Residential Management

Under Construction

Index

1. Management
2. The Problem
   1. Developers as Administrators
   2. Management Agencies
   3. Trustees as Agents
   4. The Management Agency Solution
3. The Solution

1   Management

• Are you in a position where you have no idea what the financial situation of your complex is?
• Do you battle to get financial statements from your agency?
• Is there always a fight during trustee meetings?
• Are there many people in the complex who do not pay their dues and the legal costs are just climbing by the month with no visible results?
• Are you thinking of outsourcing the administration of your complex?

If you have answered "Yes" to any one or more of these questions, please read on. If you have answered "No" to all these questions, you are either staying in a private home or you are one of the few complexes with willing and competent trustees. Look after them well!

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THE PROBLEM

You decide to outsource the management of your complex to a company that specializes in it. Expectations are created by over eager people and sales pitches. Very few people realize that in a outsource deal, two companies are forming a relationship in which there are conflicting business requirements. The one looks for Value for Money while the other is looking for Profit - two very opposite goals!

Nobody goes into business to do a bad job. However, these conflicting business requirements, if not understood and managed properly, could cause a premature separation of the partnership and untold stress in both companies. To find a common ground on which to base their relationship without anybody loosing (money and / or face) could be quite a challenge. 

When there is distrust, resources are used to ensure that nobody is cheating instead of finding ways to maximize business profit.

There are many different scenarios with the management of complexes. Some of them include:

1.1   Developers as Administrators

How it normally starts is with the builders / developers taking over the administration of the complex. Sometimes this works well, but sometimes there is a dark side to this.

Some builders / developers use the cheapest material they can lay their hands on, virtually rejects. After completion of the buildings, the builder / developer closes down the business, starts another building / development company as well as a maintenance company that will eagerly (at a fee), fix all the problems their own builders caused in the first place. If they are then also the administrators, they have an open check book to fix all their own problems at additional costs to the owners.

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1.2   Management Agencies

Management agencies vary from people who think a software package is all there is to administration of a complex to financial wizards who have all the answers to the financial questions within a complex.

The last few years these types of agencies have jumped up like mushrooms. Some of them are ethical and do it because they really care about the industry.

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1.3   Trustees as Agents

If you are fortunate enough, you will have the right combination of people to serve as trustees and they will be at the regular meetings looking after the interest of the whole Body Corporate. Alas, this is a scarce scene. Often the trustees like being elected because they can now either look after their own interest or they like the "status" this brings.

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1.4  The Management Agency Solution

Actually there is no best solution. The general guideline will be:

• If you have willing trustees, rather use the Option 1.3. This is the cheapest, you have the most control most importantly the people managing the complex are intimately aware of the problems and opportunities within the complex.
• If you do not have this fortune of having capable and willing trustees, the second best option will be to use outsiders. But BEWARE, companies much larger than a body corporate have burnt their fingers in this outsourcing business by not understanding the rules involved.

If you want to outsource or have already outsourced to an agency and you are not happy with the service you are receiving, it is not the agency's problem. Their task is to ensure that they make a profit for their stakeholders. The Body Corporate's job is to ensure that a proper Service Level Agreement has been drawn up and that a Contract Administrator has been appointed from within their own ranks (normally the chairperson of the Body Corporate) to ensure that the Service Level Agreement is honoured and that regular reports are made available to the Body Corporate.

The Solution

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Last modified: 09/05/07