New Strata To Usher in Better Service Expertise

Jumeirah Lakes Towers. Expert facilities management services allow owners to retain the value of their properties.

New Strata Law guidelines will open the market for more newly-established specialised facilities management (FM) companies to operate in Dubai, according to industry experts.

Douglas J Ralph, Managing Director, Snag & Inspect, said:

“The new strata guidelines will open the market for more specialised companies to bring in the expertise that is needed to maintain properties at the level that owners have purchased them. As the situation now stands, many properties are not being repaired properly with the result that their value is declining faster than it should.”

He said that since the new strata guidelines empower Owners Associations (OA) to choose their service providers, they are likely to go for specialised providers to fix their properties.

Speaking to this newspaper during a round-table discussion, Abdelaziz Rihani, General Manager, Portland Middle East; Werner Otto Maluck, Managing Director, Focus International Life Cycle Management; Ian Kennedy, Senior Facilities Manager, Brookfield Multiplex Services; and Douglas J. Ralph said that FM companies are yet to hear from any of the authorities with regard to any new industry law and with respect to special licences to be issued to FM professionals.

Do you think the new Strata Law guidelines will bring in increased transparency within the FM industry?

Rihani: The law is designed to handle the interaction of the three important aspects of an operation (developer, homeowners association, facilities management) in buildings and to overcome the complexities, through a set of rights and responsibilities. Hence, I personally think the new strata law will uphold and harmonise the relationship between all concerned to have a clear base and will increase transparency within the FM sector.

Maluck: The Strata Law guidelines will enable owners of units within a building to form an OA whose role will be to manage the operation, repair and maintenance of the common areas of the building to an appropriate standard. The OA manager, presuming one is appointed, has to have the experience and the know-how to be able to handle FM related issues. We would recommend the appointment of an FM consultant to advise and guide the OA manager, or that we ourselves be registered in order to act in the capacity of the Association Manager.

Only with this expert knowledge and guidance will the OA be better equipped to make prudent technical and commercial decisions regarding the selection of service providers. If an OA manager lacks the requisite qualifications and experience, and only a limited number of licences are issued, the risk remains that the owners will still not get the transparency they deserve, and that service costs will remain high. Under professional guidance, the Strata Law guidelines should provide more transparency if handled properly.

Kennedy: The new Strata Law will provide greater control and transparency for the OA with respect to the maintenance costs and service standards. There is bound to be transparency within the FM industry, since in most cases, FM companies will be providing services as an agent to the OA with specialist contractor agreements being direct to the OA.

Ralph: The Strata Law is a very much needed guideline for Dubai. Most FM companies that have based their business standards on the performance of their services and customer service to the end user (the owner) are looking forward to the law. As for transparency, it will take time for non-performing FM companies to be replaced with qualified companies.

What are the aspects of the FM industry that have been covered and taken into consideration within the strata guidelines? Which areas have not been highlighted?

Rihani: The Strata Law is mainly about providing a legal framework that enables a building with multiple ownership to be sub-divided into units and common areas, and for owners to register their unit ownership with their respective land registry departments. However, it covers some aspects related to the FM industry such as easing the understanding of rights, obligations, administration, liabilities and duties. The strata guidelines do not, however, mention the operational frame-work of a facilities management company in such a project and the relationship between the FM industry and the OA manager.

Maluck: It is essential that the facility manager be part of the project team right from the outset, advising on design, contracting and handing over issues. The master developer and project manager should be obligated to seek out and engage the services of an FM consultant.

The service providers themselves need to be selected early on in the project in order to influence maintenance schedules, commissioning, staff training and handing over.
Energy savings, water management, sustainability and efficient facility management practices, supported by suitable computer-aided FM (CAFM) systems, should be expertly introduced during the design and contracting stages.

This will ensure a smooth transition from the construction phase to the operational phase. Once a project is completed, it is almost impossible to introduce the foregoing advantages retrospectively.

An OA manager has to deal with an existing project and the chances are high that none of the benefits highlighted above has been incorporated into the building.
The possibilities to save on energy consumption, water consumption and service costs have most certainly been lost.

From what can be gleaned from the Strata Law, owners have been empowered to take control of the cost and method of managing their properties, but how this should be done, and what remedial action can be taken to reduce high service costs resulting from poor design and construction is still to be addressed.

