Month: December 2014

Budgeting with a plan for one goal!

Budgeting with a plan for one goal!

One of the most important aspects of budgeting is to have a plan and a specific Goal. I’ve outlined a plan below and your 1 Goal should be to run the property within the approved budget year after year!

Your plan should consist of the following steps:

1. Research

2. Prioritize

3. Re-Evaluate

4. Project

5. Present


Research the documents and all line items related to the budget. When must it be prepared? Is there a maximum cap for increases? Does the board treasurer or building owner want to be involved in the process? What does the manager need to know in order to prepare the budget?

Wise managers will have the budget process outlined on the annual plan for the building. They will also know the due dates as specified in the documents and will then work the schedule by backtiming from the due date to the preparation date. Once a preparation date for the manager is reached, backtiming is needed again to review the potential bids, contract evaluations, new services, and board and owner wish lists, etc. that will need to be researched prior to the budget preparation.

Set a goal to have the board approve the budget no later than November 15. That allows homeowners 45 days to adjust their budgets and prepare for a January assessment increase.


After the budget is prepared, the manager should review each of their properties, establishing the time lines for each and scheduling priority order for completion. Hopefully, this is a clear process and the manager can establish a priority list quickly and efficiently. Reminders in Outlook or on tablets and smart phones are helpful with some type of weekly review of the progress for staying on schedule.

Print the year-to-date general ledger for all income and expense accounts and use that information to project the balance of the current year. For example, when budgeting for the rest of the current year and anticipating the remaining grounds expenses, look at the contract price, determine how many months have been paid; how many remain and calculate the difference. Every line item should be clear to the manager and supported by documentation.


Budgeting time is a great time to review the services provided by the building. Just because “we have always done it that way” doesn’t mean that reasoning still applies in 2015. Look at each category critically. Are there available areas for saving money? Are there distinct new needs to be evaluated for the betterment of the building? Does the building need to upgrade? Downsize? Reduce spending? Renovate or re-design? Ask these questions as part of the budget process and be prepared to support your answers. Consider factors such as long term complaints, the economy, and the changing needs of the community in your budget process. Focus again on the common good and the improvement of property values.


Once the current year projections are complete, managers should start calculating the anticipated numbers for the next year. To help streamline this process, managers should have their estimated increases, contracts for the next year, anticipated expenses for wish list items and other information from the budget book. For example, if natural gas expense is estimated to be a 20 percent increase over last year, the manager notes the gas account accordingly, multiplies the projection by 20% and then applies that number as the estimate for the coming year.

Reserve categories need to match the annual contributions established in the reserve study or are updated from the actual experience of the community. If a manager knows of a substantial change, those figures should be adjusted now to help the association keep up with the future anticipated expenditures. Each reserve line item should be reviewed just as critically as each operating expenses line item.


Finally, the approved budget should be presented to the board and/or owner in conjunction with the time…