April 2020 – Stratalife

Strata Corporations are self-funded entities and at this time there is no government relief funding available for them to assist in the management and cashflow of their funds.

A Strata Corporations has a statutory duty to repair and maintain its common property in a good and structurally sound condition, which includes cleaning of common areas, maintain adequate insurance policy and provision of essential services (i.e. lifts, security, electricity, gas, and water).

To ensure a Strata Corporations is able to meet its financial obligations, Owners are still required to pay their levied contributions, as approved at a General Meeting.

In some instances, the Strata Corporations can review ways to reduce their expenditure during these times of uncertainty and to assist cashflow requirements.

It is suggested that any non-urgent sinking/capital works should be placed on hold and consideration be given to temporarily cutting the sinking/capital works levy if owners require levy relief (further noting that this will not be possible unless a scheme has adequate savings, and if any works are able to be placed on hold). We recommend that the Strata Corporations undertakes a revision of their Capital Works Fund Plan, to defer all non-essential works for another 2-3-year period. This will provide for an opportunity to catch up, as well as maintain their legal requirements under the Act.

Generally review your contracts, as sometimes a contract is on a rollover, and if the service is non-essential, it may be able to be suspended or services limited if possible.

A breakdown of services considered essential and non-essential for a Strata Corporations is noted as follows (note: other services may be available to the building).

Item	Notes	Action
Strata Management base fee	Contractual cost – no saving to be made, noting that we have an increased workload relating to COVID-19, additional costs incurred which are not recoverable and pressure on parts of our revenue	n/a
Strata – Additional Services	These are costs that are effectively optional for an owners corporation/body corporate	Committee consider undertaking the work themselves (e.g. running committee meetings themselves, preparing agendas/minutes) Lesser costs for meeting Put off non-urgent works
Taxation	Statutory Requirement – unchanged	n/a
Legal Costs	Unless a legal matter is ongoing, these may be able to be delayed (e.g. tribunal action for a breach of by-law) Note that defect statutory timeframes still need to be complied with	Consider whether matter important enough (or possible) to pursue legally and whether there is a requirement/obligation to do so
Disbursements	Must be incurred when owner has only provided a mailing address in relation to levies/statutory notices (e.g. agendas/minutes), as well as operating costs under the Agreement	Owners/agents should provide email addresses to reduce disbursement costs and otherwise discuss with their manager how these costs might be reduced
Software	n/a contractual cost	n/a
Insurance	Required	As always, broker should be working to ensure owners get the best deal. Payment installment or premium funding may be options.
Building Management	Contractual cost	Building Managers are now busier as a result of COVID-19 and are considered an essential service provider. Services delivery may be delivered by alternative means to ensure social distancing. Critical to scheme and resident management.
Security/Concierge	Generally contractual in nature	This should be reviewed case by case.
Cleaning	Essential service – may increase due to extra cleaning required	Cleaners are now busier as a result of COVID-19
Gardening/Landscaping	Possible to reduce cost but ensuring that gardening/landscaping doesn’t get out of hand	Residents could consider undertaking the work themselves, but ensure you notify the insurer of the type of work being undertaken, in order to maintain liability coverage under Voluntary Workers Policy
Fire Maintenance	Essential service	n/a
Fire Monitoring	Essential service	n/a
Fire Repairs	Essential service	n/a
Lift Maintenance	Essential service	n/a
Lift Telephone(s)	Essential service	n/a
Air-Conditioning	Essential service	n/a
Pumps/Irrigation/On-site detention	Essential service	n/a
Access Control System	Essential service	n/a
CCTV	Essential service	n/a
Electrical	Essential service	n/a
Exhaust/Ventilation	Essential service	n/a
Garage Doors	Essential service	n/a
Garbage Compactor	Essential service	n/a
Gym Equipment	Gym should be closed	Costs to maintain equipment/utilities in relation to gym offset
Hot Water Equipment	Essential service	n/a
Locks/Keys	Essential service	n/a
Pest/Vermin Control	Possible to reduce costs by decreasing the amount of sprays completed; not applicable to termite sprays due to warranty	review
Pool (Servicing/Chemicals)	Pool should be closed Nb – Councils still require compliance and chemical/maintenance costs cannot be fully eliminated.	Costs to maintain equipment / utilities (heating/lighting) / chemicals in relation to pool offset
Plumbing and Drainage	Essential service	n/a
Window/Facade Cleaning	Able to reduce cost	Reduce the amount of window/facade cleaning visits NB – if cleaning is required under warranty, ensure that it occurs as normal
Electricity	Essential service	n/a
Water	Essential service	n/a
Gas	Essential service	n/a
Rubbish Removal	Essential service	n/a
Carpet Cleaning	Possible to reduce costs by decreasing number of cleans	Review needs
General Repairs & Maintenance that could pose OH&S (i.e. broken tiles)	Essential service	n/a
Roof/Gutter Repairs & Maintenance	Essential service	n/a
Telephone Expenses (i.e. lift/fire)	Essential service	n/a

In the Lake Macquarie, Newcastle and Hunter area, I constantly hear differences of opinion between owners, committee members, service providers, strata managers and building managers as to what a strata managers role is when there is also a building manager contracted by the owners corporation.

