[Dudley]

@rthorburn said:

1. Hi Dudley 

OHS certificates 

I think Whale has answered this however I would like to reiterate the fact that your Strata Manager is required by law to ensure the trades they engage do meet the OHS requirements and have the required certifications. 

Whist it is not your responsibility to be checking tradesmen’s credentials, it is definitely a worthwhile means of checking that those who are responsible, are doing what they are supposed to be doing.  When you see someone working on common property, you can also contact the Strata Manager (SM) and ask them to confirm that a particular tradesman is appropriately qualified if you are unable to approach the tradesmen directly yourself.

Strata manager’s vs home tradesmen prices 

I also agree with Whales comments, however if I could phrase it is a bit differently, this might add to your understanding of the differences between strata and personal and give you some suggestions on the areas to focus on to improve things.  

The reason/s for SM’s trade’s prices often being higher than your personal trade’s prices can mainly be due one or more of the following:

1.Quality of Tradesman

SM’s prefer to use those with a higher quality level not only in their standard of workmanship but also in other areas such as OHS compliance, reliability, they need less supervision, higher technical expertise, speed of work, taking care not to interfere with the occupants or damage property, etc.  Bear in mind that SMs are spending other people’s money and this greater accountability on them.  If something goes wrong, the SM wears the responsibility. In the home situation, you are more in control and more likely to take a risk for a cost saving.  As with most things, a higher quality means a higher price as staff and overhead cost more. 

2. Competition for the work

I can’t make judgments for the whole strata management industry, but I have observed instances where some SM’s tend to minimise the practice of obtaining competitive quotation for maintenance work or, if they do, they use a limited pool of quoters.  There could be various reasons for this however, in defence of SMs, obtaining quotes does take time and with SMs usually under pressure to keep their fees down, they may not have allowed enough in their fee agreement for the level of quoting desirable.  For small jobs, the cost of quotations could exceed the savings therefore it might not be warranted.  For large jobs, net savings will be assured if quoted.  Note that these are generalizations and there would be many SMs who are providing an adequate level of competitive quotations for their maintenance work.

3.Corruption and concealed commissions

Any payments to SMs or tradesmen for favored treatment and that are concealed from the owners constitutes corrupt behavior and is illegal.  I suspect it occurs, however over the last 10 years being involved in Executive Committees, I have not witnessed it.  If it does occur, it will lead to higher prices as it all gets added onto the bill.

 

My suggestions to reduce trades’ prices are as follow:

• It is not worth trying to use a lower quality tradesman as in the long run it will cost you far more when things go wrong;
• It would be worthwhile pushing for greater amount of work that is quoted and from a broader pool of tradesmen.  I suggest your EC and SM agree on a procedure depending on the size of the jobs eg less than $1K – single quote; $1K to $5K – three quotes; more than $5K – three quotes with a written scope of work.  Ask to view their list of tradesmen and suggest others be included who you have had good experiences with.  Be aware though that the SM might request additional fees if not in the current agreement and this could be justified.
• The only way you can be sure there is no corrupt behavior is to be able to fully trust your SM and the best way initially is to ask if any concealed commissions are involved. Their answer and the way they answer it will give you an indication.  You might also be able to judge based on responses to questions about using other tradesmen and quoting.  If there is any suspicion, consider changing the SM as soon as you can and agree on a quoting procedure up front with the new SM. 

Make no mistake, if you are going to make improvements, it will involve time and effort on the EC’s part, so in some ways it is “hard”, but I do believe it is worth it. 

I would be interested in your feedback if the above information has been of help to you. 

Regards,

Rob T

Hi Rob,

Many thanks for your information. Your advice, as well as Whale’s, has given me a better understanding of both sides of the fence – so to speak. I am still concerned that we are not getting value for money, however I appreciate that it is up to me to become more involved if I believe I can do better.

Regards,

Dudley

[Dudley]

@JimmyT said:

@Dudley said:

As a starting point I would appreciate your opinion on what I must do to raise at the AGM various issues which I do not understand and/or am not convinced are necessary (unwarranted expense).

My preference would be to raise them at the AGM without prior notification – for reasons somewhat unique to our property.

Well there‘s a problem right away.  You can make a decision on anything at an AGM that isn’t on the agenda.  You can discuss what you like (at the chair’s discretion) but unless it’s on the agenda, any vote taken on the mater would be invalid.

However, can I suggest you take a look at the SCA’s excellent free online executive committee training course.  I’m sure you will find it enlightening, informative and helpful.  It will also make you better informed than 95 percent of people living in strata.

Click HERE to get going.

Good Morning Jimmy T,

Many thanks for your information.

Just to clear up a point. One of the motions listed for the next AGM is ” That the proposed budget estimate and a 10 year sinking fund plan (if required by legislation) be discussed and approved.”

Would I be correct in assuming that I can discuss, and put to a valid vote, any financial issues which appear in the Budget Estimate attached to the Notice of Annual General Meeting.

Many Thanks

[Dudley]

@IBC said:
Hi Dudley,

Let’s see if I can make some sense of all of this for you.

I will deal with each issue as you have mentioned . But before I start I would suggest even for a small scheme you would or should have an Executive Committee and the committee would be in regular contact and instructing your Strata Manager (SM) However I know of schemes that give full authority to their SM and leave the running of the OC with the SM.

STRATA INSURANCE
Firstly it’s compulsory – no option you must have it. The commission you speak of is the only allowed commission that Strata firms can receive. The fact is without this commission many Strata Firms could not survive and if it was taken away you would see management fees rise very sharply. It is normal that a couple of quotes would be sought each year, but it’s not unusal to see the same insurer from year to year. Insurers tend to give bigger discounts if the strata scheme is run well and stays with the insurer. There is nothing wrong in asking the SM if they called quotes.

STRATA PROPERTY VALUATION
It is normal for the strata complex to be valued each year and the valuation is based on establishing the replacement value so that the Strata Insurance is taken out at the right coverage level (Strata Insurance also covers several other insurances not just the buildings). As for the valuation being done by an associated firm that’s up to you and the other owners, I don’t see any issues so long as the cost is competitive.

TRADES MONITOR
Trades Monitor is a company that provides a service in carrying out an audit on the contractors used by your strata scheme in carrying out maintenance and other works, this protects to OC as each contractor is audited regarding the currency of their Trade Licence, Insurance and OH&S. I am of the view that it is money well spent.

CLOSING
Always remember that as a Owner you have the right to ask questions of both the EC and SM, so I would raise your questions with them, it seems all is in order. It’s not simple to understand all the procedures involved in strata so I hope I have been able to make you aware of a few around these issues. Best to you and your strata scheme.

Good Afternoon,

Many thanks for your feedback.

I have been a member of the EC for quite some time – albeit our EC does not really do much except agree with the Strata Manager. I accept that what we have is our fault, that said I plan to become more involved.

As a starting point I would appreciate your opinion on what I must do to raise at the AGM various issues which I do not understand and/or am not convinced are necessary (unwarranted expense).

My preference would be to raise them at the AGM without prior notification – for reasons somewhat unique to our property.

Many Thanks,

[Author]

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