Holding the Purse Strings Loss Prevention and Inventory Control

You may not realize it, but your building may be hemorrhaging money. Not in the form of disastrous lawsuits or maintenance crises like a collapsed roof or exploded boiler, but in a steady trickle coming from your method of ordering supplies and keeping tabs on small, seemingly inconsequential bills.

"The most common source of loss in a residential building is wasteful spending due to redundant or incorrect ordering of materials and supplies that are not returned or refunded," says Harrin Platzner of Platzner International Management in Manhattan. "Another major excess of expense is for parts and labor that are actually the tenant or shareholder's responsibility, such as repairing bathroom plumbing and interior fixtures."

Nickel-and-Dimed to Death

Smaller maintenance items and things like janitorial supplies are usually ordered by a superintendent or other authorized building staffer, who may be unaware of what expenses are covered by the building and what are actually the responsibility of shareholders.

"It's nearly impossible to catch all of these expenditures unless the managing agent reviews every single invoice or work order with a fine-toothed comb," says Platzner. Smaller purchases for parts or supplies may go unnoticed, while the larger expenses are red-flagged and monitored very cautiously.

Possible indicators that dishonest or wasteful purchases are being made by building staff or management are large expenses (over $1,000) or redundant quantities of small items. One such situation described by Platzner concerns "80 parts" purchased, but only 50 total apartments in the complex. In another example, he cites the purchase of faucet hardware by a superintendent when interior plumbing is actually the responsibility of the homeowner.


Related Articles

Condo Workers Strike at 75 Wall Street

Employees at Luxury FiDi Building Claim Unfair Practices, Lack of PPC

Board Transition

Switching Smoothly From Old Board to New

Board Malfeasance

What to Do if You Suspect Foul Play