Monthly Archives: October 2018

Attitude, business life, Emotional Intelligence, Management

The Party’s Over- Now What? Maintaining Perspective & Balance in the Wake of a Terminated Business Relationship

Leave a comment

Whether you are an employee of a management company, an onsite manager of a community association, or a professional service provider, odds are at some time in your career you will be involved in a business relationship that for one reason or another reaches the end of its useful life. You shake hands, wish each other well, and move on. But in reality, doing business is a human endeavor and damage can be done if you don’t recognize and address the mental and emotional toll that can sometimes linger from a business “break-up.” You can be technically proficient in handling transitions without always giving full consideration of the human factors that might be involved.

Over the years it has pained me to watch managers, in particular, come away scarred from difficult client or employment relationships. Those who throw themselves into their work are hit hardest. Despite what they may view as Herculean efforts in less-than-favorable circumstances, they come away feeling unappreciated and often abused. Professional detachment to the point of uncaring, over-defensiveness, diminished standards of performance or conduct, and profound cynicism are only a few of the telltale signs of unhealthy scarring.

I’ve been so fortunate to have had the opportunity to reflect on these things with people of uncommon wisdom. They have shared with me pearls that have proven valuable in professional and personal life. I care about all you dedicated professionals working in the community association field. I want you to be healthy and happy. So then, since sharing is caring…

Lesson #1: Learn

“When the Devil says fire is hot, he knows what he is talking about.” Credit for this one goes to my primary professional mentor, Arthur Dubin. He shared this with me some years ago while we were working with a particularly unreasonable board president. Though I have to state for the record that the statement assumes certain theological concepts that I personally believe to be rather spurious, the words create a picture that makes an important point: While being deluged by unfair and possibly irrational attacks, it is very easy to miss a salient and accurate critique. You may feel compelled to defend yourself as if you were perfect or minimize shortcomings in the face of intense scrutiny. It might seem like your client or employer expected you to be perfect. Well, you weren’t. And that’s OK, but even minor issues, if not identified and corrected quickly, can become major issues. As painful as it might be to admit mistakes, it’s way more painful to repeat them. If a criticism is true, it is true regardless of the identifying source. The challenge is hearing it. So, be brutally honest…could you have done anything better?

Lesson #2: Eyes Forward

It turns out being a lousy driver was one of the best things that ever happened to me…. “Glance in rear-view mirror anytime you apply the brakes.” I got that one in a driver improvement class many moons ago. The lesson literally saved the instructor’s life one day on the beltway. He glanced in the mirror as traffic slowed and noticed that the truck driver behind him wasn’t paying attention. He took corrective action, changed lanes, and avoided the deadly rear end collision that befell the driver that had just moments before been in front of him. When things stop in front of you, like the end of a business relationship, it pays to look behind just long enough to learn the lessons necessary to avoid getting rear ended (Lesson #1)— and then it‘s got to be eyes forward. You are smarter now. Focus on what’s in front of you. Take action to get where you need to go. It doesn’t pay to beat yourself up over the past. If you keep staring into the rear view mirror, you’ll wreck. Once Lesson #1 is done, move on.

Lesson #3: It’s Your House

This one is courtesy of the late “Uncle Mike” Gilmore. He had a well-earned reputation as one who had seen it all in this business. He was a great sounding board. One afternoon he let me whine on for several minutes about a situation. And then…

“Tommy, what’s the most valuable real estate you own?”

“I guess it’s my house.”

“Wrong. It’s here (points to his head). Let’s say you owned a house and decided to rent it out. Would you let just anybody move in?”

“Of course not. I’d qualify them to make sure they’d pay the rent and wouldn’t trash the place.”

“Right. So if you’d go through all that for a house, why would you do the same with the most valuable real estate you own? Never let negative people rent space in your mind.”

