Service charge is an amount paid by occupants of a facility to provide some services to them. The provided services such as security; power; water; maintenance and repairs; and janitorial will enhance the value of the facility/property.

The amount of service charges to be paid in a facility will depend on the services to be provided. Service charge is estimated based on the expected cost of consumption of services to be provided. These charges are paid upfront for effective management of the services. In some properties, service charge is a fixed amount.

Service charge administration is a method of sharing the cost of provided services among all the facility occupants.

Conflicts usually occur between who is managing the property (landlord or facility manager or property manager) and the facility/property occupants on the issues of mismanagement, inappropriate apportionment, maladministration, misapplication of service charge.

Facility occupants should demand for accountability and transparency on management of the service charge while they ensure they pay the amount of their charges. Occupants should always be fully aware of what is covered and what is not covered by their service charges.

What Determines The Amount of Service Charge

The amount of service charge a property will command will depend on the following:

• The kind services provided.
• The amountof energy consumptio
• The size of the property.

Challenges Associated With Service Charge

The following challenges are associated with service charge:

• There is no fixed charges.
• High rate of charges.
• Economic difficulties.
• Lack of proper communication.
• Inappropriate apportionment of service charge.
• Service charge administration.
• Mismanagement of the service charge fees.
• When cost of services cannot be quantified, they are charged based on consumption an example is utility (power and water).

Why An Occupant Might Not Want To Pay Service Charge

An existing occupants might not want to pay service charge due to any of the following reasons:

• When they feel they are being charged inappropriately.
• When they feel the services being provided are unnecessary.
• When the occupant is not happy with the quality of services being provided.
• When there is an unnecessary delay in works being undertaken by the service provider.
• When there is an economic difficulty.

What Needs To Be Done

Facility managers can have their occupants to have trusts in them by adopting the following:

• The procurement process should be efficient.
• There should be transparency in how the service charge is being spent.
• There should be accountability of the service charge.
• By not allowing arrears to accumulate.
• There should be adequate communication.
• There should be a periodic reporting of the financial statements.
• Occupants should be aware of the services they are getting.
• The provided services should be of the best quality.
• Service charge apportionment should be clearly communicated.
• Occupants can be asked refer vendors while the bidding process should be transparent and competitive.