Real Estate Investor Magazine South Africa October 2014 | Page 51

MANAGING

BY MONIQUE TERRAZAS

Manage Your Utilities Risk
And create a competitive advantage

G

iven the skyrocketing prices, the tenuous
supply, and the irregular and chaotic
administration by municipalities, utilities have
become a major risk for property owners.
For commercial property owners, a satisfied tenant
is their greatest asset, assuring ongoing income and
underpinning the value of the property. And since
your tenant is the end user of utilities, utilities hassles
– from inflated or incorrect utility bills to unresolved
utilities queries to service interruptions – represents a
significant risk to your relationship with your greatest
asset, significantly increasing the possibility of strained
relations, legal wrangling and even vacancy.
How pressing is utilities risk?
According to risk management principles, a risk is
evaluated and prioritised according to two factors:
probability and the exposure or consequences.
Utilities risk is no longer a probability. It is a reality
evidenced by Eskom’s regular black outs and Rand
Water’s recent dry-out. It is also evident in the fact
that in recent years the bulk tariff paid by commercial
property owners has increased at a much higher rate
than end-consumer (tenant) tariffs, placing severe
strain on property owners’ ability to recover the
management costs. It is further reflected in the timeconsuming and frustrating process of trying to sort
out queries and errors at municipal level. Furthermore,
the consequences of this risk are severe, because
dissatisfied tenants threaten not only the profitability
and sustainability of a commercial property, but could
even result in a financially-devastating vacancy.
Given that utilities risk represents a clear and present
threat, with severe consequences, immediate and
decisive action is required to manage this risk.
Managing the risk
Since this risk can neither be accepted nor avoided, the
most effective risk management strategy is to transfer
the risk by outsourcing utilities management to an
expert third party that understands the industry, keeps
abreast of constant changes, and have over many years
built up systems and relationships to ensure they can
deliver results.
The absolute key to success in managing your utilities
risk is choosing the right utilities managing company
www.reimag.co.za

to manage and mitigate the risk. The team of experts
at JVR Utilities shared their impressive 40 years of
combined experience in the industry to provide these
seven tips for selecting the right partner to manage
your pressing utilities risk.

T
HE RIGHT UTILITIES
PARTNER OFFERS:
1. a solid track record, with the right expertise and
experience in utilities management;
2. professional maintenance of your utilities infrastructure
(including metering);
3. access to quality metering solutions and cutting-edge
utilities management systems;
4. a no-cost service by covering their own management fees;
5. turnkey utilities management, from metering to invoicing
tenants, collecting payments and handling tenant queries
and municipal interactions quickly and professionally;
6. professional management of future risk by building up a
contingency fund for future maintenance and replacement
costs; and
7. honest and ethical dealings, protecting you from
reputational risk.
The upside of risk: reward
Over and above averting potential business
catastrophes, intelligent risk management can reveal
opportunities, allowing property owners to reap the
rewards that are inherent in any risk.
Utilities risk, when well-managed, becomes an
opportunity to reap the rewards of satisfied tenants
who are pleased to renew their leases, along with
reduced costs and improved productivity. In fact, if
you select the right utilities manager that allows you to
offer your tenants fair, accurate utility bills and excellent
service, while ensuring your utilities are managed
professionally, saving time and money, you have turned
a clear and pressing threat to your commercial property
investment into a competitive advantage.

RESOURCES
JVR Utility Management
October 2014 SA Real Estate Investor

51