Month: June 2019

2019 SCA National Conference – recap

It was an excellent Strata Community Association national conference in Auckland – I am still recovering from it (in a few senses) a week and a bit later, which is why the delay in posting.

Here’s my top 10 from the week

  1. Bright & Duggan winning the National Strata Manager of the Year award (along with Strata Data). Well deserved accolade, reflecting the hard work of Bright & Duggan and Cambridge, across the Eastern seaboard.
Bright & Duggan winning National Strata Manger of the year 2019 – Chris Duggan accepting the award.

2. Clare Stuart of Bright & Duggan QLD winning the SCA Community Manager of the Year – Rising Star award.

Congratulations also to Cambridge Victoria for their nominations for Strata Community Management Business of the Year – Small and Briana Edgecombe for her nomination for Support Team member of the Year.

Clare Stuart of Bright & Duggan Queensland winning the strata community manager of the year rising star

3. Sir Bob Parker presenting the keynote on providing reassurance in times of need. Very chilling videos and photos of the Christchurch earthquakes.

What Christchurch experienced during that time certainly gives context to how bad times can be, for factors completely beyond your control.

4. Tuesday night welcome event at the Auckland war memorial and an awesome dinner afterwards with colleagues at Baduzzi – must visit if in Auckland.

5. The Impact of Design and Development – Matt Davis from Davis and Davis Architects. Whilst the keynote was quite winded, it was incredibly interesting as I move professionally into wanting to understand how buildings function for the benefit of their occupants. Did you know that design is only 0.5% of the cost of a building’s lifecycle, and operating costs 85%?

6. Getting some exercise in with colleagues and commuting to and from the venue on a lime scooter – lots of fun. Must bring these to Newcastle!

7. Sustainability presentation from City of Sydney. I have been big on sustainability and efficiency for strata schemes for many years – the topic is now a very mature one and front of mind given the introduction of NABERS ratings in the residential space.

It’s less efficient to live in an apartment than a house, which should not be the case.

More green walls and solar please!

Check out this cool article I read yesterday about green walls.

8. Macquarie benchmarking data presentation. The data has been out for a few months but it was good to digest again to understand where we sit as a business versus competitors and where we should push towards.

Attracting, retaining and continually engaging great staff is key – what’s the point in growing a business if you can’t do those things?

Also interesting is the push towards diversified revenues. Strata management companies shouldn’t be in business if they’re only profitable due to disbursements and insurance commissions.

9. Sharing times and a few drinks with friends from NSW and interstate and meeting a number of other industry stakeholders.

10. Getting a better understanding of where we sit as a business versus the industry – Bright & Duggan is a great business (and this is now nationally recognised), but constantly reflects on the way it treats its staff and serves its clients. These two factors are far more key to profitability than bringing on new business or slashing costs.

See you in 2020 (maybe at Griffith too)!

Where’s my money honey – pt 2 – the Capital works fund

Formerly the sinking fund in the NSW Strata Schemes Management Act 1996, the Capital works fund (CWF) is a much better title for the fund from which capital works at a scheme must be paid from. The Capital Works fund is still called the sinking fund in the Community Lands Management Act and in other states.

Budgeted properly from day dot, a scheme should now have little need to raise a special levy for capital expenditure in future years.

The Act (S79) is clear on how a scheme is supposed to budget for its administrative and capital funds:

  1. Account properly for what funds are left in the respective fund at the end of the financial year
  2. Prepare a budget for the coming year’s expenditure:
  3. Assess the levies required to meet the obligations of each fund, taking into account any prior year surplus or deficit in either fund.

Despite the Act being clear as to what is required, adequate budgeting to the CWF is still rare. I put this down to several factors:

  • The 10 year plans being drafted were (and still are in some cases), not worth the paper they are printed on and the budgets inadequate when seemingly expected works arrived (painting, roof works, etc). These have improved across the board and despite being a very cheap report, are of real value when done well and implemented properly.
  • Owners and strata managers fail in their obligation to budget adequately, playing catch-up with special levies when works come about.
  • At brand new schemes, often the initial budget being put forward is inadequate and not based on a plan. This is easily overcome by ordering a plan once a scheme is registered, given there are not less than 2 months before the First AGM must be held.
  • Buildings have fallen into such disrepair due to mismanagement by the strata manager and owners corporation that the owners are overwhelmed and refuse to implement the work they are required to do as they don’t know where to start. This leads to a loss of values and potentially a compulsory appointment of a strata manager by NCAT.
  • Owners don’t know what adequate levies look like as they transpose their experience at one scheme to another, or have been led down a garden path by a developer/strata manager putting forward inadequate estimates (which despite being a breach of the 2015 Act, still happens routinely).

