Pinching Pennies Can Cost Big Bucks

Disturbing discoveries. I just took over a building on 19th Street where the board was fairly new and wanted us to evaluate the building. What we started to discover was one sort of folly after another, starting with the elevator project, which was a $145,000 job undertaken without the use of a consultant to develop the specs. We also found that the cooling tower had been deteriorating significantly due to improper operation and a lack of preventive maintenance. 

On hold. When we came on, the elevator job had been going on for about four or five weeks. The scope of work was being determined by the contractor, so we brought in the building’s attorney and stopped the job. We then engaged an elevator consultant to evaluate where we were. As for the cooling tower, it was nonfunctional in the summer, and residents had to find other ways to cool their apartments. They were treating the water for Legionnaire’s disease, but not treating the system’s water, so that it was essentially rotting from within. The board thought it was maintaining the system by repairing as needed. But like a car, if you don’t take it in for the oil changes and required service, it will ultimately stop working.

A teaching moment. It’s fairly simple: If a building only focuses on cost, it’s likely to do some things wrong. And the reality is that you’re going to pay 10 times more when you do it wrong. Previously this board had a green property manager who didn’t have the experience to guide them. When it comes to telling a board that they’re doing it wrong, a property manager has to be very careful to not make it seem like you’re talking down to them. But managers have to make boards aware of the pitfalls, and I think that is a skill that a lot of property managers learn in time.