Top 5 Tools for Managing Renovations

Real Estate portfolios strive to increase asset value by pursuing renovations and other strategies. Yet the tools available to manage such strategies haven’t changed dramatically even as technology has continued to evolve. To understand the pros and cons of the various available tools, one needs to understand the key criteria considered to renovate. Then, one […]

Real Estate portfolios strive to increase asset value by pursuing renovations and other strategies. Yet the tools available to manage such strategies haven’t changed dramatically even as technology has continued to evolve. To understand the pros and cons of the various available tools, one needs to understand the key criteria considered to renovate. Then, one can analyze the most popular software tools against these criteria.

The decision to renovate is typically financially driven and can be determined looking at the expected revenue gains and costs versus not renovating at all. Given that renovations require a unit to be vacant, a company must manage their renovation schedules to minimize vacancy loss within reason. If not paying close attention to all of the activities required to be coordinated between staff and suppliers / contractors, renovations can easily drag on much longer than expected, resulting in higher costs and greater challenge in meeting the financial goals.

With this in mind, we provide what is believed to be the most important criteria for evaluating a renovation software tool/solution:

  • Does it track financial performance of the renovations over time?
  • Is it user friendly and intuitive?
  • Does it allow for easy data collection (including pictures) for efficient reuse for future tasks?
  • Does it enable efficient collaboration with suppliers and staff?
  • Does it provide execution insight allowing for proactive decisions to save money and for ensuring critical tasks are completed?

Renovation Tool Criteria

Financial Performance Tracking

When undergoing any investment, it is critical to understand whether the investment is projected to miss or meet/exceed target thresholds. After all, if the investment is not going to provide sufficient returns, why invest.

Once the investment is made, it is important to know how it is progressing in comparison to projected financial goals. Getting financial performance information in a timely manner is critical when assessing progress. This is critical decision-making insight to know if and when to accelerate or decelerate the renovation schedule!

Familiar Tools

Whenever staff uses new or unfamiliar tools, they experience a challenge in learning or relearning how to use them; regardless, how simple and user friendly they are. Understanding how to use the tool within your process is often what creates the most confusion. The easier the tools are to use and the increased frequency the staff uses them, the more successful the staff will be at using the tools efficiently and effectively during the renovations.

Easy Data/Picture Collection and Re-Use

When using multiple tools that require separate data entry (e.g. inspections, fixed asset, procurement/invoicing, work orders, etc.), the extra steps required to enter data will either not be done or be completed late with user frustration. The more data a single tool can collect and allow for reuse over the renovation process, the happier and more effective/efficient the staff will be.

Collaboration

Many tools are online and allow for the sharing of information among staff and suppliers / contractors. Sharing is great, if it is done with the right people at the right time and it positively impacts the renovation process. Iterations are common and expected in the renovation process to ensure the right work / product is used to achieve the desired financial goals. This collaboration in creating critical transactional documents is a must to ensure the process continues to move forward and baselines are defined efficiently; after all, time is money.

Save Money, Manage Tasks

At the end of the day, it’s all about the money made and the money saved. Generally, if the tool is helping you to operate more efficiently and make better (and timely) decisions, it is going to be helpful for you. So, understand the insights the tool can provide during the renovation process that allow for timely and accurate decisions.

Potential Solutions

Excel on PCs

The spreadsheet was truly a great invention. Some argue, that it was the killer app for the IBM PC – who could argue with that. You could make calculations, sort and summarize data, and figure out answers to questions in an order of magnitude faster than you could before.

Pro’s

  • Exists, old, familiar and predictable – comfort zone
  • Very flexible in creating different financial models
  • Can track both financials and tasks

Con’s

  • Challenging to share with version control issues
  • Difficult for many people to understand the model
  • Lots of work to keep up with data entry
  • Managing large projects is inefficient and difficult
  • Mainly supports financial modeling of the process

Online Spreadsheets and Databases (Excel Online, Google Sheets, Smartsheet, etc.)

Microsoft has versions of Excel available online, so users can collaborate on or share a spreadsheet. Similarly, Google has Google Sheets which allow concurrent collaboration on an online spreadsheet. Smartsheet has gone beyond that with more complex versions of online spreadsheets.

Pro’s

  • Somewhat flexible in creating different financial models
  • Can track both financials and tasks
  • Allows for sharing across different internal groups

Con’s

  • Can share data within the team, but less flexible in creating controls over who can see or do what when sharing outside of the core team
  • Unique to each effort taking a lot of work to build and maintain the system
  • Lots of work to keep up with data entry
  • Managing large projects is inefficient and difficult
  • Mainly supports the financial modeling of the process

Online Database Software (Airtable, Ragic, Zoho, etc.)

Online databases such as Airtable, Ragic, Zoho, and others allow organizations to create forms tied to database tables in an online database.

Pro’s

  • Can track both financials and tasks
  • May be easier to update using data from other systems
  • Easy to collect information and present current results

Con’s

  • May not to support all of the calculations needed
  • Unique to each effort taking a lot of work to build and maintain the system
  • Managing large projects may be inefficient and difficult

Construction and Project Management Software

From task software such as Asana and Trello to construction software such as Procore, Sage 300 Construction and Real Estate and Plangrid, these solutions help manage the tasks associated with the renovations. Some of them even provide extensive financial tracking as well.

