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To understand why this is so, it is necessary tounderstand the
differences between so-called ‘full-service' managementand
AKAM South's ‘pure' management model.
Under both
‘full-service' management and AKAM South's
‘pure' management model, management is responsible for
overseeing an association's finances and quality-of-life issues.
But while ‘full-service' management companies also provide
such in-house services as landscaping, exterminator and pest
control, pool maintenance, and janitorial and grounds maintenance,
AKAM South outsources these ancillary services according to
a specific protocol of competitive bidding. We then manage the
independent contractors who are selected to provide these services
in the same way that we manage all the vendors and contractors
who serve our client communities.
At first
blush, ‘full-service' management may appear to be more
desirable because it boasts a ‘one-stop shop' for all aspects
of a community's maintenance. But careful examination of how
‘full-service' and ‘pure' management really work reveals
that ‘pure' management is the more beneficial. Here's why.
Under ‘full-service'
management, an association is locked in to a single annual fee
for all services provided. This means that there is no opportunity
for the association to comparison shop and no ability for the
association's decision-makers to discern the real value of services
provided. (This disadvantage is present not only under ‘full-service'
management but also in many other management companies where
the bidding and outsourcing processes are conducted improperly.)
Moreover,
because the property manager and the landscape, pool maintenance,
and other service providers all work for the same management
company, the manager has no leverage to require a certain level
of service delivery or performance, and the loyalty of all (the
manager and maintenance workers) is to the management company
and not the association. Most important, short of terminating
the management contract, the association's Board has no recourse
if the delivery and performance of services is sub-par. This
compromises the Board's ability to fulfill its fiduciary responsibility
to the association's owners.
In addition,
in many cases of ‘full-service' management, the provision
of management itself is something of a ‘loss leader,' and
the management company derives most of its profits from the
provision of ancillary services. For this reason, Boards must
be mindful not to be seduced by the lure of an initially low
management fee quote, as such quotes from ‘full-service'
companies are typically supplemented by ‘invisible' charges
for other in-house services.
Another
disadvantage of ‘full-service' management is the fact that
any distraction to the true business of management cannot help
but dilute a management company's focus on its primary responsibilities
to its clients (i.e., financial management; capital project
and project management assistance; attendance at the property
and at property-related meetings; maintenance of books, files,
and records; interaction with other property-related professionals;
and response to owners and residents).
Conversely,
under AKAM South's ‘pure' management model, all services
that are not directly related to the day-to-day and long-term
operational management of an association are competitively bid
to independent local service providers. These bids are received
sealed and are opened only by the Board. In this way, AKAM South
is able to maintain a level of objectivity that is absent in
the ‘full-service' model.
Additionally,
once the Board has selected a contractor, the Board, through
its instructions to management, maintains clear and constant
control over the service provider's performance. This allows
for individualized service schedules, and makes the level and
quality of performance and services rendered the determining
factors when it comes to retaining and renewing maintenance
service contracts.
Finally,
under our ‘pure' management model, AKAM South is able to
do what management companies are supposed to do: focus exclusively
on the management of clients' finances and ongoing operations.
For all
of these reasons, AKAM South's commitment to ‘pure' management
through competitive bidding and similar policies invariably
result in a stronger bottom line, enhanced value, and greater
satisfaction for the Boards and owners of the associations that
we manage.
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