Strata Budgets: Mapping Out Your Strategic Plan

After reading our previous article, you now know our high-level process when creating a framework for strata councils to develop an annual budget. In this second part, we go more in-depth and discuss how to create a strategic plan. 
 

What is the purpose? 

Everyone must be on the same page when envisioning what the future looks like for the community. The strategic plan only works when the strata work together to establish a clear set of goals and objectives. This involves assisting the strata council in the decision-making process of when and where to allocate money. 
 
The many benefits of strategic plans include:
 
  • Looking beyond a years-long future
  • Obtaining more consistent action from the council 
  • Identifying new ways to allocate resources - such as volunteers or committees
  • Build a strong bond between the strata council and management team
 
Remember that a strategic plan can be elastic depending on outside factors such as community needs and how the local economy is doing. 
From our years of experience, the most important goal for a strata is to yield or increase property values and enhance the community's quality of life. Once the goals are set out, and a plan is made, the strategic plan is now used to look at what the next one, three, and five years look like. 
 
To start, ask yourself the following two questions: 
 

1.) What are the communities' mandatory needs? 

This question is crucial because it determines what exactly a strata council needs regarding necessary maintenance requirements to maintain or enhance property values. An example of a mandatory need would be regular maintenance on an HVAC system, which would need proper planning at the start of the budgeting year. 
 

2.) What are the communities' discretionary needs?  

Discretionary needs go beyond mandatory needs and are often what strata councils decide will make the strata look better aesthetically and build other desired added amenities. For example, having an assortment of bright, colourful flowers with a neatly painted entrance is more of a cosmetic sight than necessary. The general thought is that maintaining an ageing infrastructure is more important than taking on new landscape projects. 

 
Create a master projects list based on the above for a detailed discussion to estimate the financial impact of each item and determine the order of importance based on priority drivers and a point system, as shown below:
 
 
Order of Importance Priority Driver Weighting
1 SAFETY 20
2 COST 18
3 CURB APPEAL (AGING LANDSCAPE OR DESIGN ELEMENTS 16
4 REQUIRED ANNUAL MAINTENANCE 14
5 REQUIRED SCHEDULED PROJECT 12
6 REQUIRED UNSCHEDULED MAINTENANCE 10
7 REQUIRED UNSCHEDULED PROJECT 8
8 UNREQUIRED UNSCHEDULED MAINTENANCE 6
9 UNREQUIRED UNSCHEDULED PROJECT 4
 
After prioritizing the strata's projects, evaluate current services and define which are required vs. those that can be eliminated. Account for your available resources when determining services that must be outsourced vs. those that can be effectively absorbed by your management company, sited-staff (if possible) or resident volunteers.
 
The final stage is implementation. Incorporate the plan with your reserve study and also into your operating budget for the next one, three and five years.
 
Remember, a strategic plan will assist the strata in fulfilling its fiduciary duties to the community. By going through the strategic planning process, you identify the community's goals to keep the big picture in sight while examining the details. Failing to plan your budget correctly could put you at risk for reduced services, decreased property values, special assessments and having an underfunded replacement reserve plan.
 

Want to read more articles like this? Join our mailing list and we’ll send them right to your inbox! Simply fill out the form below: