How Much Is That Window in the Building?
How Much Is That Window in the Building?

How Much Is That Window in the Building?
By Dan Margulies
Executive Director, Associated Builders and Owners of Greater New York

I think I’ll run down to the supermarket and by some heating oil. Oops, no, that won’t work. They don’t have #2 oil.

Well, maybe I’ll have the super run down to the hardware store where we have an account and get some insulation for the pipes in the basement. He knows what to get, right?

Most managing agents are not trained purchasing agents, and often their companies don’t have a purchasing department either…but they should. An apartment building is a business with a big budget. Would you invest in a public company that didn’t evaluate a hundred thousand dollar contract carefully? Then why would you own a building that didn’t buy electricity or oil or boilers just as professionally?

Some management companies have approved vendor lists. Others do not. In both cases a specific vendor is often chosen by an agent shouting over the partition to ask “anyone know a good plumber?”

Major capital expenses are often treated just as cavalierly. Boilers are replaced with the boiler the installer recommends, usually the size or type that was there before. Smarter agents and owners know that an energy engineer can usually save thousands on the installation and operation if the system is sized and specified more scientifically, and then bid out.

Another common problem is inertia. Someone got a good deal on cleaning supplies in 1980 and the building is still using the same supplier. The deal isn’t good anymore, but no one checks. Even more commonly there is a salesman or distributor who the agent has known for years. “Don’t worry,” he says, “I’ll get you the best price.” Well, maybe, he’s a good guy, but should you really not check?

Of course, you don’t want to change vendors just for the sake of change. And, sometimes a supplier with reliable service is worth a little more.

The bottom line is that professional purchasing means routinely researching products, checking references, getting bids and evaluating offers. Every purchase over a certain amount should be reviewed by an owner or board. No contract over a certain amount should be renewed without new bids. Another, lesser, amount should still trigger a full review every year or two or three. Even that hardware store where the super is sent to buy a can of paint should be evaluated occasionally – along with the kind of paint he’s allowed to buy.

Every agent can’t be an purchasing expert in addition to his or her other duties, but every building can have purchasing policies that keep the process under control.

(ABO is an association of multifamily developers, owners, and managers in New York. ABO also administers the national Registered in Apartment Management certification program to encourage professionalism and ethical standards in the industry.)

"My company manages 60,000 apartments, and I encourage all of my managers to get RAM certification."

– David Kuperberg, Cooper Square Management, New York City, NY

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