Managing risk is a crucial aspect of daily operations for condominium. As a business entity, the viability of a condominium and condo owners expenses depend on its ability to effectively manage risk. Risk management measures involve identifying and minimizing risks before they escalate and become unmanageable. By implementing effective risk management measures, condominium can run their building corporation more efficiently. This helps boards to proactively prepare for any potential losses and minimize risks to create a safe environment for board members, employees, and residents.
There is always a potential conflict of interests, condo owners vs management company.
Conflicts of interest in condominium can have serious repercussions if they are not avoided where possible or dealt with appropriately.
The most vulnerable management processes in terms of risks are tasks and processes related to identifying what to repair and replace, when, and who can do it with the best quality, the best price and a speed.
Main condo management processes related to replacements and repairs, risks involved and measures to decrease risks:
Potential Risks:
- Extra Condo expenses for repairs and replacements that do not need to be repaired or replaced (might happen because of an intention or just an error)
- Wrong priority (something might be done later, but something urgent is delayed).
Risks Mitigation:
Invite qualified condo owners (tech committee) or hire a PRO to:
-Evaluate what needs to be repaired/replaced,
- Identify a degree of urgency (urgent repairs or might be done later).
Potential Risks:
The scope of work might be overpriced if the scope is assessed in
conditions of a potential conflict of interests, if It is done:
Risks Mitigation:
Potential Risks:
Condo owners might get NOT the best price or NOT the best quality of job, if :
-a process of contractor s' selection is not competitive and
not transparent, and
-if selection is done in conditions of a conflict of interests: example, if condo board choices restricted by the companies that have long-term relationship, friendships, with a condo manager, management company, board member etc.
Risks Mitigation:
Potential Risks:
The job might be not done, done with low quality, or with increased price
(because of low skills or just intention):
- if the job performed in the condition of a conflict of interests, for ex. by the company that has
long-term relationship, friendships, with a condo manager, management company, board member etc. OR/AND
Risks Mitigation:
In the case of a price increase, seek the second independent contractor’s opinion
Potential Risks:
The job might be not done, done with low quality, or with increased price
(because of low skills or just intention).
Risks Mitigation:
Does condo board make any decision in the process of contractors selections?
If your condo board selects condo contractors for maintenance, repairs and replacements based on 3 service providers proposals referred by your property management company, your board does not decide anything. In that case, the board just takes responsibility for condo management company’s choice increasing risks for condo owners dramatically.
How to decrease risks for condo owners?
is designed to mitigate all those risks related to conflict of interest through:
- improved transparency (condo directors are notified about all applications and all changes in a tender, it is possible to send notification to common email-alias (to make it transparent to all condo owners) and all applications are participating (it is not possible to remove any application).
- better communication through QUOTES page https://condo-fairtender.ca/quotes.html) to check service prices in different condominiums and get in touch with directors to find out about their experiences working with a particular service provider.
- improved quality of services and prices.
Just pure competitive market might give optimal combination of
a right quality and a price!
Take control of your own living!