Pro’s

  • Built to handle very complex projects
  • Construction software can track both financials and tasks
  • Provides a collaborative environment for staff and suppliers
  • Rich feature set for extensive construction projects

Con’s

  • Can be complicated to use, and may not be used regularly by staff
  • Can be expensive
  • May take a lot of work and cost to configure to incorporate with your process
  • Typically, a separate system requiring large efforts to maintain with data entry

Comprehensive Real Estate Renovation Software (like FacilGo®)

Renovation tools / solutions for the real estate industry are typically a potpourri of various applications such as Excel and real estate specific modeling tools that require data re-entry and manual updates to assess progress.

Pro’s

  • Uses features built into the operational process minimizing data entry and user unfamiliarity
  • Specifically built to handle renovation projects
  • Can track both financials and tasks
  • Provides a collaborative environment for staff and suppliers

Con’s

  • May be a system that you are not currently utilizing

Conclusion

Being able to model and track the renovation process to understand progress toward achieving defined goals is paramount to the tool / solution selected. Providing a single comprehensive solution (versus disparate tools) that is familiar and easy to use by your staff allowing them to easily capture and reuse data supporting continuous collaboration with your suppliers / contractors enables efficiency and proactive insight to the renovation process. Keep in mind that this renovation tools evaluation assumes you were pursuing a large multifamily renovation project (or renovation projects on a substantial number of single-family homes). Be aware, there are many tools available in the market for managing the renovation process beyond spreadsheets. The importance of each criteria for your organization will be different than other organizations, but evaluating the available options against those criteria will help you better understand which tool / solution best meets your needs.

About the Author: Ken Murai

ken

Ken is the founder and CEO of Facilgo, Inc., a property maintenance platform and supplier marketplace. The system guides property management operators through inspections to invoices and helps suppliers to work more closely with their customers.

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Top 5 Turn Issues and How to Solve Them

What a Summer!! Turns are behind us and now, it’s time to assess what we did, how we did it, and how we can improve the process and resident experience for next time. Here at FacilGo®, we experienced a lot with property managers over these last few months and wanted to share some of that […]

What a Summer!! Turns are behind us and now, it’s time to assess what we did, how we did it, and how we can improve the process and resident experience for next time. Here at FacilGo®, we experienced a lot with property managers over these last few months and wanted to share some of that knowledge. We’ll share the insight to various methods customers used to solve such issues as:

  • Sharing inspection information to drive turn activities
  • Sending orders to your suppliers easily and accurately
  • Ensuring turn expenses are on track and within budget
  • Coordinating work amongst suppliers and staff
  • Capturing resident charges for damages

While these issues are much more difficult to solve within the student housing market, all property managers experience some degree of frustration with their turn process.

Sharing inspection information to drive turn activities

When you find a problem during an inspection, it usually leads to some sort of action. Perhaps your staff can fix the issue. Possibly, there are services and supplies required from a supplier and maybe you need to charge the resident for damages. Each of these resulting activities require your staff to take action based upon the inspection results. We’ve seen property staff execute inspections then separately regenerate the data to send to suppliers or service vendors. The efficient ones use solutions that allow them to reuse captured inspection data to either purchase an item or task a service supplier. Turn season is very hectic, but fortunately there are different approaches to support the process; each with its own set of pros and cons.

Sending orders to your suppliers easily and accurately

Your inspection results reveal if it’s necessary to buy supplies or task a service provider to perform work. Perhaps a ceiling fan needs replacing or carpet installed or an apartment needs cleaning. From here, your staff needs to figure out which ceiling fan, what supplier, how much should it cost, and when should it be delivered. We’ve seen dog eared catalogs and sticky notes with prices to help people through this process. It’s great information, but it also requires a bit of planning, research and data entry. If your staff is relatively new, getting them to do the right thing takes a lot of oversight which nobody has. But if you use an integrated solution that guides the staff through the process, the results could be different.

Ensuring turn expenses are on track and within budget

Turn activities ramp up quickly, and it is often difficult to track the cost associated to each unit turn. Knowing whether turn tasks are performed within budget is even more difficult. The only way to know is to compare your estimated turn costs against your budget before your committing. Without providing your team access to this information, it is difficult for them to make the right decision. We’ve seen some companies try to address this challenge by creating massive spreadsheets with links to different standardized products and services. Populating these spreadsheets can be partially done with data from the property management system, but also requires a lot of manual updates. Again, integrated turn boards can automate such processes, but only if the company is using an integrated maintenance and turn solution.

Coordinating work amongst suppliers and staff

Allocating work to service suppliers, knowing when they are doing it, and when it is done, requires a high degree of coordination. Sometimes, suppliers are told conflicting directions which causes delays, unnecessary costs, and extra effort. Keeping the entire team (staff and suppliers) up-to-date on what is being done is challenging but can be accomplished by having information online where people can easily view the data. The importance of real time information is increased when large amounts of work is needed in a short amount of time. Sometimes with a spreadsheet or a PO-based process, tasks might be repeated for the same unit across multiple days. We’ve seen non-necessary orders verbally communicated to suppliers due to miscommunication amongst the property staff. Turn season is hectic, and can be even crazier if the staff is not using the same information.

Capturing resident charges for damages

After the turn is completed, you still need to assess charge backs to residents for the damage they caused. We’ve seen some companies not charge back residents due to the difficulty of conducting an efficient process. Many state ordinances require a high level of documentation if you are to charge residents, and compliance to such laws can be more time consuming than it is worth if relevant documents (invoices, pictures, work orders, inspections, etc.) cannot be readily accessed when creating resident charge back statements. The key is accurately capturing charges at the time of inspection, being consistent across your portfolio, and easily consolidating all charges with pictures in a single document pushed to your accounting system to support the resident security deposit discussion.

