Management Budget: How to Build and Approve It

The management budget is the estimate of the expenses the condominium expects to incur in the financial year, allocated among the owners as contributions to be paid. It serves to provide the management with the resources needed before the expenses arise, so the manager can pay suppliers and utilities without going into the red. The budget is prepared by the manager, approved by the meeting and translated into an allocation statement showing how much each owner owes, usually split into periodic installments.

What the budget is for

Unlike the final report, which captures expenses already incurred, the budget looks ahead and estimates the year's costs. Its function is planning: it allows collecting in advance the contributions needed to cover recurring expenses such as cleaning, energy, ordinary maintenance and insurance, preventing the condominium from running out of liquidity. Once the budget is approved, the manager collects the contributions and pays suppliers as the expenses arise.

The items of the budget

• Expenses for common services (cleaning, energy of the common parts, water)
• Ordinary maintenance of systems (elevator, heating, garden)
• Building insurance and other policies
• Manager's fee and management costs
• Reserve for contingencies and small repairs
• Any special fund for resolved works

How contributions are allocated

The budget expenses are allocated among the owners according to the criteria of the Civil Code and the thousandths (millesimi) tables. General expenses follow Article 1123, in proportion to ownership thousandths; expenses for stairs and elevators follow Article 1124, partly by thousandths and partly by floor height; other items have specific criteria. The budget thus becomes an allocation statement assigning each unit its share, then split into installments.

Approval by the meeting

The management budget is approved by the ordinary meeting. The resolution approving the budget, like the one on the final report, requires the majorities set for the ordinary meeting: on second call the favorable vote of the majority of those present representing at least one third of the value of the building is sufficient. Once the budget is approved, contributions become due and the manager may proceed to collect them according to the allocation statement.

Budget, final report and adjustment

The budget estimates, the final report verifies. At the end of the year the manager prepares the final report, showing the actual expenses: the comparison with the budget produces the adjustment. If actual expenses were lower than the contributions paid, the owners have a credit; if higher, they must top up. A realistic budget reduces surprise adjustments and makes management more predictable for everyone.

The fund for extraordinary works

When the meeting resolves on extraordinary works of a certain significance, the law requires setting up a special fund equal to the amount of the works, subject to the possibility, in case of gradual payments to the contractor, of setting it up in relation to the individual payments. This fund is distinct from the ordinary management budget and must be kept separate, so that the sums collected for the works are not confused with routine management.

Mistakes to avoid

• Underestimating recurring expenses to lower contributions
• Not providing a reserve for contingencies and small repairs
• Confusing the extraordinary works fund with ordinary management
• Applying allocation criteria other than those set by law or the tables

Building a realistic budget and a correct allocation statement is faster with software that automatically applies the thousandths (millesimi) tables and links budget, collection and final report. With AmministraPro the manager prepares the budget, generates the installments and compares the estimate with actual expenses for the adjustment. The features are on the /funzioni page and the plans on the /prezzi page.