Unpleasant Surprises

 

How to Avoid Unpleasant Building Surprises

Robert S. Michaud, P.E.

10/8/20

Some surprises can be fun, exciting, and desirable, like a surprise birthday party, or a surprise phone call from an old friend, or even something as simple as arriving home and finding that your son mowed the lawn without even being asked to do it. Other surprises can be much less fun. If you own or manage buildings, you know the kind of surprises I am referring to. The photo above is one example. No one likes to find a wet spot on the floor where it doesn’t belong. The good news in the photo is that there is a floor drain nearby, so the leak has a place to go. Still, we can’t tell sure the source of the leak from just this photo – it could be something minor like a pressure relief valve that did its job (although that begs another question – why did it have to do its job?). Or it could be something more serious like a burst pipe.

There will always be unpleasant surprises when you have buildings to manage. Weather events, accidents, and other circumstances will always conspire to cause us problems. There are, however, things we can do to minimize unwanted surprises. The following are just some of the things you can do as a property owner or manager to reduce the chance of showing up to work and finding a mess on the floor as in the picture.

1. Develop and follow a comprehensive maintenance plan. This may sound obvious, but surprisingly (pun intended), a solid, comprehensive maintenance program is the exception, not the rule in many businesses. What are we talking about with regard to a comprehensive maintenance program? The best maintenance programs have a number of things in common, and the include:

   1. A combination of preventive and predictive maintenance tasks and inspections, based on industry best practices and manufacturer’s recommendations.

   2. An efficient system (CMMS or otherwise) to manage incoming trouble calls and deploy the right resources in a timely fashion.

   3. A method for addressing maintenance backlog items so that the list does not grow out of control.

   4. A mechanism to evaluate and escalate recurring issues or larger maintenance problems to become capital replacements when needed.

   5. Most importantly – a management feedback system that periodically reviews the maintenance system and reports and then makes adjustments and changes accordingly. Is the maintenance frequency too long on a particular piece of equipment? Change the frequency so that it gets more attention. Is time being wasted on equipment that is not problematic? Consider lengthening its inspection or PM frequency. If this evaluation is not being done, one of the most important benefits of a maintenance program is being lost.
      
      

2. Conduct periodic condition assessments of your buildings. You may think that having a crack maintenance program and solid maintenance technicians looking over you building and its equipment is all you really need, but don’t forget the long game. Every building system has an expected lifespan and a facilities condition assessment can evaluate where each system is in its lifespan and can help you better plan for their inevitable replacement. Your maintenance techs are focused on getting the most out of the equipment that they are maintaining, and as such, are not trained to take the different view that a building assessor does. Building assessments are best performed by outside, disinterested, third party contractors for a number of reasons:

   1. They are skilled and trained in this unique task. Facilities assessors are well equipped to efficiently and thoroughly evaluate your buildings and their systems so that you can get the information you need promptly.

   2. They are independent from your company and do not have a bias. Be sure to select an assessment company that is not also in the business of bidding on the capital equipment upgrades that they find. By choosing an independent assessment company you can be assured that the information is objective and unbiased. This adds credence to the results and when their recommendations are reviewed, there will be no question as to whether or not there is a hidden agenda attached to them.

   3. They have the tools and software that is best suited to this process. In addition to being able to efficiently do the field work of an assessment, a good assessment company will be able to present their data and findings to you in a clear and understandable way. Some have software or web-based systems that also permit you to examine your data from a variety of perspectives. Others can provide you with the reports and spreadsheets that you are already familiar with. In any case, this is part of the service provided and something you are receiving for your investment.

   4. A qualified assessment contractor is going to be able to project life-cycle replacement requirements for the various building systems, but will also find other problem areas – things that are not working properly, significant code violations, and more. The money invested in a comprehensive building assessment will be repaid several-fold in avoided losses.
      