Different methods to help your turn needs

  • Paper + spreadsheet processes: Inspections are done on a paper form. Orders are phoned in and typed on a spreadsheet for required supplies. Invoices are typed into the accounting system. Turn schedules are kept in a spreadsheet. Sometimes, spreadsheets offer cost and scheduling data.
  • Pros:

    • Familiar process to both old and new employees
    • Flexible, in that personnel have the independence to use whatever means to get the job done

    Cons:

    • Very labor intensive. Requires extra manual effort typing and tracking information.
    • Error prone. Due to the human element of typing information, errors of omission, or typos can cause coordination problems. The same work can be done and charged multiple times.
  • Non-integrated application + spreadsheet processes: Often, companies work on solving individual parts of the turn process. Applications from their existing software providers or single function applications are added in a piece-meal fashion to make incremental gains to existing processes.
  • Pros:

    • Leverage some technology to replace manual effort
    • Can be implemented incrementally
    • Better ability to enforce processes

    Cons:

    • Labor intensive. Requires extra work typing and tracking information as users navigate between separate systems.
    • Costly. Purchasing, managing and training separate non-integrated modules and applications is more expensive and time consuming.
    • Typically, no data transformation from inspections to turn matrices or work orders or purchasing or charge back capture occurs.
  • Integrated solution process: Using a next generation solution that supports the entire maintenance and turn process can provide greater options to those companies trying to break out of the pack.
  • Pros:

    • Easy to implement, train and support since users are guided through the process and turn matrix information is automatically updated.
    • Can be implemented incrementally instead of all at once.
    • Very efficient. Work orders (service requests), orders and resident charge back information can be created based upon inspection results, so staff does not have to think about what to do next or retype data and all transactions are tied together.

    Cons:

    • Next generation functionality is not currently provided by the big-name property management software companies, so if you are only comfortable working with them, this option is not available to you.
    • Staff may be reticent to change from familiar processes.

About the Author: Ken Murai

ken

Ken is the founder and CEO of Facilgo, Inc., a property maintenance platform and supplier marketplace. The system guides property management operators through inspections to invoices and helps suppliers to work more closely with their customers.

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Implementing Beneficial Software Is Easy with the Right Partner

The world is changing much faster than ever before, and those companies that are not continuously improving run the risk of being left behind. New software systems can provide more efficient ways to operate your business by integrating each step of the process (e.g. your inspections, work orders and purchase orders can be presented on […]

The world is changing much faster than ever before, and those companies that are not continuously improving run the risk of being left behind. New software systems can provide more efficient ways to operate your business by integrating each step of the process (e.g. your inspections, work orders and purchase orders can be presented on a smart turn board as you work through your turn process, and your fixed assets can automatically be populated based upon your purchases). Such integrated process systems can provide extraordinarily positive results in efficiency and process compliance through the presentation of better and more timely information, easier and more efficient methods of getting work done, and allowing you to do things that weren’t possible in the past. The trick is to find the right solution and provider that will help you be successful as you make the switch and grow as times change.

Implementing new software can be scary, but it doesn’t have to be. Newer systems are much easier to use than older systems. When you implement new software, you can retain your existing processes, or choose to make improvements become more efficient. In addition, some software platforms provide training and support to help you implement the solution, but not all do so make sure this is a benefit that your prospective partner provides.

Looking at software innovations over the years, we see examples of how various systems positively impacted how we work. The inventions and improvements to Graphical User Interfaces, browsers, spreadsheets, and accounting software have changed the way we work so dramatically, it’s hard to imagine working without them. In that same way, in our world of property management, recent improvements to software and technology have created efficiencies that have streamlined our operations dramatically.

For example, if you currently need to enter data into your inspection, work order, purchasing, fixed asset and/or turn board modules separately, a new software can automatically leverage data from one module to the other, eliminating multiple inputs while you use each module. Sometimes, you don’t even realize the compromises you make by not upgrading your software. You don’t know what you’re missing.

  • Process Management and Collaboration Software:

    Many processes are performed to support a businesses’ underlying operations. Within Multifamily, software helps us lease units, process payments, perform service requests/work orders, track purchases, manage turns, etc. Before such software existed on the web, teams of people had to do a lot of extra work to provide information to the corporate office. Information wasn’t always readily available. Separate systems were needed to run various processes. Trying to pull together the history of repairs and purchases for any given unit required translating data from multiple systems and possibly involved sitting down with a box of old invoices and transposing data to a spreadsheet. Today, it’s possible to collaborate among staff and suppliers on repairs, to enforce standards, and to optimize business processes, so operations can be done with fewer people at higher quality in less time.

  • Marketplaces:

    While most people know about Amazon.com for their personal purchases, marketplaces also provide incredible efficiencies to businesses. They allow companies to purchase items at their contracted prices, encourage the purchase of standard items by staff, and enable the enforcement of proper budgets (GL codes) and approval processes.

Some software platforms, such as FacilGo®, comprehensively cover an entire process such as turns and maintenance and enable collaboration between staff and suppliers. These platforms may be much better than what you are using today; however, justifying the switching cost is the real question. In order to determine if a platform change is worth the cost of change, you need to review several factors:

  • Does your new platform allow you to implement your ideal process ?

    If a software platform is dictating how you run your business, that is a problem. Sometimes, you don’t even realize the compromises that you’ve had to make for your software. For example, are you having to enter data into your inspection, work order, purchasing, fixed asset and turn board systems separately, or does your software automatically update each of them while you are using each module?

  • Are their software modules easy to setup and configure?

    If the new software requires you to perform a lot of configuration and setup, it probably won’t get done. On the other hand, if the software allows you to pull and push data from your existing systems to be setup and the software provider helps translate your current documents and processes into their platform, then it will take you very little effort to have the system up and running. Make sure the setup process is easy, or else you’ll never be able to get the process off the ground. Consultative support is critical to ensure successful deployment and use.

