A building manager is responsible for overseeing the day-to-day operations of a building or property. Some benefits of having a building manager include:
Maintenance and repairs: A building manager can ensure that the building is properly maintained and repairs are carried out in a timely manner. This can prevent minor issues from becoming major problems that can be costly to fix.
Safety and security: A building manager can help ensure the safety and security of the building and its occupants. This can include implementing security measures such as surveillance cameras, alarm systems, and access control systems.
Tenant satisfaction: A building manager can help ensure that tenants are satisfied with their living or working environment. This can include addressing concerns and complaints promptly, and ensuring that common areas are clean and well-maintained.
Cost savings: A building manager can help identify cost-saving opportunities by implementing energy-efficient measures and negotiating with vendors for better pricing on maintenance and repair services.
Compliance: A building manager can help ensure that the building is in compliance with all relevant regulations and codes, including building codes, fire safety regulations, and health and safety regulations.
Convenience: Having a building manager working for you on or off-site can provide convenience for tenants by allowing them to quickly and easily report issues or concerns, and have them addressed in a timely manner.
Overall, having a building manager can help ensure that the building is well-maintained, safe and secure, and that tenants are satisfied with their living or working environment.
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)
Any strata building is complex. In a single day, there might be a range of issues requiring the input of professional managers and specialist contractors.
The average size of strata schemes has increased dramatically in recent years; whilst 40 lot buildings used to be considered large strata schemes (and contain c. 80-100 residents), it’s now common to see 300+ lot strata buildings, with potentially over 600-800 residents. This isn’t only a Sydney/Melbourne metro phenomenon – it’s an urbanisation issue impacting Brisbane, the Gold Coast, Newcastle, Canberra, Adelaide, etc.
This has changed the landscape for strata and facility management and there are constant calls for higher skill levels than were once required. These communities are complex, have massive budgets and the skills, software and contractors required to manage them are comparable to that required for very large commercial buildings. This is also a time of machine learning and soon we will (hopefully) say goodbye to repetitive/mundane administrative tasks which pain the strata and facility managers of today.
Additionally, strata committees used to be able to do a lot of legwork at a building and it was common to see them made up with people who had time, rather than specific skills. Successful strata committees of today are made up of experienced professionals who have owned in multiple buildings, are experienced and knowledgeable about their obligations and functions in sitting on a committee and know the benefit of solid independent management and advice.
It’s now more common for smaller buildings to have the input of both a strata manager and building manager, as these buildings understand the benefit of an onsite professional and their input in the context of the complex facility which the owners are expected to manage.
The strata manager of the future is a relationship manager and master administrator supported by a well-resourced, technologically abled and specialised head office – they understand that they need to help buildings make good decisions and they arm them with the appropriate information to do so and they ensure transparency, accountability, compliance and process. They are great at communication by myriad means, cost planning and running meetings.
As noted, many of the traditional strata functions are becoming automated, however the role of the strata manager is expanding and diverging into that of the facility manager.
Strata companies with FM capabilities are ahead of the curve, as they understand and have close involvement in:
asset maintenance/management. Compiling asset registers, advising on and arranging routine preventative maintenance.
Community building
Sustainability and energy/water management
Emergency planning and relief/management
Prompt communication with occupants by different means
Focus on building security
Can assist with economies of scale
Defect management
Development advisory – how will people live in the asset?
Ensuring contractors have undertaken work correctly, assessing the payment of invoices
Remote access and management
Ultimately, strata and facility management (in both strata and community schemes) will converge, with most full-service strata companies having an inhouse facilities management business to truly support the strata living experience and expectations of today’s occupiers.
The strata management company of tomorrow (that wants to manage the communities of tomorrow) is well versed in facilities management, with the inhouse skills to manage the building fabric and the ever changing needs of its occupants.
Solar is fast becoming the in-demand sustainability and energy efficiency initiative for strata buildings in the Hunter region.
Once a building has considered and undertaken ‘low hanging fruit’ efficiency upgrades to lighting, HVAC, etc. – solar is generally the next pillar for consideration.
We all know that the climate in the Hunter region is fantastic year-round, with (300) sunny days per year; this, in turn, makes for fantastic solar energy production.
We have helped arrange the installation of solar at a number of buildings we manage and we’ve had fantastic support from the owners and results for the owners corporation in doing so.
