Managing the Cost of Services

According to the SCSI and RICS guidance notes, a sinking fund is formed by periodically setting aside money for the replacement of a wasting asset (for example, major items of plant and equipment, such as heating and air-conditioning plant, lifts, etc.). It is usually intended that a sinking fund will be set up and collected over the whole life of the wasting asset while a reserve fund is formed to meet the anticipated future costs of management and upkeep in order to avoid fluctuations, or an anticipated large, one-off increase in the amount of service charge payable each year (for example, regularly recurring items such as external cleaning and redecorations).

Evaluating the Asset

Many commercial leases provide that tenants in commercial property should contribute to a sinking or reserve services fund. This fund is then accessed on an as-needed basis by the landlord for capital works such as the repair or replacement of faulty or end-of-life assets. What this means is that you as a tenant will be asked to contribute to the fund based on the assets that will be managed within your occupied area. We recommend an independent Asset Lifecycle Analysis is carried out to determine your contribution to this fund. Acacia regularly conduct these exercises for commercial landlords and clients occupying full buildings. Our processes and methodologies combine years of industry experience rooted in a deep understanding of Asset Management.

Our team of experts can:

• Compile an asset register of the M&E elements of the building.
• Assess the condition of the assets.
• Draw up a planned preventative maintenance (PPM) programme to identify the required cyclical maintenance and eventual replacement programmes in the next 5-10 years.
• Present a full cost analysis and recommended contribution amount over the next thirty years of the life of a building.

Contribution benefits

• Maintenance costs managed
• Condition of assets is established from the beginning
• Assets are managed consistently