User chooser

Some district cooling suppliers are billing on consumption, a step in the right direction, but they should also publish their rates for comparison
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By Alan Millin

As end-users perceive a decrease in services for an increase in charges, Imdaad’s Alan Millin suggests transparent service charge costs and billing as the way forward

As facilities managers we are often asked to prepare service charge cost models for clients. These cost models enable the client to pass service costs through to the end-user while ensuring all their own costs are adequately covered.

End-users pay their service charges and expect a certain level, or quality, of service.

We know only too well from the media that service charges have become a cause for complaint by many residents in Dubai. With service charges spiraling and end-users crying foul, the service level delivered by FM providers is also under closer scrutiny.

What were once end-user expectations have now become demands. Residents who were once happy to wait patiently for a response from their service provider are now less tolerant, and have grown impatient. They want quality service and they want it now, after all they are paying a premium for it.

So where does the problem lie? Why are residents facing increasing charges for what they perceive to be decreasing service levels?

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At the recent ‘Building Sustainability into the Middle East’ conference I was impressed by the level of interest in district cooling charging mechanisms. As an element of service charges, district cooling is clearly a topic that needs more open discussion, so let’s revisit it.

If we consider the provision of district cooling as a service charge element, with the charge levied on floor area rather than consumption, who are we really paying? The master developer charges the resident/owner of a new property at handover and I have recently seen an example of a district cooling (DC) service charge element in excess of AED13.00 per square foot per year for a small apartment.

The average charge, according to district cooling industry insiders, is around AED6.00 per square foot per year, with residential units at the lower end of the price range. It would seem in this case that end-users are effectively paying twice for their cooling.

Who’s fleecing the owner?

So who is fleecing the property owner/resident? Is it the district cooling provider, trying to get a speedy return on investment, or is it the developer, trying to make a quick buck by overcharging the residents and owners?

Note that whoever is the profit-taker, no one is really winning anything here. The end-user is considerably out of pocket, dissatisfied and demanding premium quality service. The master developer and the district cooling provider are both under fire for overcharging and their reputations are suffering, regardless of which party is profiteering. The FM is, as usual, stuck in the middle.