2008 Issue 6

Stretching Maintenance Dollars
By William North

In these days of recession no complex seems immune from the dilemma of available funds falling short of desired expenditures. The Catch-22 of maintenance is that to cut or postpone expenditures may further impair the competitive position of the unit owners in a strong real estate buyers market. The challenge for property managers and board members is to take actions that will yield the best pricing possible in an effort to stretch available maintenance funds to cover necessary maintenance projects. What are these actions?

Specify Your Needs

Every project requires a definition of exactly what needs to be done. This seems obvious but even in these times less than 50% of the requests for proposals our company receives, provide written specifications. When we request specifications, the response "take a look and give your recommendations..." is given with unacceptable frequency. Without specifications, three proposals from three contractors, each based on an individually created specification, will not yield three comparable bids. If the bids are not comparable there is no way of knowing which bid provides the best value.

Best value is obtained by creating one specification which is used to derive the price of all proposals. Price and service presented in each proposal communicates the proposal of choice.

Don't Delay

Successful property managers and board members operate on a minimum of a six month lead time for upcoming projects. Let's look closely at the benefits that are gained through their organization.

Communication:  Simply operating on a long lead time says a lot to a supplier. The act alone communicates the buyer is organized, thorough, prepared and knowledgeable. All of these attributes suggests decreased risk to the supplier. Pricing has little risk premium.

Accurate Budgets:  Association budgets reflect genuine pricing rather than estimates. There are few surprises. An association is not caught short of funds nor do they over allocate funds to a project depriving other deserving projects of completion.

Best Pricing:  Maintenance service is like any other product. Pricing is based on supply and demand. When the supply is high the price is low. When the supply is low the price is high. Maintenance supply is highest (and therefore cheapest) right at the end of the previous service season. The contractor has the greatest uncertainty of demand and is the most eager to sign contracts to reduce the uncertainty of the future.

For summer services the best pricing is available in October through December. Winter projects obtain the best pricing in April and May. The association that makes a purchase decision for a summer project in June or July could be paying a premium for the timing of the purchase.

The benefits of pricing can be extended through the use of multi-year contracts. The goal is to lock in pricing over a longer term with the protection the contractor must meet the rigors of a performance clause to renew the contract.

Sequencing:  Maintenance often requires the coordination of a number of projects which must be completed in a defined sequence. Early planning insures that each trade component can be scheduled in the proper order without delaying the overall project. A common example is accomplishing wood replacement prior to painting to avoid future costly touch ups.

Broadest Choice:  Early commitment allows for the selection of production month from the contractor of choice. The best contractors book up first and the preferred months of production are reserved the fastest. The front of the line has the broadest selection.

In summary, use consistency and timing to the advantage of your association(s). Strive for the best value on each and every project and the reward will be available funds for the completion of a greater number of projects on the association's wish list.  Some associations set-up a calendar for their maintenance projects and preparation, this in turn is considered standard operating procedure for the boards calendar and the process gets passed along from Board to Board.

William North is President of Prime Touch Services. The company provides condominium consultation and maintenance for painting, carpentry and vinyl siding in New England.