As Super Bowl LVI approaches, and the Rams and Bengals prepare for a historical showdown, there is another ongoing head-to-head match that is (respectively) just as big, if not bigger: you vs. your utilities. And while it may seem odd to compare the nation’s biggest bowl game to the process of utility management, the two subjects have much more in common than you probably realize.
1. Rules and Penalties
Regardless of where your properties and communities are in the U.S., there are rules and regulations in place to ensure fairness and encourage conservation. These regulations may include the inability to use certain bill-back methods, requirements to disclose specific items in a resident or tenant’s lease, requirements for energy benchmarking, and so on.
If your team fails to follow these rules, you may be subject to financial penalties that will push you back and potentially cost you thousands, hundreds, or millions of dollars.
For example, in the city of Boulder, Colorado, the Boulder Building Performance Ordinance requires all commercial, multifamily, and industrial properties with more than 20,000 square feet to:
- Report their energy data through the ENERGY STAR Portfolio Manager every year
- Perform energy assessments every ten years
- Perform retro-commissioning (RC) assessments every ten years, then implement any found cost-effective measures within two years of the assessment
- Complete one-time lighting upgrades
Properties that are not compliant with these requirements will be fined $0.0025 per square foot per day with a daily maximum of $1,000.
To provide another more recent example, at the beginning of February 2022, a small Minnesota-based property management company was penalized for improperly imposing utility surcharges and late fees. This company was then required to provide refunds for the affected tenants with the overall refund expense costing approximately $50-$60K.
That’s a heck of a penalty for any referee to call–just imagine what that overall refund amount would have been if this non-compliant company was managing hundreds of properties instead of four.
2. Reliable, Experienced Teams
Without any kind of automation or support service, it can take roughly 3 days to manually process one utility provider bill. And that doesn’t include the time it takes to track down missing bills, audit invoices, resolve issues with providers, and bill-back tenants for the expense. Which, to be honest, seems somewhat manageable when you only have a few utility accounts to work with. But, in most cases, utility management is rarely (if ever) a one-person job.
Effective utility management requires a diverse team of well-trained individuals who have the necessary skills, knowledge, and expertise to propel your team forward. You will need receivers to obtain bills in a timely manner; quarterbacks to pass charges onto residents and tenants; running backs to identify gaps; and a strong legal line to ensure compliance and protection. These individuals—among many others—will then need to work together seamlessly to ensure oneness and minimize the chance of mistakes.
3. Evolving Gear
Since the game’s origin in the late 1800s, gridiron gear has dramatically changed to increase athlete efficiency and protection, evolving from rugby-inspired sweaters and leather helmets to jerseys, pads, padded helmets, and cleats.
The tech supporting utility management has similarly evolved.
As time has passed and technology has advanced, bill pay processes have been refined to further reduce late fees; bill-back processes have been modified to increase recovery; utility management platforms have been developed to track utility and ESG data in real-time; monitors have been invented to ensure cost-efficient waste hauling; and many other advancements have been made to streamline every step of the utility management process.
If you’re still relying on old gear (and you want to stay in the game) you should consider modernizing your utility management strategy and technology. Here’s a whole article on doing exactly that.
4. A Game of Strategy
While strategies may vary from one coach or property management firm to the next, the need for effective game plans is the same across the board—without them, success cannot be achieved. That said, as you can see from this year’s NFL standings, not all strategies are created equal. Some strategies lend themselves to more losses—like those of the Lions, Jaguars, Giants, and Jets (sorry, fans).
So, what can you do to develop a winning strategy?
Learn from the All-Stars
The property management industry is filled with all-star companies that are consistently winning the utility management game: Greystar, Bozzuto, American Homes, Cardinal Group, Phillips Edison, etc. Do a little research to find out what they are doing and how it differs from your current processes.
- Are they managing utilities in-house? Using an app? Or passing the full utility management burden onto an external provider?
- What additional steps have they taken to reduce utility costs or improve the efficiency of their homes and buildings?
Another all-star resource would be individuals who are managing utilities full-time (aka utility management providers). Their knowledge of the niche utility market, and their utility management services, will help you find the most effective strategy for your team and real estate portfolio.
Don’t Bench the Data
If your company has utility data available, use it. Regularly monitor utility consumption and expense amounts to identify recurring trends, shortcomings, and abnormalities. Compare your properties’ performance to similarly-sized buildings within your portfolio or market.
If your company does not have utility data available, surf the web. Use online resources like market research surveys, public benchmarking statistics, informative articles, and the like.
After you’ve finished your research, turn your findings into actionable insights and strategic steps. In doing so, you will significantly increase your chances of success.
Listen to the Players
Reach out to your team members, tenants, and other key stakeholders. Ask them how they feel about your current utility management processes or efficiency goals. Do they have any recommendations for improvement? What are their expectations for your strategy? Which KPIs are most important to them?
Use this feedback to further refine your strategy.
5. A World That’s Watching
History, the future, your customers, your investors, and the public at large are in the stands right now, watching your game and judging your plays. Just stick to the rules, partner with a sturdy team, upgrade your tech, and come to the field with a strong battle plan—you’ll come out a winner.