  • Will the software provider help you train and support your staff?

    Not all organizations have staff set aside to help train and support the implementation of new platform modules. Whether your software provider has such resources available to provide training or not, this needs to be considered if and when to implement a new software platform. After all, if staff is not available to train and support a platform, the software implementation is will fail.

Let’s face it. Some software providers try to support their customers more comprehensively than others. Just because software new modules are available from your current property management provider, it doesn’t mean that they are the best solution for you. Consider using an integrated process software provider that offers a more comprehensive, focused, consultative level of service and solution. If you implement a new software platform, you have the opportunity to greatly help your organization with vastly better capabilities than they have today. Take a look at potential solution providers, and work with those that provide the highest value, become one with your team, and make the process as simple as possible. A strong solution provider and solution with key services translates to a more successful implementation and makes the “leap” of change less risky and scary.

About the Author: Ken Murai

ken

Ken is the founder and CEO of Facilgo, Inc., a property maintenance platform and supplier marketplace. The system guides property management operators through inspections to invoices and helps suppliers to work more closely with their customers.

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FacilGo® Recognized As Top 20 Most Promising PropTech Solutions of 2019 by CIOReview

We are thrilled to announce that FacilGo® has been recognized by CIOReview Magazine as one of the “20 Most Promising PropTech Solutions for 2019.” FacilGo® is the only property maintenance and turn solution that guides staff through procedures and purchasing based upon their inspection and work order results.The joining of new technologies, insights and business […]

Proptech_LOGO

We are thrilled to announce that FacilGo® has been recognized by CIOReview Magazine as one of the “20 Most Promising PropTech Solutions for 2019.” FacilGo® is the only property maintenance and turn solution that guides staff through procedures and purchasing based upon their inspection and work order results.

The joining of new technologies, insights and business processes is critical to solve today’s evolving set of property maintenance challenges to be impactful to the operators’ processes. FacilGo® provides a comprehensive maintenance solution where each step of the process can be leveraged into the next. The end result is an accelerated turn and maintenance process that helps save time, enforce standards, and lower operational costs. “This recognition by CIOReview is truly gratifying. With FacilGo®, we sought to create a well-designed solution that encompasses the entire maintenance process, including suppliers, thereby forgoing the need to piece together siloed applications that don’t talk to one another” explains Ken Murai, Founder and CEO.

About Facilgo®:

FacilGo® created a complex, user friendly property maintenance and turn platform, which includes due diligence and turn inspections, work orders, bidding, contracts, procurement, invoice processing, fixed assets, inventory management, resident charge backs, smart turn matrices and more. The platform helps property operators work more efficiently, follow standards, and make better informed decisions, and also helps suppliers build stronger relationships with their clients and become more efficient. FacilGo® is comprised of a team that built the first generation of procurement solutions for the Multifamily market.

About the Author: Ken Murai

ken

Ken is the founder and CEO of Facilgo, Inc., a property maintenance platform and supplier marketplace. The system guides property management operators through inspections to invoices and helps suppliers to work more closely with their customers.

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Why you should resolve to adopt new technologies

I recently had the privilege to speak at a conference about the future of property maintenance. Part of my message was focused on why we need to adopt new technologies. Since we at Facilgo study this topic frequently, I’d like to share some personal stories that shaped my perspective as to why adopting new technologies […]

I recently had the privilege to speak at a conference about the future of property maintenance. Part of my message was focused on why we need to adopt new technologies. Since we at Facilgo study this topic frequently, I’d like to share some personal stories that shaped my perspective as to why adopting new technologies is important.

The Power of Timely Information in the hands of the Right People

Almost 20 years ago, I was riding on a ferry between two islands in Indonesia. It was the typhoon season, and while there were some winds, the ferry ride was uneventful. Two days later, I read the news and was shocked at what I saw. The very same boat which I had ridden had capsized the next day. As the ferry took on water, a British passenger on the boat texted her boyfriend, who was in a pub in London. The boyfriend immediately contacted the Royal Navy, who in turn contacted the Indonesian Navy. The Indonesian Navy dispatched a search and rescue ship and saved all of the ferry passengers.

If you are unfamiliar with sinking ferries during the typhoon season in Indonesia in 2001, I can assure you that this outcome was quite rare. This was an incredibly amazing occurrence, and it made me start to understand the power of getting the right information to the right people at the right time. While property maintenance may not see such dramatic effects, obtaining timely information can make processes increasingly more effective and efficient.

Your Residents’ Expectations are changing with the introduction of New Technologies

My father owns an inexpensive flip phone, which as many of you may recall, holds a charge for several days. Yet, when he is not actively making a phone call, he chooses to power down the phone to preserve the battery charge. From his perspective, the value of having a charged phone whenever he needs it is quite high. Moreover, he’s quite used to the concept that if people are unable to reach him, they’ll call back later. He also has not set up the voicemail on his cellphone either, so you can’t leave a message. For the rest of us, my father’s lack of connectivity is both confusing and annoying.

Several months ago, my dad was changing doctors, and the new doctor’s office was trying to contact him to obtain insurance information. They called his home number, but the voicemail was full. Then, they called is cellphone, but it was turned off and his voicemail was not set up. Shortly thereafter, I received a call from an exasperated doctor’s office administrator. She had already made 2 phone calls and was not able to get ahold of my dad. She wanted me to get a message to my father, but I explained to her that I could only do what she had already done. I live an hour away, and explained that she just needed to try again, since he was often at home. Apparently, on her third call to my dad, she was able to reach him and obtain the required information.