Whoa. Of course he was right. Even if you successfully apply lessons one and two and have done everything you should do, sometimes those negative comments might play back in your memory. A new comment might trigger an old memory. There is no benefit to dwelling on them. You can’t control others, you can only control yourself. Why give up any of that control by allowing others’ negativity to reside in your head? Lock the door.

“Never let negative people rent space in your mind” – Mike Gilmore

It’s not easy to maintain a dedication to excellence in a balanced, healthy way. But you have to. It is the best way to be good to our clients and good to ourselves at the same time. Imagine that—a win-win.

If things don’t work out sometimes, it’s OK to hurt. Just not too long. It sounds trite, but it’s true – every experience can make you better and stronger. Please don’t burn out. And please don’t sell out. We need you.

Book Reviews, business life, Startups

Book Review #2 – Learning From a Humble Master

Leave a comment

The Backstory

I did a lot of curation in the early days of trying to figure out how to set up my digital platform. Through Twitter, I stumbled upon Shonali Burke, the Queen of Measurement in the public relations field. Her Waxing Unlyrical blog  became one of my resources. I noticed Shonali frequently retweeted Mark Schaefer. At the time, a good amount of it was a bit over my head. She convinced me to attend a conference in Washington D.C. at which Mark was a speaker, despite the fact that I was a fish out of water. I was glad that I left my comfort zone and showed up. Mark was an excellent teacher. He went deep without sacrificing pragmatism. I could tell he was an introverted fellow with a passion for sharing thoughts and ideas. I got the sense he dug into subjects and let the data lead him to his conclusions. My kind of guy!

Flash forward to 2018. My platform was finally starting to take shape, but I knew I wasn’t doing it very well. Mark had published Known: The Handbook For Building And Unleashing Your Personal Brand In The Digital Age.  I have a general aversion to “how to” books, but I decided maybe this was the time to learn from Mark (see note on “Krios” below). It was a good decision. I will never be an internet superstar, nor do I want to be. But I am much clearer on how I can use the medium in a useful way as I take my professional mission farther and deeper.

The Summary

Known is a “how to” book done right. The lessons are taught through research, personal experience, and by the experience of others who have mastered their digital brand in distinctive ways. All the lessons are founded in the fundamentals of life and business, and that’s why they can work. Mark sticks to The Why and stays grounded. He is a humble myth buster. He is also a master of realism, tackling the challenges of the human condition in a balanced and thoughtful way.

He breaks the task of digital branding into four steps– place, space, fuel and finally, creating an actionable audience. Along the way he dismantles the “follow your dream” Kool Aid and integrates the principles of grit into the process of engaging in any meaningful endeavor. He provides invaluable advice on content development. He also explains how you might fit other media, such as book writing and public speaking, into your platform. In each section, you’ll find real-life practical tips. (Spoiler Alert: Tip #20 for content creation is to “drink a beer.” (114))

I was especially impressed with Chapter Three – “Finding Your Sustainable Interest.” Mark introduces seven exercises that he has used at his seminars. They are more than marketing exercises; they are valuable for anyone looking to find or clarify their career path.
Finally, Mark introduces you to “Stars of Known,” actual case studies that show how all this can come together for distinctively different people and situations.

The Gold

There’s so much gold in here that it’s hard to pick. Here are some of my personal favorites:

Page 12: “Passion without a plan is a hobby.”

Page 23: “The key to success isn’t necessarily a passion, it’s finding a sustainable interest…”

Page 30: “Everybody has the chance to be known and realize their goals and dreams, but not everybody will succeed. Some will listen to the gurus and ‘follow their dream’ into oblivion without the plan they need to give them a chance to succeed. Some will grow impatient and give up too soon. Many will be unwilling to devote the time and consistent hard work needed to make it happen.”

Page 40: “Passion…that’s common. Endurance is rare.”

Page 69: “Becoming known is probably a multi-year journey. But the journey must start. You must begin, even if it’s not perfect.”

