When committees evaluate building management proposals, the temptation to choose the cheapest option is understandable. Levies are tight. Owners want low fees.
But building management isn't a commodity where the only variable is price. The difference between a $1,500/month manager and a $2,500/month manager isn't just $12,000 a year. It's the difference between proactive and reactive management — and that difference compounds over time.
Here are five hidden costs that cheap building management often brings.
Cheap management companies cut costs by minimising inspections and deferring non-urgent maintenance. The building looks the same today. But problems are developing unseen.
The minor waterproofing issue that could have been fixed for $5,000 becomes a structural repair costing $50,000. The lift that needed a $15,000 modernisation eventually requires $150,000 replacement after a catastrophic failure.
Research indicates that reactive repairs can cost up to 10 times more than proactive maintenance. The savings from a cheaper manager evaporate quickly when major repairs hit.
When building managers are stretched across too many buildings — which is how cheap providers maintain margins — compliance tracking suffers. Deadlines get missed.
The AFSS submitted late can result in fines up to $110,000. The Strata Hub report filed after deadline can cost $5,500. The smoke alarm not replaced on schedule, the pool inspection not completed — each creates liability exposure.
A single compliance penalty can exceed the annual 'savings' from choosing a cheaper manager.
Cheap management companies typically pay lower wages and load managers with more buildings. The result is high turnover — some industry sources suggest building manager tenure averages just 7 months.
Every time your building manager changes, there's a restart period. New managers don't know your building's quirks, your contractors, your residents. Problems that the previous manager understood get missed. Relationships need rebuilding.
The cost isn't just operational disruption. It's the constant cycle of bringing new people up to speed on a building that should already be well-understood.
Overworked building managers don't have time to properly supervise contractors. Work gets approved without adequate inspection. Invoices get paid without verification.
The contractor who charges for work not completed. The tradesperson who does a quick fix instead of a proper repair. The quoted scope that somehow expands once work begins. These issues are caught by attentive managers and missed by overwhelmed ones.
Over time, poor contractor oversight means paying more for lower quality work.
When compliance lapses, insurance coverage can be affected. Policies often have conditions requiring maintained fire safety systems, current certifications, and documented safety procedures.
A building with gaps in compliance may find that coverage is reduced or claims are disputed when something goes wrong. The committee members who approved the cheap management — thinking they were saving money — may find themselves personally exposed.
The cheapest manager is no bargain if they leave your building uninsured or your committee exposed to personal liability.
Building management fees typically represent 20-30% of strata administration costs. Saving 20% on that component — maybe $3,000-4,000 a year — is trivial compared to the costs of reactive repairs, compliance penalties, and liability exposure.
This isn't an argument for paying the most expensive option. It's an argument for understanding what you're actually getting at each price point.
Ask providers: How many buildings will my manager handle? What's their average staff tenure? What compliance tracking systems do they use? What proactive maintenance do they perform?
The answers will tell you whether the lower price reflects efficiency — or corners being cut.
How does your building management measure up?
Take the free Building Management Scorecard to assess your current management against the standards that actually matter.
https://dino-p8buwtjz.scoreapp.com
Sedgwick (2020): Cost to rectify water-related defects can be 10x the cost of prevention
Master Builders Association NSW: 80%+ of building complaints relate to preventable defects
Macquarie Bank 2023 Strata Benchmarking Report: Staff turnover data in strata management
Accord Property: Industry average building manager tenure of 7 months
NSW Environmental Planning and Assessment Act 1979: AFSS penalty provisions
Dino Biordi
Founder & Managing Director, LUNA Management
25+ years in construction | NSW ABMA Independent Review Panel
A Building Manager oversees the safety, security and maintenance of designated properties and ensures that these properties comply with all applicable regulations. A Building Manager is also known as a Facilities Manager, Caretaker or Resident Manager. They are assisting the Owners Corporation with managing the common property, controlling the use of the common property by non-residents, arranging the maintenance and repair of common property.
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