The doctor’s office administrator and my dad had widely different expectations. My dad’s expectations were similar to those living prior to the widespread usage of voice mail, while the doctor’s office administrator was living more in the present. After I got off the phone with the administrator, I felt her pain, and it made me think about how residents may feel any time their property managers interact with them involving paper!

What do Your Residents think when you hand them a Piece of Paper?

If you hand a paper move-in inspection form to a new Millennial resident, does it leave them with the type of impression you desire? Are they left with the expectation that you will respond quickly to their needs, that it will be convenient to work with your community, or that you will continue to evolve to meet their ever-changing needs? For me personally, paper inspection forms leave me with the impression that the property has not invested in technology that is going to make my living experience as convenient as the other aspects of my life.

My life is filled with conveniences such as printing a gift card five minutes before my daughter leaves for a birthday party, getting a ride to the airport whenever the need arises, or being able to see on my phone where my kids are in mall so I can easily find them. These are all activities that make elements of life highly efficient and convenient, because they provide products, services and information to the right people at the right time. They share information in a way that paper cannot.

What happens if you don’t adopt new technology?

There are countless stories of companies that went out of business due to their failure to adapt to new technologies. Today, we see a major shift in how and what products and services people purchase, which is creating a major shift in traditional brick and mortar businesses. Several retail stores recently declared bankruptcy including Sears (founded 1893), Borders Books (founded 1971), and Toys R Us, (founded 1957). What consumers want and how they want to buy it were the overarching reasons for their demise. The ability to purchase products online without having the added cost of a retail outlet within the price greatly impacted both Sears and Toys R Us. Their focus on old technology products (paper books, CDs and DVDs) was what led to the downfall of Borders.

If companies are unable to adapt to the new demands enabled by changing technologies, their customers will not just be unhappy, but may respond in a way that may cause them to go out of business.

We have all seen the impact of what technological innovation can do for everyone. They make a positive difference in our daily lives. On the other hand, if we do not embrace the values of new technologies, we will not only miss out on the chance to become more efficient, but our residents’ will become frustrated losing confidence in our company’s ability and willingness to adapt to change. Resident frustration can only lead down a dark path.

If you are still using paper processes, take a look at all the innovative solutions available in the market. Some of them, like FacilGo®, are easy to adopt, can be transformative for your business, and help you become an innovative leader.

About the Author: Ken Murai

ken

Ken is the founder and CEO of Facilgo, Inc., a property maintenance platform and supplier marketplace. The system guides property management operators through inspections to invoices and helps suppliers to work more closely with their customers.

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The Value of Setting Standards on Products, Services and GL Coding

Setting standards on products, services, approval processes, and GL codes not only makes your process more efficient, but also saves you money and makes costs (and budgets) more predictable. When paired with software to elevate visibility and enforce controls, your organization can more easily get the right things done, and eliminate time spent wondering what […]

Setting standards on products, services, approval processes, and GL codes not only makes your process more efficient, but also saves you money and makes costs (and budgets) more predictable. When paired with software to elevate visibility and enforce controls, your organization can more easily get the right things done, and eliminate time spent wondering what to do and/or what happened.

Product and service standards, approvals and GL coding all have common attributes. They are necessary in order to operate profitably and to provide your residents with high quality service, and yet there are too many choices.

What are Product and Service Standards?

Defining what products and services to use for a given class of property or region is what I mean by product and service standards. For example, there may be a certain carpet spec and color used in your class A properties, and specific appliances used in your class B properties. You may have regional differences in what you decide to specify, for example you may want to use an eggshell paint in more humid areas, and flat paint in temperate areas.

Some of the categories in which companies often enforce standards include:

Floor Covering Carpet Cleaning Appliances
HVAC Water Heaters Paint
Paint Services Landscape Services Plumbing Fixtures
Lighting Fixtures Fire and Security Equipment Window Coverings

If you don’t provide guidance on standards, your staff may have too many choices of what to buy, who to buy from, and what to pay. As you can see, the amount of choices available to your staff can become large,complex, and overwhelming. If you don’t have a quick and easy process to follow, or software to guide your staff through the process, enforcement of such standards is next to impossible.

What are the benefits of Product and Service Standards?

Southwest Airlines famously flies only 737s; focusing their staff on maintaining one type of plane, and on negotiating better pricing with their suppliers. While your maintenance staff doesn’t need to work on anything as complex as an airplane, they are certainly more efficient if they work on a smaller set of appliances, HVAC systems or other equipment. This approach also allows them to become more proficient at knowing who to contact for help and how to resolve issues.

Standardization helps in several areas: up-front costs, maintenance costs, inventory management, and efficiency. Your suppliers will provide better discounts for larger purchase volumes of a specific item, as it helps them reduce inventory types. Maintenance costs are lower because staff is more familiar with operating and repairing standard items. Finally, when replacing an item, they can order what they need without much effort, because they don’t have to think about what to buy, who to buy it from, and how much it costs. They just go with the standard and get their work done.

The benefits of product and service standards are immense, but it takes a little work to put them together. Here are a few tips in figuring out what to do:

  • Work with your staff and suppliers to determine the right product, price range, and durability suitable for what you are looking for
  • Document your product and service standards
  • Use software or create a system to provide visibility into your standards
  • Make the purchasing of the standard products and services a part of the overall unit turn or operations process. For example, at FacilGo® we incorporate what you buy into the inspection and work order process, so your staff is presented with the correct products from the correct suppliers at your prices based upon the problems they have encountered.

What are GL Coding Standards and how do I enforce them?

