The Long and Short of It: Choosing the Right Funding Horizon for Your LTMP

“Why did our contribution jump by almost a third this year, when nothing on the building has actually changed?” It’s one of the more common questions body corporate committees ask when reviewing their annual budget, and more often than not, the answer has nothing to do with a new problem with the building. It comes down to a single design decision buried inside the maintenance plan itself: the funding horizon.

What is a funding horizon?

A funding horizon is the length of time a Long-Term Maintenance Plan looks ahead when calculating how much needs to be collected from owners each year. Establishing a 10-year funding horizon is common practice, and it means that only major maintenance expenses scheduled to fall within that 10-year window are factored into the annual contribution calculation. Anything scheduled to occur beyond the horizon is left out of the calculation entirely, even if it’s due to happen just one year later, once the horizon rolls forward.

In practice, this means a major roof replacement scheduled for year 11 has no influence at all on this year’s levy, while the same job scheduled for year 9 is fully funded within it. Nothing about the roof has changed, only which side of an essentially arbitrary line it happens to fall on.

The case for a funding horizon

There are good reasons a shorter funding horizon has become such common practice, particularly for committees who want contributions that feel manageable and relevant to what’s actually coming up:

• Lower, more digestible contributions: because only near-term costs are counted, annual contributions tend to be lower than under a full life-cycle approach, which can be an easier sell to owners.
• Estimates you can trust: costs 10 years out are considerably easier to estimate accurately than those 25 or 30 years away, where material costs, construction methods, and even the assets themselves may look completely different.
• Relevance to today’s owners: apartment owners often turn over well before the building’s lifespan is up, so a shorter horizon keeps contributions focused on works current owners are actually likely to see and benefit from.
• Simplicity: a shorter list of near-term projects is easier for committees and owners to understand and scrutinise than a sprawling 30-year schedule full of highly speculative long-range estimates.

The trade-offs

None of this comes for free, and the drawbacks of a funding horizon are just as real as the benefits, even if they’re less visible until they arrive:

• The cliff-edge effect: because the horizon is a hard cut-off, large expenses can appear to come out of nowhere the moment they roll inside the window, even though they were always going to happen.
• Reduced predictability: contributions can move up and down more sharply from one year to the next as big-ticket items enter and leave the funding window, making budgeting harder for both the committee and individual owners.
• Risk of under-collection: if a large expense sits just beyond the horizon, the fund can look healthier than it actually is, right up until the year it isn’t.
• Questions of fairness across owners: a shorter horizon can, in effect, shift some of the cost of the building’s full life cycle onto future owners, rather than spreading it evenly across everyone who benefits from the building over time.

The alternative: funding for the full life cycle

The alternative approach is to model contributions against the building’s entire remaining life, factoring in every capital item over its full useful life rather than a rolling window. This tends to produce smoother, more predictable year-on-year contributions, because large expenses are effectively pre-funded well in advance rather than causing a spike the moment they enter a shorter horizon. The trade-off is that near-term contributions are usually higher, since owners are, in effect, partially funding items that won’t need attention for twenty or thirty years, and the plan carries more assumptions about far-future costs that are inherently harder to pin down with any real confidence.

Finding the right approach for your building

There’s no single right answer here, only the right answer for your building, your owners, and your committee’s appetite for volatility versus certainty. Worth weighing up: your building’s age and how much major capital work sits just beyond a shorter horizon, typical owner turnover, and how comfortable your committee is asking for a bigger contribution today in exchange for a smoother, more predictable ride tomorrow. Because the decision has such a large impact on what owners are asked to pay each year, it’s one worth revisiting periodically rather than setting once and forgetting.

Seeing the impact before you commit

This is exactly the problem Commonview’s new Funding Horizon feature was built to solve. Rather than manually rebuilding a plan to test what would happen under a different horizon, previously a task that could take days, Commonview lets committees and professionals adjust the horizon and rebuild the entire 30-year plan in seconds, instantly showing the effect on annual contributions, funding stability, and long-term risk. A committee weighing up a 10-year horizon against full life-cycle funding, or anything in between, can see the real numbers for their own building before making a decision, rather than relying on generic guidance or guesswork.

So, in a nutshell…

A funding horizon isn’t right or wrong, it’s simply a lever, and one that has a bigger effect on your annual contributions than almost anything else in your maintenance plan. A shorter horizon keeps contributions lower and more focused on the near term, but trades away predictability and can quietly build up risk just out of view. Full life-cycle funding smooths that volatility out, at the cost of higher contributions today for benefits owners may not see for decades. The best approach is the one your committee chooses deliberately, with the numbers in front of it, rather than the one it inherits by default.