Effective Age

Effective age is the difference between a component's useful life and its remaining useful life.

It is how old the component behaves, which is not always how old it is by the calendar. A 10 year old roof in excellent condition, with 15 years left of a 20 year useful life, has an effective age of 5.

Effective age is used in the fully funded balance calculation. Each component's share is its current replacement cost multiplied by effective age and divided by useful life. Using effective age instead of calendar age means the benchmark follows the real condition of the property.

When a component is replaced, its effective age returns to zero and its share of the fully funded balance drops with it. This is why percent funded can rise in the year after a major project, even though the reserve balance went down.

Effective age can never be less than zero or more than the useful life. If an inspection finds a component has more years left than its useful life allows, extend the useful life so the two figures agree.

Source: this definition follows the National Reserve Study Standards, published by Community Associations Institute (CAI), explained in our own words. State law can define the term differently for its own purposes.