To help with accounting, it is important to make sure that the correct GL codes are utilized. This helps the company understand how the property is performing against budget and where its money is being spent. Plus, the accounting staff doesn’t have to spend a lot of time re-coding invoices to ensure that they are adhering to the standards. Thus, setting and enforcing GL coding standards will help you improve your budgeting process moving forward (please check out our article on Strategies for Creating the right Budget Now and in the Future).

To set the standards, your accounting staff must document the situations in which various GL codes should be used. It is most important to document when capex codes are used versus expense codes. In conjunction with product and service standards, the accounting staff should document what GL codes map to what product and service standards. Then, those GL coding standards can be shared with the rest of the company. If you are using a software solution to support your staff’s procurement activity, you should be able to set the GL code that is used when purchasing a specific item or items from a given category or supplier. Not all solutions support all of these methods for ensuring the right GL code is used, but all solutions have some degree of support for this. Otherwise, reports will need to be run regularly to ensure that the right GL codes are being used, and to provide feedback to those personnel who are not coding items correctly.

How do you communicate your Product Standards to your staff?

Once you have created your standards, not only do you need to communicate them, you need to get your staff to incorporate them into their regular processes. Plus, you need to be able to check and ensure that your standards are being adhered to. How do you do that?

  • Create a process in which the right product is presented to the staff member when they need to buy such an item. Needs to be flexible to account for times when the standard cannot be adhered to.
  • Analyze whether personnel are adhering to standards or not. Procurement software should provide reports that have this information.
  • Reward, within reason, based upon their adherence to standards.
  • Check to make sure that the suppliers are adhering to SLAs and performing the services to your staff’s level of satisfaction (supplier ratings)
  • Implement a software solution to make the above process easier for your on-site staff to execute as well as those personnel who define and implement the process.

Now that you have created your standards and rolled them out to your team, you’ll need to work with your suppliers to get their pricing. You can secure significantly better pricing with higher volume purchases for your specific products, compared to not having standards.

How do you negotiate pricing and service level agreements?

In addition to setting pricing and early payment terms, make sure you negotiate with your suppliers the level of service that they need to provide. If you have great pricing but products aren’t delivered on time, warranties don’t exist, and billing isn’t accurate, you may regret working with that supplier. After all, even a 25% discount isn’t worth it, if the delay in service or delivery prevents a new resident from moving in!

In your service level agreement, define what you need, as well as what happens if either party doesn’t meet the standards in the agreement. These agreements need to be both ways, since the supplier will want to also know that you will be reliable.

How do you negotiate with your suppliers once you’ve set your standards?

  • The higher the guaranteed spend with a supplier, the better the pricing
  • In addition to pricing, think about service too: delivery, warranties, early payment terms, supplier ratings, billing accuracy (and timeliness), and their past level of service and helpfulness.
  • Leverage supplier rating scores to communicate to supplier their performance and comparison to agreed upon rating levels.

Once you have your contract with service level agreement in place, make sure that your staff is aware of the new agreement. Make sure that utilizing the agreement is part of their regular process, and that adherence to the process, usage of the contract, and items negotiated within the service level agreement will be proactively measured.

FacilGo® Can Help

As you can see, product and service standards are important, and it’s in your best interest to work on defining them. You don’t have to implement a comprehensive program initially. Start small to get used to the process, and then add more categories. At FacilGo®, we can discuss your ideas and help. It doesn’t take long to start, and it will make life easier and help you operate more efficiently.

About the Author: Ken Murai

ken

Ken is the founder and CEO of Facilgo, Inc., a property maintenance platform and supplier marketplace. The system guides property management operators through inspections to invoices and helps suppliers to work more closely with their customers.

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Insights into the Future of Property Maintenance

Technology has greatly impacted the sales and leasing side of property management. The industry has seen how companies like Zillow and Airbnb change how we market and sell online. Facilgo wanted to understand if the operations and maintenance side had been similarly impacted. Specifically, we wanted to understand how changes in technology or other external forces […]

Technology has greatly impacted the sales and leasing side of property management. The industry has seen how companies like Zillow and Airbnb change how we market and sell online. Facilgo wanted to understand if the operations and maintenance side had been similarly impacted. Specifically, we wanted to understand how changes in technology or other external forces would cause fundamental shifts in how people were planning to allocate their workforce in the future.

External to the survey, our conversations with various property management companies revealed that changes in the labor market made it difficult to hire and retain maintenance personnel. Specifically, they stated that Millennials often left maintenance jobs for jobs in other industries due to the heavy usage of paper processes and lack of mobile apps being available to complete their jobs efficiently. Our survey touched upon how new strategies were being used to deal with changes in the labor market and whether technology was having an impact on their organizations now or in the future.

Facilgo surveyed 54 companies to better understand their visions for the future of property maintenance. We were able to see several patterns in the industry as a whole, and although our sample sizes were small for certain sub-segments, we were able to gain some insight into them as well.

In general, we found that as of yet, technology had not substantially changed how companies structured their maintenance operations. Larger properties continued to staff properties with dedicated maintenance personnel, while smaller properties had roving work forces and used outsourced services. While it is likely that mobile phones, resident portals, and electronic work order systems had some impact, they had not caused a significant shift in how properties were being operated.

Following are some of the specific results that we found from the survey.

Impact of technology on maintenance organizations for the next 5 to 10 years:

The vast majority of operators felt that technology would have a high or medium impact on their maintenance organizations in the future. Specific applications that were seen to have the highest impact to an organization’s maintenance approach included mobile work orders, mobile inspections, preventative maintenance reminders, and mobile order placement. Companies also felt that receiving notifications about appliance/device failures would have a high impact on an organization’s maintenance approach in the future.

