For the last few years, centralization has been one of the biggest stories in multifamily operations. We have seen substantial progress in property admin functions and some movement in leasing. But, as the last few editions of the 20for20 Annual Survey have demonstrated, little progress has been made on maintenance centralization.
That is not to say that companies have not been working to improve maintenance delivery and technology. They have. But if centralization is not the defining challenge in maintenance, what is?
That question is at the heart of a brand new piece of research that we are releasing today. “The New Economics of Maintenance Improvement” is a new paper, researched with leading multifamily maintenance organizations to identify where the dollars are in improving maintenance. It debunks some popular ideas, and it identifies the common elements of companies that have made meaningful changes to the way that maintenance works in their companies.
Show me the Money
Let’s start with the basics: multifamily owners and operators frequently misunderstand the ROI that maintenance offers. Multifamily properties typically operate with a coverage model: a relatively fixed number of maintenance FTEs responsible for whatever work arises. Because that “lump of labor” costs the same irrespective of how productive they are, improvements in maintenance efficiency do not translate neatly into savings.
It has not helped that software vendors jumped on the centralization bandwagon and began to talk about their technology as a way to cut headcount. Very few operators approach maintenance improvement with that objective. There are efficiencies to be had, but they seldom show up in the form of staff cuts.
In reality, most benefits ultimately hit the revenue side of the ledger. Better scheduling makes service faster and more predictable. The resulting improvement in resident experience can contribute to retention and reputation scores. Each additional renewal also eliminates the cost of a turn. Since maintenance has a bigger impact on renewal likelihood than any other aspect of service delivery, it is often the impact of maintenance on experience that delivers the most dollars.
As this new research describes, maintenance affects financial performance in more ways than conventional ROI calculations tend to capture. Instead of asking how technology can reduce the cost of maintenance, it is better to identify how a better maintenance operation improves asset performance.
Contrasting Perspectives
One interesting observation that emerged from this research is that there are two distinct perspectives on maintenance: that of the C-suite and that of those responsible for day-to-day maintenance delivery.
Maintenance encompasses an unusually broad range of activities that are often less familiar to senior executives than functions such as marketing, accounting, or revenue management. Those closer to the operation tend to have a deeper understanding of how work is organized and delivered.
Maintenance supervisors and property-based leaders tend to understand intuitively how changes to process and technology affect delivery. Executive attention, on the other hand, focuses on creating the conditions for improvement: visibility, consistency, accountability, and ultimately better resident experiences.
That leads many executives to reach for the “easy button,” looking for new functionality that looks like it will improve some aspect of maintenance. A clear learning from this research is how performance gains come not from simple solutions but from mastering complexity.
What Successful Maintenance Organizations Have in Common
In setting out the sources of ROI that maintenance typically offers, this paper concludes that the benefits accrue primarily to companies that address maintenance in its totality. That requires three components that were remarkably consistent across the participating companies, despite their varied portfolio types and business models.
First, they had established a single source of highly detailed operational data. Second, they organize maintenance around standardized workflows, rather than treating individual work orders as isolated activities, as most companies still do. Finally, they build communication into those workflows so that—and this part is important—the workflow drives the communication, rather than the other way around.
Together, those foundations change how maintenance works and create a level of control that relatively few multifamily operators have. They also provide the platform that will enable companies to maximize the leverage of AI. While AI chat is rapidly becoming ubiquitous in multifamily, the bigger maintenance opportunity is not simply to have AI communicate with residents. It is to combine AI with the data and workflows to achieve ever-higher degrees of automation and consistency.
Our new white paper explores how leading operators are putting these pieces together. It identifies the financial opportunities and what operators are changing to capture them. To learn more, download your complimentary copy of ”The New Economics of Multifamily Maintenance” today!
Photo by Matt Artz on Unsplash