A 450-home master planned community replaced all of its roofing with a lifetime-guaranteed product that, unfortunately, failed within a decade. The manufacturer of the roofing product honored its warranty by replacing the roofs with more of the same product which also failed. As roofs continued to fail, they were replaced with an entirely different product. The result: some homes now have their third roof, and nearly all roofs in the community are a different age.
As we initiated a reserve study for this community, we recognized that long-term planning for roof replacement across both warranty and non-warranty scenarios would be incredibly complex. Basically, how do you effectively account for a mixture of roofs replaced by at least two different manufacturers with different warranties? And how could we tackle all of this complexity while still keeping reserve study fees low?
Using our specialized software, we created two different tracks for each roof, with two different life assumptions for every roof within the community. The first life assumption envisions that all roofs will fail in the relative near term which would be within the warranty period covered by the manufacturer and only reflects replacement costs not covered by the warranty. The second life assumption foresees that all roofs will reach their full useful life (30+ years) which would be beyond the warranty period and thus reflects full replacement costs. This solution addresses the complexity of the situation by ultimately providing a rolling, pro-rated, easy-to-understand prediction of the community's financial obligations to each roof.