Why Vendor Management = NOI Management
Operating expenses are half of your NOI story. The fastest way to widen margins—without rent hikes—is to professionalize vendor selection, contracts, and performance.
Step 1: Spend Audit & Baselines
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Pull 24 months of paid invoices by category (landscaping, janitorial, security, pest, turnover, make-ready, elevators, fire/life safety, pool, IT/Wi-Fi).
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Normalize for one-offs; benchmark $ / unit / month.
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Flag categories with >10–15% YoY inflation and no scope change.
Step 2: Scope & RFP the Right Way
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Write clear scopes: frequency, materials, safety standards, response times.
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Mandatory SLAs with credits for non-performance (e.g., response within 24h).
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KPIs by category:
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Landscaping: completion rate, resident complaints
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Janitorial: inspection scores, rework tickets
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Security: incident logs, patrol compliance
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Pest: retreat rates, same-unit call-backs
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Solicit 2–3 competitive bids; compare apples-to-apples.
Step 3: Contract Levers That Save You Money
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Term + Renewal: 1-year with mutual 30-day out; cap auto-renew increases.
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Price Protection: CPI-linked but capped; require documented justification.
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Bundling: Where logical (janitorial + common-area upkeep) to lower per-visit cost.
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Unbundling: Keep specialized trades separate (elevators, life safety).
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Volume Discounts: Multi-property portfolios = tiered pricing.
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Insurance & Compliance: Minimum coverage, additional insured, lien waivers.
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Performance Credits: Missed SLA → invoice credit.
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Data Ownership: You own service data, photos, checklists.
Step 4: Performance Management (Make It Visible)
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Monthly scorecard per vendor: SLA hits/misses, quality, inspections, incidents.
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Quarterly business reviews (QBRs): pipeline, staffing, improvement plan.
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Ticketing system/CMMS (even simple): time-stamped logs, before/after photos.
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Resident feedback loop tied to work orders.
Step 5: Preventive > Reactive
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Build PM schedules for HVAC, roofs, gutters, plumbing stacks, elevators, life safety.
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Track Mean Time Between Failures (MTBF) and Mean Time To Repair (MTTR).
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Common saving: reducing emergency call-outs and water/energy waste.
Case Study (Illustrative)
100-unit property:
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Landscaping rebid (same scope): –12%
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Janitorial KPI credits for missed SLAs: –2% net spend
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Water-leak PM + smart meters: –8% utility
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Insurance rebid + higher deductible: –6%
Total OPEX reduction ≈ 6–10%, NOI up meaningfully without touching rent.
90-Day Implementation Plan
Days 1–30: Spend audit, target list, draft scopes, collect bids
Days 31–60: Negotiate terms, select vendors, implement SLAs/KPIs
Days 61–90: Launch scorecards/QBRs, train staff on CMMS, announce service standards to residents
Red Flags
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“All-inclusive” quotes with vague scopes
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Above-market annual increases without documentation
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No supervisor on route / high staff turnover
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Refusal to accept performance credits or data transparency
Quick Vendor Checklist
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2–3 competitive bids with apples-to-apples scopes
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SLA + KPI exhibit with remedies
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CPI cap + renewal terms
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Proof of insurance, background checks
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Monthly scorecard + QBR cadence
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Exit clause and data ownership
CTA — Want us to run a vendor/OPEX optimization on your property?
https://mcqproperties.online/calendar-page/
