How do we measure and manage the transition of control from developers to owners

I was interviewed last week by a PhD candidate studying the transition from developers control to owners control. It got me thinking about the disputes that arise in this period.

Chief among this type of dispute are long term service contracts, restrictive by-laws and the difference between projected levies and actual common property expenses. It is the last of these I want to talk about this week.

There are a number of challenges on a strata manager proposing a budget at the outset of the development process. The final plans may change, expenses may blow out unexpectedly, and the actual running costs for new technology, particularly sustainable initiatives, might not be known.

For all of this, the main problem is usually the pressure from the developers marketing team to cut the budget to ‘match the competition’. The sales team knows that there will be push back from buyers if the costs seem too high relative to the competition.

Now the problem is that the competition might be an apple and one is buying an orange. It might also be that the market intelligence comes from a taxi driver’s brother’s uncle.

An old business adage came to mind as I was speaking of this to a soon to be Doctor friend; ‘If you can’t measure it, you can’t manage it’. When a developer and its consultants go to set a budget on the price of new apartments matching a particular generic description, how useful would it be to have a forecast range from a database of such information?

Everyone in the strata world wins from such a tool; strata managers have guidance on the market and are less likely to have cranky owners when an estimate is too low, developers have a benchmark to sell to, and owners might have a better grip on reality when they enter the strata scheme.

Anyone up for a PhD?

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