      

3. Utilize an independent maintenance and capital planning consultant to periodically review the progress of your programs. This may seem unnecessary at first, especially if you are performing the first two items in this list well. However, we are all prone to blind spots and tunnel vision when we are well focused on our day to day tasks. We may be doing a very good job addressing the problems before us, but we might be might be missing opportunities all around us because we lack the perspective to see them. A periodic check-up by a qualified professional can look at what is being performed and then at the bigger picture with a fresh set of eyes and offer suggestions on adjustments and improvements to the existing processes. Technology changes as well, and there may be opportunities to employ new tools and methods that may not have otherwise occurred to us, if not for the suggestion of someone outside your internal processes. Much like we periodically meet with a financial planner, accountant, doctor or lawyer to make sure our business or personal affairs are up to date, our buildings deserve the same sort of check up to ensure that we are addressing the most important needs of the facility.

Our facility assets are one of a businesses most significant investments, and yet they too often get taken for granted. When we do, we open up ourselves for very unpleasant surprises. Minimize those surprises by taking time and partnering with building professionals that can help you maximize your investment.

Commercial Property Buyers and Lessees - Do This At Your Own Peril

 Commercial Property Buyers and Lessees - Do This At Your Own Peril

Robert S. Michaud, P.E.

10/1/20

Your company is looking to move into a new building. Perhaps you have outgrown your existing facility, or maybe it doesn’t have the features or location you need. You have found just what you are looking for, the deal looks good and you are ready to execute the purchase (or lease). Your accountant has looked over the numbers, and your lawyer has looked over the contract, so you have done your due diligence, right?

Not so fast. Commercial facilities can be complex assets, and whether you are purchasing it outright, or leasing it (triple net with much of the capital costs landing squarely in your lap), if you don’t have a qualified commercial building inspector look conduct a thorough inspection of the building and its equipment, you really don’t know what you are getting into. You wouldn’t buy a home without a home inspection, so why would you buy or lease a property that is far more complex than a residential building?

There is more to consider when purchasing or leasing a commercial property, and there are significant benefits for all parties – the buyer, the seller and the real estate agents involved. Let’s consider each from their unique perspective.

From the buyer / lessee perspective:

This is the most obvious perspective. As a buyer, you need to make sure that you know what you are buying / leasing. A trained, qualified commercial building inspector can find those hidden concerns that could end costing your company down the road if not addressed, and the best time to address them is during the negotiation process.

There are other considerations too. Instead of just a one-time inspection to find any potential surprises, why not take this opportunity to build a maintenance program for this new asset so that you can stay on top of the capital and maintenance related issues that are part of owning any asset. By establishing a good maintenance program from the start, you will minimize surprises and the overall cost of ownership of your new asset.

From the seller / lessor perspective:

Savvy building owners and managers know the value of properly maintaining their properties, but even the best and most conscientious maintenance programs are more focused on the day to day maintenance and may not be as in tuned to the expected lifespan of various building systems and the effect they may have on the sale of a property. For instance, you may be diligent in your roof or boiler maintenance procedures, and your efforts may have even extended the expected life spans of those systems but eventually all things reach their end of life. You may be entirely comfortable with the current operating condition of the systems in question, but a qualified and experienced independent third party inspector may shed light on how much more time could reasonably be expected and provide you the cost information that you need to either upgrade the system before selling or leasing the property, or to negotiate with during the sale / lease process. Knowledge is power, and in this case, knowing ahead of the sale or lease process gives you options and the opportunity to address them before they come up in sales or lease negotiations.

From the Realtor perspective:

Whether you are the buyer’s agent or the seller’s agent, the goal is to get to “YES”. Using the reasons mentioned above, you owe it to your clients to encourage them to engage with a qualified third party expert to remove any surprises ahead of time. No one likes surprises of this nature, and by helping your clients thoroughly throughout the process, you demonstrate your commitment to their satisfaction and increase your chances for referrals and repeat sales.

There are some real estate agents that appear to be wary of building inspections. They seem to be concerned that if problems are discovered they will jeopardize the sale process. This is short sighted and if you are working with the right inspection professional, the opposite could be true. A qualified professional can see beyond the problems and offer solutions. If the inspectors you recommend perform a superficial inspection and miss key issues, or alternatively find problems but do not offer remedies and cost estimates when appropriate, they are not serving your client well, nor are they serving the sales process well. Ultimately, you want your client to be well served so that they have a positive experience and either refer you to other and / or return themselves for future property needs. Commercial properties are potentially far more complex than residential properties which is all the more reason to engage a qualified, experienced inspector to be part of the process.

© Michaud Engineering Inc. 2020