Long-Term Costs (Replacement Reserve)

Long-term costs were named as a defined term in the 2024 edition of E2018. They are opinions of cost for anticipated replacement of building systems and components reaching the end of their expected useful life within an evaluation period the user chooses, typically the loan term or a ten-year hold. They are usually presented in a table, commonly called Table 2 or the replacement reserve schedule, with a line per component showing expected useful life, remaining useful life, effective age, quantity, unit cost, year due and cost by year, and totals in current and inflated dollars.

The table remains an enhancement in the guide's appendix on enhanced due diligence, so including it is a deviation to be disclosed. Routine maintenance and tenant-responsibility items are excluded; inflation is typically applied at a constant rate; and the guide states the table is not a substitute for a community-association reserve study. See the reserve table explained.

Related: expected useful life, remaining useful life, effective age.