How Mitigating Vendor Risk is Simplifying Property Management
Nearly every property manager can relate to – or at least empathize with those who have experienced – the middle-of-the-night emergency plumbing breakdown. It’s when the phone rings at 3 a.m. and a resident is ankle deep in water. Only this time, the property management company’s go-to emergency plumber is slammed and a frantic search begins for somebody else who can fix the problem.
Good thing that the on-call manager comes through in the clutch and finds a 24/7 plumber who can be there is 20 minutes. Even though the community has never used the company before, a burst pipe gets fixed, and the healing begins.
Nice save. Or is it?
In the aftermath, a long wait-and-see process begins. Everyone will learn whether or not the plumber was the right call in the coming days, weeks or months. True, the company put a fast plug on a problem that could have jeopardized future retention. But many questions are unanswered because the vendor was not properly credentialed.
The on-call manager may argue there simply wasn’t enough time to check out the plumber. Verifying insurance coverage can take a couple of days, maybe a week or more if the vendor has some sort of amendment to coverage. The process typically involves going back and forth with the vendor to get the right paperwork, endorsements, additional insured and so forth.
But, with any repair, issues could crop up down the road. Apartment industry veteran and RealPage’s Director of Risk Management Tracy Castleman recalls a time several years ago when a fire started a day or so after a plumber had soldered pipes to fix a leak in the wall. By the time the smoke cleared, the plumber was long gone and a nightmarish insurance claim process began. Had the property ensured the plumber was adequately covered before the work began, everyone would have slept a little better that night.
It’s an issue that faces the property management industry every day. Plumbers, HVAC technicians, landscapers and painters are needed to keep America’s apartments looking good and running smoothly.
But the property ultimately takes a huge risk hiring a vendor that hasn’t been thoroughly checked out.
So how can apartment operators from the site level to corporate be assured that the companies they are hiring check out to minimize risk?
Cut time, effort and risk
In order for property management companies to effectively mitigate risks associated with doing business with other firms they need to have a stable of primary and backup vendors who are compliant to the company’s needs. The sometimes arduous task of ensuring compliance should have already been completed and shown that those vendors are a good fit for the property whether in an emergency situation or not.
“If the plumber is going to come in and do some work for a community, there are some rules, insurance and other things of that nature that they need to supply. This helps them to make sure there’s adequate protection for the management company if something were to go awry based on the work that’s being done,” says Castleman. “All of that takes time.”
Working from a pre-approved data base of vendors helps mitigate risk faster than the traditional process of finding companies and chasing paperwork from office to office and courier to courier, Castleman adds. What sometimes takes several days to complete can be done in less than two hours.
Focus on resident retention instead of paperwork
Reducing the amount of time it takes for a vendor to become compliant with a property management company’s requirements ensures an orderly flow that’s critical to effective apartment operations. It also relieves the burden of site personnel who may not know the ins and outs of proper vendor credentialing so that criminal records, insurance and financial standing of the vendor is quickly verified.
Ultimately, the right call gets made, even at 3 a.m.
“Most people at the site level are experts at leasing apartments and are not necessarily well versed on the intricacies that are associated with an insurance policy and how the endorsements all work together,” Castleman says. “You want to focus on resident retention and getting those prospects in the door and getting those leases signed. So that’s where they need to have their attention. They really shouldn’t be spending their time worrying about some paperwork.”
‘Mitigating Vendor Risk Made Simple’ at RealWorld 2018
Castleman will cover in more detail the advantages of quick vendor credentialing in “Mitigating Vendor Risk Made Simple,” at the RealWorld property management conference this July in Las Vegas. The huddle is one of several educational sessions focusing on new ways to improve business performance through innovation and simplification.
Join us this summer to learn how multifamily companies are simplifying their businesses. Book your spot here now!