Owners need to be better aware of what they are paying for and whether they are potentially paying for it twice (e.g. building manager should be issuing work orders as part of their fee, however, they ask the strata manager to issue work orders and they charge a fee to do so).

Furthermore, the understanding of what a building manager can and should be doing has changed greatly over the past decade – whereas once they were a cleaner with a tool belt (e.g. caretaker), they are very much now the professional onsite interface between residents, contractors and the strata manager.

We often educate potential and new clients as to who should be doing what. The Strata Schemes Management Act is somewhat vague on the role of a Building Manager and it’s defined as below:

STRATA SCHEMES MANAGEMENT ACT 2015 – SECT 70

Functions of building manager

70 FUNCTIONS OF BUILDING MANAGER

(1) A building manager may, in accordance with the building manager agreement appointing the building manager, assist in exercising one or more of the functions of the owners corporation of managing and controlling the use of common property (otherwise than by the owners or occupiers of lots) and of maintaining and repairing common property.

Noting the above, the scope of what is in the agreement between the owners corporation and building manager is what is important here, however, it’s now better understood what the role of a professional building manager entails:

Item	Strata Manager	Building Manager
Repairs / Maintenance	Administration with strata committee – e.g. approvals	– Issuing work orders – Contractor management (sourcing, insurance, SWMS, Site induction) – Monthly/routine reporting – Arrange quotes for committee review for routine and ad-hoc maintenance
Defects	Advisory/escalationManagement via committee/OC	-Processing / administration of in-unit and common property defects with builder – Escalation of common property defects to strata manager/strata committee where not addressed by builder
Moving	Collect bond if applicable	– Establish process for moving of goods over common property – Manage bookings/lift covers – Inspect common property for any damage
Software / Communications	Use of software for announcements if requiredInvolvement in Whatsapp committee groupIssue communications from owners corporation/strata committeeDeal with owner/committee queries in relation to owners corporation	– Management of Buildinglink or other system – resident database, announcements, – Management internal communications – e.g. Whatsapp cleaning group, committee group – Place signage on site as required – Dealing with all resident queries – e.g. metering, by-laws, approvals
AFSS	Approvals via committeeSubmission to council	– Source relevant contractors – Arrange inspections – Coordinate statement requirements
Site Inspections	n/a	Weekly inspection all common property areas – ensure proper functioning equipment, by-law breaches
Waste	n/a	Ensure functioning of chute/waste room and collection of rubbish with cleaner
Meetings	Manage all OC/SC meetings	– Prepare quotes/reports as required – Attend committee meetings – Potential involvement in sub-committees
Emergencies/out of hours	Provide out of hours contact service	– Provide 24/7 contact service for onsite issues – Attend site if required
By-laws	By-law escalation – e.g. final notice/notice to comply and any formal proceedings – committee action/approval	Manage first action – e.g. direct communication with resident via call/sms/email/in person
Bookings – common facilities	Assist in establishing rules/procedure for booking common facilities, including SC approval	Establish and manage the booking of any common facilities – e.g. BBQ area
Contracts	Execute and negotiate contracts as instructed	Obtain pricing for R/M OC contracts as required – Fire, lifts, pumps, cleaning, gardening, etc)
Budgeting / Finances	Prepare annual budgetsPay all invoicesReport to strata committee	– Assist strata manager with budgeting. – Invoice approval as required
Keys	Take deposits as required	– Issue keys – Authorise keys – Maintain key register
Community / Place making	Advice (insurance, etc)	Facilitate community events and other placemaking exercises
SSMA and other legal requirements	Manage OC compliance with the SSMA and other OC legislation	Be aware of the requirements of the building manager under SSMA and other relevant legislation – e.g. authorisations, timelines, approvals

NB – if BM fails to perform duties, SM steps in and manages at hourly rate if requested.

SC – Strata Committee

OC – owners corporation

About

Andrew Terrell is a 30 something strata and facilities management professional based in Newcastle NSW where he lives with his wife and daughter. Andrew fell into the strata industry over a decade ago and hasn’t looked back. The industry has morphed rapidly since and Andrew believes that the future lies in the successful merging of strata and building management functions – smarter buildings and informed owners and committees.

Andrew runs the Hunter offices of Bright & Duggan and Cambridge Management services – based in Wickham. Bright & Duggan has been a leading provider of strata services for over 40 years and more recently, facilities management services. The group has key sites under management including Hope Island, Magenta Shores, and Barangaroo.

Newcastle and the Hunter are evolving. Larger and more complex communities are being created, needing the involvement of experienced professionals to ensure they operate efficiently and as planned. This is where Bright & Duggan and Cambridge Management Services come in, with turn-key solutions for owners and developers.

andrew.terrell@bright-duggan.com.au

Month: April 2020

Covid-19 – Strata Budgets

Strata Manager VS Building Manager

STRATA SCHEMES MANAGEMENT ACT 2015 – SECT 70

70 FUNCTIONS OF BUILDING MANAGER