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Of those companies responding, we found that owner operators and 3rd party managers viewed the impact of technology differently on their maintenance organizations. 3rd party managers felt that technology would have a medium impact while owner/operators felt technology would have a higher impact.

We didn’t see any correlation between the organizational structure (roaming staff versus dedicated staff), since that was largely dictated by the size of the property.

We also didn’t see any correlation between the number of units being managed per maintenance personnel with companies’ expected impact of technology. Most companies responded that each maintenance person handled 100-150 units.

Maintenance organizational structure and outsourcing

Creating a maintenance organization that relied on outsourced personnel was less popular of a strategy moving forward than we anticipated. Only 6 of 47 of respondents (13%) noted that they would run their maintenance staff with combination of onsite staff supported by outsourced technical expertise.

The average size of the properties dictated how companies were organized more than anything else.

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In looking at other subsegments, we saw that the small number of Affordable portfolios that responded to the survey were more likely to outsource tasks than other types of portfolios. Conventional had a much higher sample size and those respondents were highly likely to have dedicated staff on-site, and possibly have some personnel that provide maintenance across multiple properties.

With regard to the tasks that companies expected to outsource included HVAC repair, carpet cleaning and painting, and dry wall repair.

Number of Units Managed by each Maintenance Personnel

In general, we saw a majority of responses clustered around 100 and 150 units per person. 3rd party managers had a mode around 150, but the mode for owner operators’ was 100. Conventional was clustered around 100 and 150. Affordable had a mode at 100. The larger property management companies had each personnel manage more – from 150 to more than 300 per person.

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We also saw some correlation between the number of units managed by an organization with the number of units managed per maintenance person. Companies with 2,000-5,000 unit were more likely to have their maintenance personnel handle 150 units per person while companies with 5,000-15,000 units were more likely to have their maintenance personnel handle 100 units; however, several companies in this unit count range selected 150-300 units per person. Some of these outlier responses may have been due to a misinterpretation of the question.

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Maintenance interaction with residents, performance metrics and hiring characteristics

Respondents anticipate their maintenance personnel to have a medium to high level of interaction with residents. In particular, all of the REITS responded that they anticipated their maintenance personnel to have a High level of interaction with residents.

Most companies expected 3-4% increases per year in their training budgets, but an equal number were clustered around 5-10% and 10-15%. 500-1,999 unit portfolios predominantly answered that training budgets would be increased by 3-4% increase.

Most companies reported that they would be conducting training on a quarterly basis, but there were plenty of other responses. We did look at whether there was any correlation between companies looking for experienced personnel and the amount of provided training. We found that those companies that cited having property maintenance experience being an important hiring criterion tended to provide more training than companies that didn’t provide as much frequent training. Companies with less than 2,000 units provided much less training than other companies, but they generally were more likely to hire personnel without property maintenance than larger companies.

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Resident satisfaction and Amount of time to complete service requests were by far the most common metrics that companies planned on using. 2nd tier items were Cost per unit, % of preventative maintenance tasks vs reactive maintenance, and % of service requests that need to be reworked.

Companies were looking to hire personnel that were experienced in property maintenance. In particular, they were looking for people that had specialty skills such as HVAC, plumbing, and electrical. An understanding of mobile technology was another key skill. Having a high school diploma or GED was also deemed to be important; however, customer service experience was cited as characteristic for property maintenance hires for less than half of the respondents.

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Take-Aways

Maintenance organizations are evolving, but are evolving at a slow pace. From our survey, it appears that property management companies anticipate that technology will have a high or medium impact on their maintenance operations in the next 5 to 10 years. Specifically, they felt that mobile work orders, inspections and mobile ordering would be the most impactful. Outsourcing of maintenance tasks did not appear to be a strategy that companies cited as a popular direction of the future. Moreover, companies predominantly had their maintenance personnel managing 100 to 150 units per maintenance personnel. While interaction with residents was forecasted to be of medium or high value, customer service skills were only cited as an important characteristic for a maintenance hire by less than half of the respondents, Resident satisfaction and the time to complete service requests were the two highest metrics for measuring performance. The survey provides interesting insight to the importance of tenant satisfaction and projects a slow utilization of technology to improve the experience and efficiency of the maintenance staff.

About the Author: Ken Murai

ken

Ken is the founder and CEO of Facilgo, Inc., a property maintenance platform and supplier marketplace. The system guides property management operators through inspections to invoices and helps suppliers to work more closely with their customers.

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Strategies for Creating the Right Budget Now and in the Future

It’s budget season! For many companies, this is a several month-long process of fact finding, planning, and negotiations. Your budget and budget process can have an enormous impact on your operations, so we’ve outline several different methods of creating budgets, their pros and cons, and how to prepare for implement such methods in the future. […]

It’s budget season! For many companies, this is a several month-long process of fact finding, planning, and negotiations. Your budget and budget process can have an enormous impact on your operations, so we’ve outline several different methods of creating budgets, their pros and cons, and how to prepare for implement such methods in the future.

Method 1: Increasing last year’s budget by X% – Problematic if the prior budget is off

The easiest way to setup a budget is to look at last year’s budget and actuals and then increase a combination of those numbers by a certain percentage based upon expected market conditions. However, what it makes up for in simplicity, may cause problems down the road. Did last year’s budget create the optimal operational incentives to achieve your goals? Does it provide the right incentives for your star performers?

