Sometimes an estate’s Council may find itself in the situation where a new Managing Agent (MA) is needed. When the Council goes out to the market to look for a new Managing Agent, their search is complicated by the fact that there are two types of MAs. First is the pure MA and the second is an integrated MA.
Pure Managing Agent
In a pure model, the company is independent of all the service providers the MCST engages. This means that there are no linkage between the contractors and the MA. The MCST signs the agreement with each contractor independently. The MA manages these contractors on behalf of the Council. Financially, the MCST pays the contractors directly every month.
The advantage of this model is that the MA is independent of the service providers. If any of the service providers are not performing, the MCST can terminate the contract and appoint a new contractor to do the job.
However, the disadvantage of this model is that in a tight market where the contractors cannot get foreign workers, the MCST may find itself without many options and have to stick with the existing contractor. The MCST has to bear with the shortcomings of the under performing contractor. At the same time, the MA does not have much leverage on the under performing contractor as there are not many contractors with enough staffing to take over the job at the same price. Most would quote a higher price and drop the lower paying estate in their portfolio. This creates a churn in the estates in Singapore.
Integrated Managing Agent
An Integrated MA model is one where the MA assumes all the roles of the contractors. The MCST signs only 1 contract and it is with the MA. The MA assumes all responsibilities for the smooth running of the estate. If there is a shortfall in cleaning headcount, the MA would make good by assigning their float staff to the estate. The Managing Agent has to have all the necessary backups. At the end of the month, the Council only has to sign one (1) cheque that is for the Managing Agent.
The advantage of this model is that the Council only has one (1) party to assign all accountability. This simplifies the management work of the Council. This works well for a very thin and Council that does not have much time to manage the estate.
On the flip side, the disadvantage is that if one of the areas is not up to mark, eg, cleaning. Do the MCST “terminate the cleaning part” of the Managing Agent or the Managing Agent?
Also, the MCST is taking a huge risk of placing all bets on the MA. If the MA were to pull out of the estate suddenly due to dispute with the Council, all services would stop. The Council would need to scramble to put in place all the services that have been stopped.
Unlike the former model. Integrated MAs would likely to be facing the foreign worker constraints like the contractors. This would put them in the same situation as the contractors.
Councils have to weigh the pros and cons of the two models and make a judgement call when evaluating the proposals submitted in estate management or property management. Different circumstances require different models – pure Managing Agent or the Integrated Managing Agent model.