Originally Posted by
Puddington
A few persons asked about this, so I am posting here based on the collective experience from myself and a few friends who sit on their MCST Council.
How to watch out for bad MA?
Please don't flame, these 12 lessons are taken from the school of hard knocks...
1) Good MA is pro-active. They inspect the premises, get inputs from the maintenance contractors, and don't wait till residents complain about facility issues.
2) For large estates, the MA has a live-in facility manager, so the estate is better kept as the guy cannot 'run'.
For smaller estates, make sure your MA is not coming to the estate just to get the Treasurer to sign the monthly cheques. Otherwise, he is a BAD MA.
MA management fees differ depending on size of estate, but if it contributes more than 20% of total op expenses, the MA is probably paid more than his
contributions. Try to break down the MA's contributions... for instance, the mkt rate for accounting and admin support only costs $250-$500 / mth by 3rd
party companies. If your MA constantly gets the security guard or cleaner to do his job, you should question whether an MA is required.
3) There are some MAs who privately negotiate for kick-backs from renewing maintenance contracts or introducing a new project contractor.
Hence, if your MA keeps pushing for high cost increases from maintenance contractors, instead of helping to negotiate for fair rates, watch out.
Some MAs allow maintenance contractors to build in a high auto-increment in price per year in the contract and to push for long multi-year contract.
The solution is simple -- always try to get an independent quote from other channels besides your MA before you sign that contract.
The BCA directory of registered contractors has a full list of contractors in different areas of expertise. Where doubtful, don't over-commit to a long contract. Don't be FOG (fear, obligation,guilt) by the MA or the contractor in the contract negotiation.
4) Similarly to point 3, some MAs would try to capitalise on the Council's ignorance, and try to get the Council to spend on repairs using Sinking Fund instead of claiming from Developer warranty in the warranty period. Reasons are two fold: 1. Many MAs get repeat business from developers who handover the management of newly completed estates to them. Don't be surprised if the MA has more interest with the developer than with any single MCST and work in hand with developer to reduce their after completion liabilities. Consult a legal counsel if necessary. Don't just rely on what the MA says.
2. If the Council spend on repairs using the Sinking Fund, the MA is likely to be the one recommending a contractor and some MAs may ask for a kick-back from the contractor.
5) If your MA has a tendency to flag on major repairs coming from the maintenance contractors just before end of the financial year, be careful, review whether it is a true need, or real big item expense, or is the MA trying to soak up the budget?
6) Bad MAs capitalize on their middle man position to 'push' maintenance contractors to highlight facility issues 'requiring expensive repairs', and get kick-backs in the process. Bad MAs are only concerned about asking Council to spend more on repairs or on contract renewals. They are less concerned about daily operations.
7) Bad MA try to push the AGM date as late as possible, or even later than 4 months pass the end of the financial year. By the time the next year's budget is reviewed, almost half of the financial year has passed and the money has been spent or committed. If the Council wants to pursue any matters against the MA, the Council may find itself falling foul of BMSMA instead...
8) Bad MA incurs a lot of additional costs 'under the radar', like 'disbursement costs' or 'general expenses' or 'stationary expenses'.
9) Bad MA would get a "friendly" auditor to audit the expenses. That's when it's useful to have an accountant on board to sniff out the oddballs as the auditor is no longer playing that role. If possible, the Council should hire its own auditor that has direct report to the Council.
10) Most maintenance contractors are in more awe of the MA than of the Council because the MA is the one facilitating the payment. Never forget that it is the Council that is delegating its powers to the MA. The Council should always retain its decision making powers (since it is also legally responsible even if it is executed by the MA), and be prepared to exercise its authority over poor performance by the MA or maintenance contractors.
11) To exercise maximum flexibility over the selection of MAs, the AGM should determine that the Council has the right to hire other MAs in the midst of the year if the incumbent MA is under performing.
12) Be careful if the MA seems keen to support some Council members over others persistently, they may be easier to exploit from the MA perspective.