Pros:

  • Simple to implement if you have a prior year budget

Cons:

  • May not be accurate
  • May create disincentives for strong performers and reward weak performers

What if your best property manager has managed to optimize the performance of their property. Occupancy is high, rents are strong, and expenses are kept at a minimum, and their next year’s budget is based upon their stellar performance. You are essentially rewarding them with a more challenging budget due to their great prior year performance, which could cause them to not make the effort to meet the less achievable numbers, or worse, they could decide such unfair treatment is a reason to quit.

At another property, occupancy is below market and expenses are high. Every year, this property manager continues to perform below what they should, but without much effort they are able to operate within budgets and are rewarded the same as your stellar performer. Their peers see that they are given easily achievable goals, and see that they are being treated unfairly. As a result, your low performers stay and continue to perform at a low level, and your strong performers leave because they do not like being treated unfairly.

Such outcomes are a common occurrence if you don’t get your budgets right. If last year’s results were not optimal and you modify them by a certain percentage to create this year’s budgets, you may run into these types of problems.

Method 2: Setting Budgets based upon comparable property benchmarks Good if the benchmarks are accurate, but doesn’t account for inertia

Using benchmarks based upon similar properties is another method. This method can work if the data is available and accurate; however, it doesn’t account for the current inertia of a property’s current performance. To implement this method, a company takes expected occupancy rates and expenses for various categories or specific GL codes for a typical property and normalizes them per unit. Then, the company applies those normalized amounts based upon average rent and unit count to comparable properties to come up with their budgets.

This method can provide a fairer long-term benchmark for the property to follow, and uncover some important revenue generating or cost cutting strategies; however, it doesn’t account for the current performance at the property. Different properties may have different infrastructure, processes or tools in place that given them a performance advantage. The property may already be performing at a high level with good occupancy and efficient expense management. On the other hand, the property may have a lot of deferred maintenance and capital projects that have kept expenses in check, but the day of reckoning for when immediate repairs are required is imminent.

Pros:

  • More accurate representation of how the property should be performing

Cons:

  • May be difficult to get accurate comparable budget info for a property
  • Does not account for the current performance at the property

Sometimes, best practices haven’t been implemented across the portfolio. Implementing the best practices takes education, time and effort, which needs to be accounted for when setting up the long-term budget targets.

Several years ago, I reviewed painting practices at various properties in a large multifamily portfolio. I found that there was a wide variance in the costs for interior painting at different properties. The biggest difference I found in the performance of some of the properties versus other properties was the fact that a small set of properties had a significantly lower paint and painting spend than any of the others. When I visited the property, the maintenance supervisor showed me how doing a partial paint (light paint on the walls up to 3 feet) with some touch up not only took 30 percent of the time, it took even less paint and required less drying time! While this practice didn’t work at all properties (some had oil furnaces), it worked at many and led to significantly lower costs. However, educating the other properties on the new process took training, implementation time and follow-up, but once implemented, improvements could be accounted for within the budget.

Method 3: Prioritizing and Accounting for Major Projects Could take a bit of work if you don’t have the right tools

Things age, need to be updated or need to be replaced over time. While preventative maintenance is ideally done regularly to minimize catastrophic failures, there are always upkeep items and renovations that require a lot of expenses. By inspecting your property, getting quotes for or forecasting the expenses related to each major project, and prioritizing, you can figure out what to include in your budget.

Gathering quotes and tying them to projects and then prioritizing the projects doesn’t necessarily require lots of data entry and paper shuffling if you have the right tools. Just make sure you are using a system that helps you gather all the right information and put it all together in a budget.

Pros:

  • Helps prioritize and budget projects to accomplish during the year

Cons:

  • Takes some work to gather quote, prioritize and schedule the projects if you don’t have the right tools

As you probably guessed, FacilGo® provides such tools. With FacilGo® you can perform an inspection, create quote requests / gather and enter budget amounts based upon your inspection results. You can even review pictures, notes and estimates during budget negotiations and organize your transactions within different projects.

There are merits for using past budgets, benchmarks and prioritizing expenses for major projects. Ideally, you have the tools and time to incorporate all three methods into your process. If you don’t have the time or tools, you may want to spend this upcoming year making a few changes that will help improve your budget process moving forward.

Method 4: Combining the Approaches – the most accurate, but also the most work

The best but most difficult method of creating budgets is to combine the best from all three of the above approaches. Start with historical budgets and actuals and budget amounts per unit from comparable properties. After blending those results, add in market factors. Finally, add budget amounts based upon the high priority projects that you expect to accomplish in the upcoming year.

Pros:

  • Provides an accurate view of upcoming budgets

Cons:

  • Requires the most work to accomplish

By providing accurate budgets, your staff will be incented to accomplish the goals you set out for them. Plus, by providing fair numbers, you will challenge and reward your star performers, and identify your weak performers.

Long Term Planning

While combining all three approaches is the ultimate goal, you will need to do some prep work to get your organization ready to adopt this approach. Here is a list of items that you should do to help make your budgets more accurate and easier to prepare in the future:

  • Set policies for GL code usage and make sure you enforce them – this will normalize your data.
  • Find comparable properties to which you can compare your properties’ performance, and gather budget data for those properties.
  • Create best practices so your staff know the best way to lease and operate your properties.
  • Create standardized sets of products to use at your properties.
    Negotiate contracts with your best suppliers in high volume categories and regions.
    Use software that will allow you to document necessary projects, gather cost estimates, and modify budgets.

Next time:

How to create and enforce standards on products and services, approvals, and GL coding.

About the Author: Ken Murai

ken

Ken is the founder and CEO of Facilgo, Inc., a property maintenance platform and supplier marketplace. The system guides property management operators through inspections to invoices and helps suppliers to work more closely with their customers.

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