Do you know how to track work orders? What about billbacks? Tracking these metrics at your commercial real estate (CRE) property is what will set you apart from your competitors.
With the data collected from these key performance indicators (KPIs), you have the information you need to bring your property to the next level. And in this case, it means seeing an improvement in your tenant’s lease renewal rates and even your property’s net operating income (NOI).
Continue reading for an outline of what specific work order and billback metrics you should be measuring.
Track work orders
Healthy work order management leads to happy tenants. Work orders can sometimes be the most direct contact tenants have with your property team, so it’s important to get them right. You should track work order completion rates to measure the health of your work order process. Here’s how:
1. Speed of work order completion
Measure the average time to work order completion, along with the percentage of work orders completed by their due date. It’s about tracking your performance versus the service level agreements (SLAs).
Use reports to track the average SLA target (number of hours it should take to complete a work order) versus the time it actually took. This is key for tenant satisfaction. You can also use this information to diagnose areas of improvement.
2. Tenant satisfaction with work orders
Request tenant feedback on completed work orders to identify service bottlenecks. See where your engineer’s efficiency can improve or where help might be needed. A proper evaluation will improve work order completion time.
3. Engineering productivity
If engineers are spending a sizable chunk of time on administrative work, a work order system can measure an engineer’s productivity against their peers and SLAs. Teams can see where they measure up and if they need to focus attention elsewhere. Having a pulse on engineering productivity can ensure you’re fixing small problems before they become big ones.
Here are a few things you can measure when it comes to gauging engineering productivity:
- Response time to tenant work order requests
- Resolution time on those work orders
- Downtime for equipment repairs (i.e., HVAC, elevators, security systems, etc.)
- Training sessions completed or continuing education certifications received for engineers
Tracking specific metrics related to billback summaries or expense reimbursements can provide insight into your revenue, efficiency, and tenant relationships. Here are some key metrics you should track when it comes to billbacks:
1. Total billback amount
This is the total amount of money that is expected to be recovered from tenants. It’s a critical metric for understanding your potential income from expense reimbursements.
2. Billback recovery rate
This is the percentage of the total billable amount that has been successfully collected from tenants. A high recovery rate indicates effective cost management and lease compliance.
3. Billback compliance rate
Measure the percentage of tenants who are complying with their billback obligations. If this rate is low, it could indicate that tenants are not understanding their obligations, or there may be issues with how expenses are being allocated or communicated.
4. Disputed billback amount
Keep track of the total amount of billbacks disputed by tenants. A high level of disputes may indicate issues with the clarity or fairness of your expense allocation.
5. Aging receivables for billbacks
Monitor the time it takes for billback payments to be received after they are invoiced. If this time period is growing, it might indicate problems with the payment terms, billing process, or tenant financial health.
6. Frequency of billbacks
The number of times billbacks occur is also an important metric. Frequent billbacks might indicate a fluctuating operating expense that could be better managed, while infrequent billbacks might suggest an opportunity to improve cash flow by billing more regularly.
7. Overhead costs related to billbacks
These are the administrative costs of calculating, invoicing, and collecting billbacks. If these costs are high, it might indicate inefficiencies in your process.
8. Number of errors in billbacks
Mistakes can happen, but a high number of errors could indicate a need for better systems or processes.
By keeping a close eye on these metrics, you can ensure you’re maximizing billback income, maintaining good relationships with tenants, and running operations as efficiently as possible.
See the impact on your lease renewal rates and NOI
Understanding the fundamentals of how your building is performing can contribute to better lease renewal rates. And the more lease renewals you secure, the better your NOI. However, these outcomes aren’t possible without proper work order and billback programs.
Here are the different ways your work order completion rates and billback summaries can impact your property:
Timely and efficient management of work orders demonstrates your commitment to maintaining the property and ensuring tenant comfort. A well-maintained environment can lead to increased tenant satisfaction, which in turn influences the decision to renew leases.
Building integrity and value:
A property that is well-maintained not only physically but also operationally (i.e., all work orders are dealt with promptly and efficiently) helps maintain or even increase the value of the property.
Prevention of major issues:
An efficient work order management system allows minor issues to be addressed before they become major problems. This reduces the likelihood of large-scale problems that could disrupt the tenant’s business operations, making them more likely to renew their lease.
Communication and trust:
When work orders are handled promptly and efficiently, it signals to tenants that management is responsive and takes their needs seriously. This builds trust and a good relationship between you and the tenant, making it more likely that the tenant will renew their lease.
Tracking billbacks can improve the collection process. It allows you to identify tenants who are late or deficient in their payments and follow up promptly, reducing the time and money lost in chasing unpaid billbacks.
Improving accuracy and reducing disputes:
Regular tracking can help identify and correct errors in billbacks before they become problems, minimizing disputes with tenants. Fewer disputes mean less time and money spent on resolution, thereby reducing operating expenses.
Predicting cash flow:
With consistent tracking, you can forecast expected reimbursements, enabling more accurate budgeting and financial planning. It helps you make strategic decisions about potential property improvements, debt servicing, and other factors that could increase the property’s income potential.
Lease agreement optimization:
Regularly reviewing billback summaries can provide insights for future lease negotiations. For example, you may identify certain expenses that are consistently not covered by current leases and can negotiate to include them in future lease agreements, increasing the amount of recoverable operating expenses.
Additional metrics to measure
Establishing a way to track work orders and billbacks might just be what your property needs to bring it to the next level. Because it’s clear, tracking these metrics can have a significant impact on your tenant relations and bottom line. If you’re eager to find out more modern metrics your property should be tracking, download the guide, “Metrics that matter for modern property management,” today.