Page 107: Practical steps to answer the question, “What kind of content is right for you?”

Page 110: Awesome advice to help answer the question, “How do you find time for this?”

Page 151:The description of the “Alpha Audience” was an Aha! moment for me.

Chapter 9: The five inspiring stories of Known . Yes!

Page 194: Application of 2 Greek words for time, Chronos (chronological time) and Kairos (“the right time”). So insightful.

Page 199: Overcoming fear and the imposter syndrome.

Page 219: “Consistency can heal a multitude of faults – and maybe it eventually turns into talent.” – Anna Blake

Page 223: “It’s your job to make that fire (your content) worth gathering around.” – Chris Brogan

Page 225: “Provide value with the expectation that you’ll never receive anything in return. Serve your audience with your arms wide open, not with a hand extended.” -Shawn Van Dyke

Best Practices, Budgeting, condo associations, Cooperatives, HOAs, long range planning, Reserve Studies, Strategic Planning

14 Things Your Reserve Analysts Might Not Tell You – And It’s Not Their Fault (Part 3)

Leave a comment

Two weeks ago,,  we shared five focus points to help you analyze property components. Last week, we offered another five, which were practical considerations to discuss with your reserve analysts in order to estimate project expenses as accurately as possible. To recap, we’ve covered:

1. Engineering Study for Stuff You Can’t See
2. Elements Impacted by Code Compliance
3. Piping Systems
4. New Construction Technology
5. Underground Piping and Wiring
6. Project Design & Management Expense
7. Logistics for Limited Access Projects
8. Collateral Damage
9. Items Outside Study Period
10. Strategic Improvements

We close out the series with the last four nuggets. These cover areas where the Board has a level of discretion and help you deal with some thorny cash flow issues.

11. Interior Renovation Upgrades: Interior renovations can take many forms. If you don’t tell your analysts what you have in mind, they are left to guess. For instance, I helped one client to plan for wallcovering, painting and lighting that would last through two cycles of carpet. In another case, the whole lighting plan was to be revised. That specific data had to be plugged into the reserve study.

12. Alternative Funding Options: If the community is behind the ball financially, debt service, special assessments, or a combination of the two might be options to consider. Clarifying the Board’s authority to do either and strategically planning to communicate options to members are absolutely crucial. This will no doubt be the subject of a future blog. Your reserve analysts should be able to help you to run “what if” scenarios, but you are going to have to tell them what those options might be.

13. Big Trees, Drainage & Other Landscaping: I’ve heard arguments that greenspace does not belong in reserve studies. However, mature trees and landscaping can be really expensive to remove, not to mention replace. Over time, surface drainage can become ineffective and might even lead to flooding. A review by an arborist, landscape designer or architect can be a real eye-opener. You can consult with your reserve analyst and auditor to confirm the appropriateness of including such items in the replacement reserve. If it gives either of them heartburn, you have an option. See #14 below.

14. Major Periodic Maintenance: I regularly see five-year electrical panel and switchgear maintenance in reserve studies. I even see the cost for future reserve studies in some reserve schedules. Even though these expenses may not pass the test as a reservable component, it makes sense to flow the funding evenly from year to year. Including such expenses in the operating budget could have significant impacts on fees. The fact that it’s on a schedule and in the financial plan helps Boards to maintain the discipline to actually tackle these vital projects. Depending on the property there might be other major periodic maintenance that is just as vital and has a similar financial impact. Hydro-jetting of plumbing stacks and laterals, dryer duct/vent cleaning, HVAC duct cleaning, and chimney inspections and cleaning can add up. There may be a couple of approaches to consider. If the property can be divided up with a portion of the work done each year, it would flatten out the expense. But if that’s not feasible, you might ask the reserve analyst to include such projects in the study. If the analyst (or the auditor as noted in #13) or the Board is uncomfortable with that approach, there is an option. You can create an operating reserve, set up a schedule of expenses, and calculate a monthly contribution to that reserve in the same manner as the replacement reserve. This will make sure the money is in the bank, keep you from deferring critical preventive maintenance, and even out the financial impact on association members.

