Control scheme: outside or inside?

The most modern, architecturally and technically perfect business center is not a viable unit without tenants. In order for it to work in full force, competent management is required. The choice here consists of only two options: organize your own management company, or rely on professionals from the outside. Let's try to weigh the pros and cons of each of these decisions.

To begin with, we will define the terminology. UA deals not only with the maintenance of the building, but above all with the increase of profitability. In the Russian market, not everyone agrees with this interpretation. You can meet the sites of "management companies", where cleaning services are perfectly described, but there are no case studies confirming the actual management of facilities. In commercial real estate has its own terminology of management (management) triad:

Asset management - asset management or trust management;

Property management - property management (income minus expenses);

Facility Management - building infrastructure management (optimization of operating costs).

The last option, Facility, solves a limited amount of tasks in the BC, so in the "solo" version it cannot replace the work of the management company, but is only one of its directions. So, object management is Property management.

External management

The main advantage of the external M is the ease of interaction between the parties. The owner of the business center does not buy people, but a certain service (or rather, a set of services, competencies, knowledge and reputation of not one person, but the whole range of services offered by the external management company). Accordingly, the result of the work of the MC is assessed very simply - she managed to increase the profitability of the business center or not. This significantly saves the time of the owner and allows you to get the predicted result, which can be fixed in the contract.

Other advantages of this solution:

1. The staff of a professional management company consists of employees with relevant experience - no need to spend time and money on retraining your own staff;

2. To resolve issues and interact with the MC, one full-time specialist is sufficient;

3. Service takes place in accordance with the agreed quality standards;

4. The owner removes the risks of working with employees who are not residents of the Russian Federation;

5. The Criminal Code sets the ideology of service standards, as it understands and feels the end user of services - the tenant.

Cons for the owner of only two.

The first is the cost. Attracting an external management company is likely to be more expensive than creating your own, but this point is offset by professionalism and the ability to provide a higher level of profitability of the object.

The second and main disadvantage is trust: it’s not so easy to open up and share the “pain” to a stranger, and even more so, to entrust the management of your “brainchild” of a third-party Criminal Code. 

Self management

To the obvious advantages of creating your own management service is the ability to control the situation and operational priority setting. In practice, this requires a certain professionalism (retraining of personnel or a new staff). Own operation service, perhaps gives a chance to reduce the cost of Facility Management, but there is a risk of duplication of roles and functions. Without a look at the Criminal Code, as an independent business unit, even if it’s your own, but without relevant experience in the external market, you can easily lose in the speed of reaction to the expectations and requirements of tenant customers. 

Significant deficiencies that the owner will face:

1. Double commission for attracting tenants (both the staff member and the third-party broker must pay);

2. Lack of free time: the need to control the work of departments and solve problems of employees;

3. It will be necessary to independently search for personnel and build a personnel management scheme from scratch. At the same time, professionals will prefer to work not with the owner, but in the external management companies;

4. Most likely, some of the functions will double, and the state will be inflated;

5. The human factor: absenteeism, illness, not going to work for employees, in some cases - theft of staff.

Fast or forgotten?

We must not forget what David Weiss said at that time, the head of NorthernTelecom, “in the future there will be two types of companies - quick or dead.” 

In fact, an external company that is accustomed to give all the best in the competitive real estate management market takes not price, but speed. For the current real estate market, the speed of response to the needs of tenants, the speed in proposing the best management practices, the speed in search of new services, the speed with which the MC enables its customers to be heard is “more than money can buy”. Agility and efficiency today rule even in such a conservative business as PropertyManagement. Are we ready to take on Craig Barrett's challenge from Intel “to move at maximum speed, blasting the road behind us?

So, "Responsibility is a consequence of certainty." Define your tasks and priorities and weigh your own possibilities: this will help you make the right choice.