CREJ

Page 10 — Property Management Quarterly — April 2020 www.crej.com Perspective I magine walking into this sce- nario on your first day at a new asset: an intuitive filing system that reveals the man- agement agreement within a few mouse clicks; a general led- ger that leaves no questions upon audit; a mechanical room that looks brand new. By now you probably have a great feeling about the rest of the property. Your predecessor ran a tight ship, right? As managers we often, unfortu- nately, are reacting to the latest fire drill thrown our way. Rarely do we have the opportunity to step back and implement proactive measures to alleviate pressures of the unfore- seen. Introducing new guidelines will shift team thinking toward proactive reactions. When policies and procedures are established and teams are educated, they are more likely to follow and maintain the new guidelines. Check in with team members: do they understand their role in the process? Have them explain it to you. When that unfore- seen situation arrives, team mem- bers with a clear understanding of their responsibility are more likely to remain even keel and execute the plan properly. Tenant engagement is crucial to a smooth operation. We all have that tenant who refuses to follow the new policy. You have sent com- munication about the procedure more than once. Perhaps they do not understand the need. A phone call to the tenant explaining the consequences of deviating from the procedure may point them in the right direction. Tenants respond to consistency and structure. When management does not enforce policy or makes excep- tions, tenants tend to become com- placent or relaxed in their reaction to the request. Soft skills are crucial when enforcing policy. As cliché as it sounds, ten- ants need to understand the reason. If they feel heard in the conversation, engage- ment will occur organically. They may even become an ambassador within their company to hold oth- ers accountable. How can a forward-thinking frame of mind be applied to the asset itself? Schedule recurring inspections and communicate find- ings with key vendors. Create an inspection checklist. What is man- agement looking for? Engineering? Enlist major vendors to join inspec- tions. Forecasting upcoming preven- tative maintenance and presenting estimates accordingly will alleviate concern among ownership teams that maintenance is being deferred. This also allows the team to build a complete and comprehensive operating and capital budget. When these conversations are presented to investors, it allows them the opportunity to create a narrative for the asset. Will funds be appro- priated for proactive measures, or will they fix up on failure? Depend- ing on the intention for the asset, investors will expect a budget to include preventative maintenance throughout the building. Vendor partners can provide budget esti- mates for preventative measures and explain the potential conse- quence of deferred maintenance. Routine inspections of the asset are one step in the quest for pre- vention of failures, but what about administrative measures? Con- sider a schedule for routine audits. Tenant contact lists, access cards, contracts and tenant/vendor insur- ance are easy to track and maintain when audits become repetitive. Tenants are likely to have fewer revisions when audits are per- formed frequently; it also provides a positive image of the management team through the lens of the ten- ant. Sending monthly rent increase reminders is a simple way to avoid an awkward conversation when rent is short paid. This courtesy cre- ates a touchpoint for management to strike conversations with ten- ants. This same proactive approach can be applied to monthly financial audits. While preparing monthly reports and accruals, perform a detailed audit of the general led- ger for the month. Confirm each line item is accurately accounted for. This not only alleviates stress at quarter end and year end but also confirms monthly accruals are accurate. Take this time to review the entire budget each month. Determine upcoming projects and strategize with team members on who is taking lead in which areas. Schedule follow-up meetings to ensure the project will be complete within budget and on time. Should the team see a delta in price or schedule, communicate with the asset manager. Of all duties expected of a man- agement team, creating the annual operating and capital budgets are the most time consuming and typically the most stressful. Within this arena there are many ways to prepare for budget season prior to its commencement. Audit ser- vice contracts and create a list of annual escalations. Based on build- ing inspections and staff meetings, what are the upcoming mainte- nance projects that are needed, and which are a wish list item? Keep track of these as you may need to shave off additional expense and wish list items are an easy target. During monthly review of the bud- get and financials, make notes in your budget of items to review or adjust during budget season. Per- haps you budgeted an item quarter- ly but are accounting for it monthly, creating an unnecessary variance that can be alleviated in the new budget. When it comes time to cre- ating the budgets, you can be more than prepared given all the due diligence performed throughout the year. During your next staff meet- ing, challenge your team – what policies, when properly executed and maintained, will provide an additional layer of guidelines and lessen confusion when a situation arises? s Proactive measures lead to smooth operations Laura Cain Property manager, U.S. office division, Brookfield Properties