.

Maybe just a last word. Contrary to the perception that the new STSM act will result in increased cost for property owners, is the opposite actually the reality. With the majority of LTMP that we have compiled in the past years,  have the actual cost base reduced with at least 18%.

That’s it.

For any assistance or comments please email us on plan@propertymd.co.za

 

 

If you have the appetite for more ..hope you do.

Below we  detail the most important informational needs that underpins a LTMP for sectional titles.

Legislative (STSMa) perspective

The acts requirements endeavor to establish a platform  of living standards  and  good financial discipline for residential infrastructures.

  • Forecast
    • 10 year forecast per year
    • Forecast for all major structural items
    • Forecast must include all costs for the 10 year period  for
      • Planned routine, cyclic restorations/renewals and 
      • Unplanned failures and repairs
    • Future planned(cyclic) event costs provision must be carried in a reserve fund, while current planned and unplanned event costs must be carried in the admin fund.
    • Forecast must be based on the condition and relative age and expected life of each item
  • Mandate
    • Only events provisioned in the LTMP can be authorized by the mandated officials.
    • Funds in the reserve fund can only be used for the purpose sated in the LTMP
    • Exceptions needs to be  authorized via AGM decision
  • Audit
    • Auditors must validate that expenses was done in accordance with mandate and the LTMP provisions.
  • Funding
    • Funding via contributions needs to meet the minimum reserve fund balance requirements as specified at ratio  between RF / actual contribution of the previous year:
      • =>100% – No minimum contribution requirement
      • =>25% – Contribution = forecasted current year expenses
      • < 25%. – Contribution = forecasted current year expenses *1. 15%
    • Max contributions increase per year 15%

Business perspective

From a business perspective is the goal simply maximum value at the least cost. Rather than giving you the strategic/tactical/operational view, for this purpose the requirements is best viewed i.t.o the W’s.

What –

  • What is the whole picture , meaning all structural items. As nothing gets done by itself or for free, You accountant will tell you that you want  to minimize guess-work or averaging, as far as possible,when in come to budgeting.
  • what activities  must be done per specific structural item to ensure sustain operations, minimize degradation , maximize life expectancy
  • What is the cost dynamics and in what cycles to inform timeous provision
  • What is the failure propensity as a factor of unplanned breakages/failures

When

  • When must you start budgeting for Planned events & unplanned failures?
  • When must you consider replacement?

Who

  • Who must do what to cater for their information requirements?
  • Who must do what?

How

  • How must calculate funding & contribution requirements that meets business and legislated criteria?
  • How must you schedule activities?

 

For any assistance or comments please email us on plan@propertymd.co.za

 

 

 

Advertisements