Strata buildings in the Hunter, Lake Macquarie, and Newcastle region have features that lend themselves well to the installation of solar:
Flat roofs without plant and equipment, on buildings with a relatively large footprint (there are not many towers in the area like you find in Sydney metro areas);
limited over-shading from other buildings (e.g. commercial buildings like you get in many parts of Sydney) and trees;
Relatively limited demands on common property power – lighting, garage doors, lifts, HVAC – thus a rooftop solar system is generally able to offset this completely;
Payback periods as short as 4-5 years based on current power charges – this will shorten again if rates continue to rise (which they likely will with the closure of power plants);
The indicative lifespan of solar systems of c. 25 years, with very little maintenance;
Ability to reduce demand on the grid, which can be stressed during summer when people are running air-conditioning and other appliances; and
A greater focus on cleaner/smarter energy than there’s ever been.
The process for getting solar on your building is relatively simple:
Strata Committee arranges for assessment by a solar installer (make sure you find one that has done strata work previously). There may need to upgrade to the electrical board and wiring to allow for solar;
Provided the building is suitable (some are not due to the shape of the roof, over-shading, plant and equipment on the roof or the orientation of the roof), competitive quotes are sought based on a suitably sized system for the building.
We suggest having an independent third party such as Sustainability Now or Wattblock (here’s a great white paper that WattBlock did on solar – certainly more informative than this particular blog) – tender the work and give a recommendation (there are so many types of panels and inverters and you want to ensure what you are getting is suitable);
Work out how the system will be funded – special levy or out of existing funds (what has worked well at other buildings is using capital funds to purchase the system and then allocating additional funding in future years to repay the system cost from the savings in electricity in the administrative fund);
Put relevant motions to a general meeting for funding and the addition of solar to common property; and
Once agreed by the meeting, proceed with the work and start experiencing the amazing cost benefits of solar.
Committees and managers should ensure that the solar system is monitored so that you know it’s producing power. There’s nothing worse than having an expensive solar system on your roof which has tripped and nobody is any the wiser. There are now SIM solutions for this at a minimal cost and an alert goes to the strata/building manager/retailer or committee if the system isn’t operating as it should.
There are also some alternate models out there involving leasing the solar equipment and the lessee being able to provide occupants clean power at a discount.
Battery storage technology is getting better year-on-year as well, so there’s every prospect of mating battery with solar to ensure that a building will only draw power from the grid in off-peak periods.
It’s also noted that strata schemes made up of townhouses can likely obtain all the benefits of solar on a per-lot basis (or potentially group together for the installation of a larger system with battery technology – there’s every opportunity for an off-grid development in the Hunter of this type in years to come).
At Bright & Duggan and Cambridge Management Services, we would be happy to have a chat with anyone about the process and the benefits.
I recommend that every owners corporation (or community scheme) takes time periodically to reflect on the way it’s managing its affairs.
This isn’t just going through a process to look at a change of strata managers or building managers (in fact I advocate that people stay with their service providers and try and resolve small differences, rather than move to save a few bucks and lose a whole lot of knowledge in the process).
I have noted a few different areas of focus for a ‘health check’. Some of these are relevant to all schemes, others are overkill for smaller schemes.
Management
Is the current strata and facility management operation optimal – what other options exist in the market (services performed directly or virtually)? What are the costs of alternative services/structures?
What software exists that may be able to improve the running of the community?
Are your service providers professional, value for money and do they know the building/community?
What are the provisions for out of hours/emergency events?
Financial matters
Does the building budget program (which needs to be looked at over a multiple-year period) align with the capital works fund?
Are there possible savings that can be made (contractual or otherwise)?
How does the budgeting process work on an annual and ongoing basis?
How are invoices coded? Are work orders generated from the relevant cost centre?
Governance
How regularly does the committee meet – are these meetings productive (i.e. are issues being resolved or are they ongoing)? Do the meetings align with meetings for other entities of which the scheme forms part (e.g. BMC).
What introduction/guidance do new committee members receive to being on the committee? The Fair Trading Strata/Community Living guide should be required reading for anyone in strata or community title (let alone those who live in a strata scheme within a community scheme!).
Is there knowledge amongst the committee members which should be recorded/held to be accessed if member sells their property or is otherwise unavailable?
Are relevant sub-committees being formed?
Technology/other matters
What technology does the building have available to it to improve the management of the building (e.g. data logging, automated reporting)?
What sustainability upgrades exist – should the community consider obtaining a NABERS rating?
What security upgrades should the building consider?
Would the building be best served with a professional building manager?
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:
Account properly for what funds are left in the respective fund at the end of the financial year
Prepare a budget for the coming year’s expenditure:
The admin fund should be an extrapolation of the PY admin costs (with an escalation for CPI) and any other known contracted costs.
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.