Who & When?

We’ve identified a number of capital projects that may require additional professional support to properly plan and estimate replacement costs. Investing funds up front to work with a qualified, structural engineer, mechanical engineer, construction manager, construction estimator, project manager, elevator expert, fire protection system engineer, architect, or contractor can significantly mitigate the possibility of unhappy surprises and create a realistic funding plan. We’ve identified a few areas where legal and audit advice is advisable. Making this a point of discussion with your reserve analyst will help. Some firms that provide reserve studies are multi-disciplinary and may have some of these resources in-house.

The optimal time and depth of study will depend on the projects themselves. Hopefully this series has helped you to take a hard look at the components in your reserve schedule, do a risk analysis and take the holistic approach described in last week’s blog. Once you’ve identified elements that may benefit from further analysis, check the timing. Early on, perhaps you can get some inexpensive thumbnail estimates (hint – plan for the worst, guess high). If you are getting to within about five years of a large project, it might be time to make a more significant investment and hire specialists to take a deeper look. The more complicated the project, the more important this is.

Bottom Line

A truly comprehensive reserve plan can make all the difference in the financial health of a community association and the quality of life of its members. The reserve study is a tool. Your reserve analysts are your partners. See the bigger picture. The better the data, the better the study. The better the study, the better the plan. The better the plan, the better the execution of the plan. The better the execution of the plan, the better the community.

Best Practices, Budgeting, condo associations, Cooperatives, HOAs, Reserve Studies, Strategic Planning

14 Things Your Reserve Analysts Might Not Tell You – And It’s Not Their Fault (Part 2)

Leave a comment

Last week’s blog offered five focus points to improve the accuracy of your reserve plan. Nuggets 1 through 5 help you analyze property components. This week, we share nuggets 6 through 10. These are practical considerations to discuss with your reserve analysts in order to estimate project expenses as accurately as possible.

These all come from my experience working with clients through the years. In some cases, I noticed a disconnect between plan and execution. In their planning process they dutifully used the expense listed in their reserve study. However, once the project got going, additional necessary expenses that were not anticipated in the study were funded from replacement reserves. This made it appear that the projects were over budget, resulting in weeping and gnashing of teeth, not to mention death glares in the direction of their reserve analysts. The truth was that these projects were not over budget, rather they were under planned. In other cases, under planning occurred when clients failed to take a bigger picture or strategic approach to planning projects. The lesson is clear: The more accurately you can see the future, the better the odds you can get there.

Clients who implemented this week’s nuggets planned more realistically and utilized reserve funds to the maximum benefit.

6.  Project Design & Management Expenses: Wise associations elect to engage professional engineers, architects, and/or project management firms to develop specifications, facilitate the bidding process, and provide quality control for major capital projects. Depending on the nature and size of project, the investment can be in the neighborhood of allowing 10% to 15% of the total project costs.

Lately I’ve been encouraged to work with boards that understand the impact of major projects on their management team. Projects that impact residents in an intense way take human resources to make sure they run smoothly. Hiring additional staff or a professional project manager can make all the difference between a great project and one that sucks the life out of every resident, board member, and team member. Too many associations ignore the fact that without that support, something will give – the quality of the project, the quality of day-to-day operations, or both.

Reserve studies may not anticipate any of these expenses. You may need to direct that they be included.

7.  Logistics for Limited Access Projects: If something is hard to access, it’s going to be more expensive to replace or maintain. Sometimes A LOT more expensive. Getting a handle on those costs can be crucial to estimating the total price tag of a project. A cooling tower on top of a 27-story high rise is going to cost exponentially more than one on the ground floor. If a building elevation presents challenges in accessing a roof, the costs of roof or gutter replacement and periodic major maintenance on components like soffits and trim go way up. Contractors and construction estimators can be lifesavers in helping to avoid some gnarly surprises.

