How to Prepare an Operating Project? Dues Budget Guide

What Is an Operating Project?

An operating project is a budget document showing the estimated annual income and expenses of an apartment building or complex. The amount of the dues and which expenses will be covered are determined by this project. In short, it is the justification for the dues: the answer to "why do we pay this much in dues?" is written in the operating project.

The Turkish Condominium Law requires management to prepare an operating project containing the estimated income and expenses. This project is presented to the board of unit owners; once approved by the board, it enters into force and becomes the legal basis for the dues.

What Items Are Included in an Operating Project?

A solid operating project includes the following expense items:

• Personnel expenses (concierge/attendant salary, social security premiums)
• Cleaning, maintenance, and repair expenses
• Elevator, heating, and hydrophore maintenance contracts
• Common-area electricity, water, and natural gas expenses
• Insurance premiums (compulsory earthquake insurance, fire)
• Manager and auditor fees
• Reserve fund (repair fund) share for unforeseen repairs

When these items are added together, the annual expense budget emerges; this forms the basis of the dues.

How Are Dues Calculated?

Once the estimated annual expense budget is determined, this total is distributed to the units either in proportion to land share or by the equal-share method. Which method is used is determined in the management plan or by a board decision. To calculate the dues correctly, one must proceed from concrete expense data; applying the inflation rate randomly yields an incorrect result. You can review our dues increase rate calculation guide, where we cover this topic in detail.

Notification of the Operating Project

The prepared operating project must be announced to all unit owners. An owner who does not learn about the project should not face a surprise in the dues. In transparent management, the project is presented to the board of unit owners, approved, and communicated to residents. On a digital management panel, sharing the budget and expense items with residents facilitates this transparency.

Why Is the Reserve Fund Important?

A good operating project allocates a reserve fund (repair fund) for unforeseen situations. In cases such as an elevator breakdown, a burst water pipe, or roof repair, collecting additional dues mid-year is both difficult and creates discord. Setting aside a small share in the budget prevents this trouble.

Common Mistakes

• Not preparing an estimated budget: Copying the previous year does not meet rising costs.
• Not setting aside a reserve fund: When an unforeseen repair arises, additional dues become a burden.
• Not announcing the project to residents: Without transparency, objections and mistrust increase.

Related Topics

We covered the calculation of dues in our dues increase calculation article and the reserve fund for unforeseen expenses in our reserve fund article.

This content is for informational purposes. Preparation of the operating project varies according to your management plan and the specific situation of the building; obtain financial/legal counsel if necessary.