Kennedy: The full impact on the FM industry will not be determined until the regulations are made available.

Ralph: The economic downturn in Dubai has prompted home-owners to maintain their properties better. Home-owners are now looking at keeping villas and apartments longer and are asking for an inspection service to help them ensure that they are receiving a new property in the best possible shape with a full understanding of what they are receiving or purchasing.

Have FM companies started to register the company and its employees under the special FM licence?
Have you received any notifications on this from the Real Estate Regulatory Agency (RERA) or Middle East Facility Management Association (Mefma)?

Rihani: So far there’s no notification from any government body to have a special FM licence or to register the company or its employees to such a regime. Actually, we were approached by Mefma regarding a kind of registration as we were told that Mefma will be in charge of the organization of all the FM industry activities in the market. We were also told that there will be a charge for this on a yearly basis, depending on which category you are interested in, but till date nothing is official.

Maluck: The registration or licensing requirements as mentioned in Part 6 of the Owners’ Association Constitution are not known, and we have received no further information that would assist us in this. We should add, however, that FM consultancy is vitally important for the OAs. Service providers alone will be seeking to benefit themselves and not necessarily the OA. Their prime purpose will be to provide a service, but not an optimum service where cost savings can be made. The FM consultant will be providing a valuable service to the owner.

Kennedy: Currently, we have not been contacted by either party at this point.

Ralph: No comment.

Do you know when the FM law is expected to come out? Have you heard anything from RERA on this?

Rihani: There’s yet no clarification on whether there will be restrictions in place on agreements which is most of the time taken care by developers. Hopefully, the expected regulations will impact upon arrangements entered into by FM operators with respect to the operation and management. Nothing is disclosed by RERA on the FM law as yet.

Maluck: No, nothing as yet.

Kennedy: Again we have not heard directly from RERA but the industry appears to expect the enabling regulations to be released in the upcoming few weeks.

Ralph: No comment.

Do you believe empowering the OAs in Dubai will lead to more specialised FM companies being signed on for specialised services?

Rihani: An OA is a special, not-for-profit entity. Quality and price will be the main elements to deal with within the FM industry.

Maluck: That should be the target. Owner Associations should target international FM standards of reducing water and energy consumption, increasing the service quality based on acceptable service costs, but again, that can be only controlled by the right kind of FM consultancy.

Kennedy: History in other parts of the world dictates OAs who are specifically made up of owner occupiers who are very concerned about maintaining the capital value of their asset tend to engage professional FM companies to manage their developments as they can see the value in planning and maintaining the asset. The long-term savings across the capital replacement costs become extremely important where the prudent purchaser will enquire after the actual maintenance fees, service charges, the visual condition, meeting minutes etc. to help provide the framework for the decision-making process for where to invest. Where the associations are predominantly made up of members focused on short-term gain, these members will try to minimise the actual maintenance being provided but will concentrate on the aesthetic look only.

Ralph: It will open the market up to companies that bring in expertise that is needed to maintain properties at the level that owners have purchased them. As it is now, many properties are not being repaired properly and the value of the property is declining faster than it should.

As an example, an inspection at the time of handover and before the end of the defect liability period, which in most cases is normally one year, the savings can be very small to none at all on a well-built building where no defects have been found during the snagging/inspection. However, savings will be different for each owner. It comes down to what we find during the inspection, how hard the owner is willing to push the issues found to the developer. We find some items are priceless to a family, such as hidden water leaks that cause mould growth and that can be very dangerous to people with allergies or asthma.

The developer gets a one-year defects liability period from the contractor and a structural defect period of 10 years. If you have cracks that start showing up on your walls, this is covered under the defect period. If the air-conditioner fan coiler unit’s water drip pan is installed so the water does not run to the drain but adds up draining into the ceiling, this is a defect in installation. Most developers do not like to admit that the defect liability period also covers the end user.

The Strata Law is a much-needed guideline for Dubai. Most FM companies that have based their business standards on the performance of their services and customer service to the end user (the owner) are looking forward to the law. As for transparency, it will take time for non-performing FM companies to be replaced with qualified companies. However, owners are opening up to the fact that they would like their house to be inspected and checked. For example, we had one very large villa that had water leaking into the first floor hallway that made it feel like it was raining inside. During inspection, we found that the contractor had used a sheet of plastic for water-proofing under the roof tiles.

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