Improving Profit via Pricing
The Challenge:
Several years ago, Carpedia worked with SSDC on a very successful engagement within their health care division. SSDC invited Carpedia once again to evaluate Sterling Karamar’s organizational effectiveness in order to help elevate their performance in a highly competitive market. An Analysis was conducted at SKPM’s Toronto based headquarters in order to enhance their property pricing matrix and assess resource utilization opportunities within Operations & Accounting.
The intent behind the original property pricing matrix was to provide SKPM’s management with visibility to profitability by property. The concept behind the original model was correct as it captured the key criteria used to assess the complexities of managing each property. It highlighted that the effort of managing similar size properties varied based on elements such as landlord / tenant difficulties, frequency of visits, and punctuality of rent payments. The tool however did not help management determine resourcing requirements and threshold for staffing level adjustments. Additionally, the model could not be utilized to assess the profitability of managing prospect properties.
Commercial & Residential Operations and Accounting operated as separate entities. Monthly owner statements required inputs from Accounting and Operations departments however they were not in sync and frequently resulted in late publishing of the reports. Furthermore, the mentality among the department leaders was to function with excess capacity in order to accommodate potential room for growth as there was no scientific way to determine resourcing requirements.
Carpedia and Sterling Karamar engaged in a 17 calendar week project to analyze and develop improvements to processes, management systems, and management behaviors within these areas.
The Results:
Process, System, and Behavioral changes were implemented throughout the organization. The results were as follows:
Property Pricing Matrix
- An overall margin improvement of 12.5% was achieved across the entire portfolio of Commercial, Residential, and Condominium properties.
- Fees were re-negotiated with several properties while others were eliminated.
- The model was developed based on workload analyses completed within each department providing the department heads with visibility to current and future resourcing needs.
- The model was extended to assist management with decisions surrounding potential property acquisitions and their anticipated profitability.
Operations & Accounting
- A 25% improvement in resource utilization was realized in Operations and 10% in Accounting.
- Working standards were created, reporting milestones synchronized, and manual system work-around eliminated. Additionally, a weekly forum was established to facilitate best practices and enhance overall utilization of the operating system – Yardi Voyageur.
- Resource planning tools and weekly operating reports were instituted allowing the department leaders to effectively plan, schedule, and measure performance.
- Intra-day and weekly follow-ups were instituted to foster performance based discussions between management & staff.
The Client Experience:
“The keys to the success of the engagement were the reporting tools and the structure that allow us to better manage the company by numbers. The detailed work that went into overhauling our primary planning tool (The Matrix) has been essential to improving how we manage accounts and allocate resources appropriately. This hands-on approach you helped us employ was of significant value to our organization.”
President, Sterling Karamar Property Management