What is the best way to ensure property management contracts align with risk management strategies?

1 Understand your risks

Before you draft or sign any property management contract, you need to identify and assess the potential risks that may arise from your facility operations, activities, and assets. These risks may include legal, financial, operational, reputational, environmental, health and safety, or security issues. You should also consider the likelihood and impact of each risk, as well as the existing controls and mitigation measures that you have in place. This will help you prioritize the most critical and urgent risks that need to be addressed in your contracts.

2 Define your expectations

Once you have a clear picture of your risks, you need to communicate your expectations and requirements to your service providers and clients. This means specifying the scope, quality, and standards of the services or products that you expect to receive or deliver, as well as the performance indicators and measures that you will use to evaluate them. You should also define the roles and responsibilities of each party, the communication and reporting protocols, and the escalation and resolution procedures for any issues or disputes. By setting clear and realistic expectations, you can avoid misunderstandings, conflicts, and breaches of contract.

3 Negotiate your terms

After you have defined your expectations, you need to negotiate the terms and conditions of your property management contract with your service providers and clients. This means agreeing on the fees, payment methods, and schedules, as well as the warranties, guarantees, and liabilities that each party will assume. You should also discuss the risk allocation and sharing mechanisms, such as insurance, indemnification, limitation of liability, force majeure, and termination clauses. These clauses will determine how each party will bear or transfer the costs and consequences of any unforeseen events or circumstances that may affect the contract.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?