I am not going to go into any detail on types of expenditure that come from the capital works fund, as this relates to the building fabric (which is different at every scheme), however, these are generally the larger ticket items:

  • Painting
  • Roofing
  • Waterproofing
  • Guttering
  • Hydraulics
  • Fire equipment
  • Landscaping
  • Access control
  • Carpeting/tiling
  • Doors / windows

How do we fix these issues ongoing?

  • Get a quality 10-year plan (which must be updated every 5 years) from the likes of Solutions In Engineering – ask questions about the report, particularly for any work in the near future (maybe even obtain a quote to see if the external painting work in 3 years is a realistic cost).
  • Implement the plan – irrespective of what that means to a levy increase. If there is urgent work outstanding, perhaps draw a line in the sand and get the work done asap via a special levy or strata loan so that levies can be made lower once the work is done – e.g. a scheme has $100k in the CWF and has to do a $500k repaint in 6 months. Raise the money over years and the work becomes more expensive and more urgent due to resultant damage – get the work done asap to incur short term pain but restore value.
  • Educate/educate/educate – the CWF pays for the sexy stuff that helps a building look good down the track and compete with newer stock in the market. Owners should understand that putting $1.5k-$2.5k aside each year in this fund (in the case of a new scheme) protects their asset.

As a guide, a brand new scheme (apartments/townhouses) should set aside between $1.3k-$2k per lot per annum, depending on the nature of the building and its specific maintenance requirements.

2019 SCA National Conference – next week!

I can’t wait to head to Auckland next week for the Strata Community Association (SCA) national conference. It’s an action-packed week and a chance to reflect on what we’re doing well and what we can ‘be better’ at (Bright & Duggan’s new leading value).

I have been fortunate enough to attend the last two national conferences and I think this will be the best one yet – not least because it involves a trip over the ditch. I am very excited to be joined by my wife Kylie and daughter Thea, who will make their own fun whilst I am conferencing.

I am looking forward to:

  • Seeing and meeting a number of our interstate friends and business partners (along with more local ones I have barely seen since a move to the Hunter and starting a family).
  • Events at the Auckland War Memorial and the Viaduct.
  • Bright & Duggan NSW (or Cambridge Management Services QLD) winning the Large Strata Community Management Business of the Year award at the gala awards (high confidence – 2/5 chance!), along with three other awards our business/staff are in the running for.
  • Zipping around Auckland on a Lime Scooter.

The conference program is excellent and I’m picking the following sessions as the stars:

  • Macquarie strata Benchmarking report insights.
  • Panel – challenging times for strata managers (featuring our own Chris Duggan).
  • Panel – driving the building defects agenda. I believe that Bright & Duggan leads the market with our approach to defects, which seeks to bring the various parties together for non-litigated outcomes.
  • Providing reassurance during a time of need – presented by Sir Bob Parker, the mayor for Christchurch during the 2010 and 2011 earthquakes.
  • Why utility management is critical for strata managers – I am a big believer that data drives better decision making (or removes a need for decision making in some cases as it presents such a compelling argument). Also moderated by Mr C Duggan.
  • Panel – building a career in strata. I don’t believe (as an industry) that we do an amazing job at attracting and retaining people; concentrating on how we improve at this is vital to long term business success and recognition as a profession.
  • Panel – The right amount of business growth, moderated by our fearless leader Chris Duggan.
  • Keynote – The impact of design and development, presented by Matt Davis from Davis and Davis Architects

I am particularly interested in speaking to people about a blended strata/facility management approach (asset/governance/finances)- I believe this is where the market is going and it’s an area that Bright & Duggan/Cambridge Management Services will lead – particularly in the Hunter!

If you’re going – look forward to catching up there.

Stay tuned for a recap of the event after I catch my breath the week following.