8.  Collateral Damage: This can be a tricky one. Technically, the association may have limited or no responsibility for replacing unit components. But what if they are altered to access common element replacements like pipe risers? My favorite example to illustrate the point: Let’s say the only way to replace a piping system is to go through 1950’s era ceramic tile. You’ll never match the old tile. Will the Board repair the plaster only? Tile one mismatching wall? Or replace all the tile in the unit? Multiply the expense by all the units in that tier. The answer might make a significant impact on project costs. Here, your first call may be to association counsel to be clear on your responsibilities and options. Then you’ll have to make a business judgment. Just don’t wait until you start the project to decide. Get clarity in the planning process and plug the info into the reserve study. That is not your reserve analyst’s responsibility, it’s the Board’s.

9.  Items Outside Study Period: Many studies include only those components that have useful lives within the period of the study (usually 30 years). The rationale is that if you conduct studies every three to five years, the component will eventually make its way into the study. But some major components such as electrical switchgear, transformers, or piping systems may have useful lives of 50 years or more and they may be major expenses. Waiting to fund those expenses over only 30 years could create a big bump in required funding levels when they magically appear in the study. Plug them in now.

10.  Strategic Improvements: Instead of replacing components in kind, it might make sense to rethink and plan. For instance, a property may have high-maintenance components such as wooden exterior soffits, fascia, and rake boards. These require repainting every few years and eventually sectional or full replacement. It might make sense to replace them with low-maintenance materials. More expensive up front, but much less expensive in the long run. Original gutters might have been undersized and should be replaced with larger ones. If gutters and downspouts are being replaced, it might be the golden opportunity to replace wood trim with low-maintenance material. The Association could pay only once for mobilization for two projects and save money in the long run. Better yet – think strategically and tie these projects in with the next roof replacement to get to best bang for the buck. Take a step back and see property components in a broader context. Adjust the plan accordingly and make sure the data gets plugged into the reserve study.

Perspective

No one wants to increase fees. It can be tempting to ignore the potential for additional expense, even if it means losing out on savings in the long run. Making the best use of members’ assets is a key element of the board’s fiduciary duty. Think strategically, plan wisely.

“Leaders keep their eyes on the horizon, not just on the bottom line” –Warren Bennis

Next…

Next week we close out this series with the last 4 nuggets. These will help you to recognize areas where the board has a great deal of discretion in the planning process. Many community associations are facing the tough realities of under funding and have to include options such as loans and special assessments in their funding plan. We will help you to partner with your reserve analysts and other professionals to develop scenarios and choose the best plan for your community.

Budgeting, community associations, condo associations, Cooperatives, HOAs, long range planning, Reserve Studies

14 Things Your Reserve Analysts Might Not Tell You – And It’s Not Their Fault (Part 1)

2 Comments

Reserve studies are invaluable tools for condominiums, cooperatives, and homeowners associations. Used properly, they assist boards and managers to make good decisions for reserve funding with long range planning in view. They also help to plan for near term capital projects. The reserve study provides a basis for a systematic and disciplined approach to reserve funding and capital project planning.

At the same time, I’ve heard too many complaints from clients through the years about accuracy of the data included in their reserve studies. This tends to occur when unpleasant and unplanned realities throw a monkey wrench into the best laid plans. I’ve found that either an unrealistic expectation or a poor understanding of the study process are typically at the root of the issue. This series of 3 blogs helps to address the first issue. I’ll provide tips on how to work with your reserve analyst in another blog soon.

What a Reserve Study Is…And Isn’t

Professional reserve studies have two components – a physical analysis and a financial analysis of major property components. The physical analysis helps to estimate the remaining useful life. The financial analysis turns it all into an actionable plan to recommend a funding level that ensures the Association will have enough money in the bank to replace components when needed. For more details, you can review CAI’s National Reserve Study Standards, and the Association of Professional Reserve Analysts Standards of Practice.

