Ensure your portfolio has an adequate replacement reserve plan.
Directions:
Step 1: Download the template.
Step 2: Enter Project information:
- Current Year
- Interest Adjustment Date (if unknown, check with your Portfolio Management Officer)
- Current balance of Replacement Reserve Fund
- Annual allocation to the Replacement Reserve Fund
- Inflation Factor
Step 3: Complete ‘Remaining Useful Life of Capital Items’ worksheet
- Capital Item
- Unit #
- Date of Purchase
- Useful Life (information from ‘Useful Life Table’)
- Remaining Useful Life formula (example: year of purchase +useful life – current year = remaining useful life)
- Current Cost (estimated)
- Estimated Replacement Cost (Formula = current cost x inflation factor = inflated cost: Repeated for each year of remaining useful life)
- Estimated Date of Replacement (current year + remaining useful life)
- Annual Need (Total Estimated Replacement Cost for each year) – Transfer yearly requirement to ‘Withdrawal’ column in Cash Flow worksheet.