August 2024
The Condo Act encourages condo directors to rely on consultants to obtain necessary expertise. This approach is wholly endorsed by the condo consulting industry which includes accountants, engineers, lawyers and other specialists. All serve an important role in condominium management and governance.
Yet there is danger in placing too much reliance on consultants while failing to understand the inner workings of the community and property you manage.
Too many condominium directors accept the word of a consultant or service provider without asking questions to better understand what is provided or will be delivered. Directors, focused on protection against litigation for their decisions and failing to do the necessary work, are more likely to make poorer decisions. Specialists and consultants have a narrow area of expertise. They are unlikely to understand your building and community as well as long-serving directors and management.
The fiascos we all know as ArriveCan and McKinsey & Company are textbook examples of laziness and incompetence.
Two of three companies working on the ArriveCan system for customs and health information came in dramatically over budget. Each had only two employees and outsourced the work. They billed nearly $60 million (estimated) for a software application that should not have cost anything close to this amount. This business strategy worked well for the consulting companies but not so well for the government that failed to provide reasonable oversight over the project.
McKinsey & Company has billed the federal government $200 million and is reported to have shown a disregard for contracting rules. This could only have been possible because the government failed to uphold these rules. A government unable to manage the more basic task of managing consultants and failing to explain why so much is being spent on them appear to be hiding their own inability to make decisions. It is easier to follow the advice of consultants than to develop internal expertise and knowledge.
Condo boards should take care not to fall into the same trap.
While there is a need for condo consultants and service providers, some condo boards lean too heavily on them to avoid tasks they may have to learn or find uninteresting. This allows condo boards to avoid the hard work and trial that needs to be undertaken in-house to develop expertise and experience. Condo boards more focused on protecting against litigation fail to exercise their own judgement in evaluating the advice of consultants and service providers, and applying or evaluating recommendations in light of their situation and community.
Condominium corporations, like other companies, require certain skills and expertise to be successful. An overreliance on consultants tends to detract from quality. It increases the likelihood that a condominium corporation will be cheated or scammed by improperly vetted consultants offering something that is not needed, delivering poor work that costs extra to fix, or providing an inappropriate solution. While the Condo Act encourages the use of consultants, it does not require condo boards to accept their advice without proper consideration.
Gaining knowledge through research, study or firsthand experience pays dividends. This education is missed when unnecessary work gets outsourced and insights are never communicated to condo boards and management.
Delving into projects, rules, financials, budgets and reserve fund studies teaches condo boards which ideas, policies or projects are worth pursuing and spending money on. These are skills never learned if there is a tendency to rely on the advice of consultants without asking detailed questions and understanding the answers.
In immersing themselves in the work needed to maintain and build a condominium community, condo boards learn to identify problems, manage risk, and find new ways to better the community and its infrastructure. They develop a depth of knowledge that helps them to be more effective. They become more open to ideas, critique and exploration, which is less likely to occur when a final product is delivered by an outside consultant or vendor.