Reserve studies are relatively inexpensive as compared to other engineering analyses. There are reasons for that.

  • Reserve analysts are by definition generalists engaged for the specific purpose of creating an overall financial plan. They do not undertake the detailed condition reports, basis for design, or specifications that a specialty engineer may create in preparation for a particular capital project.
  • Reserve studies do not include destructive testing. No walls will be opened, ground dug up, or other means to get into the details of conditions unseen.
  • Reserve analysts are neither omniscient nor clairvoyant, nor do they possess X-ray vision. You’d have to pay a lot more for that!

Throw Me A Bone, Man!

The good news is reserve analysts LOVE data. The more valuable information you can give them, the more they will plug into the study. The better the study, the better your plan.

Here are a few nuggets you should consider feeding to your reserve analyst. Complicated condominiums and cooperatives, especially high rises, are more likely than HOAs to benefit from the additional data points listed in this blog series. Regardless, it’s worth taking the time to consider whether each of the 14 nuggets factor into your association’s reserve plan. I can tell you they’ve either saved my clients a lot of heartburn, or I learned about them because of my clients’ heartburn!

These first 5 nuggets deal largely with building components. The next 2 blogs will address discretional expenses, practical project planning, and approaches to thorny cash flow issues.

  1. Engineering Study for Stuff You Can’t See: This could apply to components like waterproofing systems under patios, parking lots, green space, fountains, etc. Without doing destructive testing and taking a look at what is underneath, you may have no idea how much it will cost to design and replace a system you can’t see. You will likely pay far more for this engineering study than you will for the reserve study, but it will be well worth it. One client’s reserve study had estimated system replacement for four garages to be $500K. When it was all said and done they paid about $1.1M…. per garage! The information gleaned from their engineer’s work helped them to prioritize and pay for the project. If they had that information up front and included in their reserve study they could have avoided sticker shock.
  2. Elements Impacted by Code Compliance: The typical reserve study assumes like-for-like replacement. However, local code may require a building to upgrade an old system to meet current codes, exponentially increasing the cost of some projects. This is particularly true of fire protection systems and elevators. Getting cost projections from sources familiar with local codes can save you from ugly surprises.
  3. Piping Systems: No pipe will live forever. Yet, I have seen common piping systems omitted from reserve studies for whatever reason. Also, determining the remaining useful life of copper piping is easier than ever before thanks to non-invasive technology. Obtaining a pipe condition study for domestic, HVAC and waste piping can provide invaluable data.
  4. New Construction Technology: Sometimes new building products or construction techniques can post a challenge until there is a track record of periodic major maintenance, rehabilitation or replacement. Installing contractors, architects or engineers involved in the new construction can sometimes provide some insights to help plan for future projects.
  5. Underground Piping and Wiring: This can be a big one for garden communities, especially those built in the 1960s as apartments, and particularly those with central HVAC plants. I don’t always see underground electrical feeds, HVAC piping, or domestic water piping in reserve studies for communities that have these components. Tracing a break or a leak, digging up between buildings to replace a section of wiring or piping and restoring the grounds on an emergency basis is an expensive proposition. It is surprising how much electrical wiring has been laid in the ground without being run through conduit. This can even impact the planning for replacement of light poles. Identify the risk and make a plan to include in the reserve study as needed.

Hard Reality

In some cases, the engineering and design costs outlined in the 5 nuggets above might exceed the cost of your reserve study. But that’s irrelevant. Think about the impact of not having the data. Underfunding by any means is a bad strategy.

When & Who?

In the third and final blog in this series, we’ll identify potential resources and factors that will help the Board to decide when to reach out.

Next…

In next week’s blog, we will discuss data points related to practical considerations when planning for projects. I will again reach back into my bag of experience to find the things that made a huge difference for my clients through the years.