Applying the “5 Whys” of Six Sigma to Property Management

One of the challenges of property ownership is that is seems like something is always broken. A great tool for conceptualizing exactly how to fix a problem before it begins can be gleaned from the seemingly unrelated body of work related to efficient manufacturing called Six Sigma or Lean Manufacturing.

Taiichi Ohno from Toyota pioneered this way of running a business which minimizes inventory and operating costs while maximizing throughput and profit. Here are the three main tenets:

1) Empower the people closest to the productive process to make continual improvements.

2) Use a continuous flow process instead a batch based process (think assembly line versus making big batches of parts that are then assembled later).

3) Identify flaws with equipment or goods as early as possible in the process to avoid an escalation of the problem.

Ask “Why” 5 Times to Get to the Source of a Problem

A specific tool for this third tenet is the “5 Why” exercise. In order to minimize equipment downtime, this lean manufacturing process wants to get to the heart of why something bad happens and not just fix the immediate problem. This 5 Why process is quite simple: if something bad happens to an asset, product, or employee ask why it happened, when an answer arises, ask why that answer happened. Repeat this process 5 times. At the end of the exercise you are able to take a technical issue that happened to you, and distill the issue down to your actions that caused the problem that you can change moving into the future.

5 Whys Applied to Real Estate Management

While this business philosophy was conceived and refined in a manufacturing setting. Over the last three decades it has been applied to every type of business or process. And now we are going to apply Lean Manufacturing to real estate management with the “5 Why” technique for diagnosing a problem.

Problem: If you have a duplex that has cracks in the ceiling, that even when spackled and painted over, continue to reappear time and time again. You might want to go through the five why process.

Why are the cracks appearing? – because it seems like the center of the house is slightly lower than the rest of the house

Why is the center of the house settling? The house is pretty old and natural settling has already taken its course, the cross beams in the crawl space are secure, the piers that the beams are connected two are sound, but it does seem like the center pier has sunk slightly.

Why has the center pier sunken? The property has good drainage, there are French drains around the side of the home and it is on top of a hill so typical storm water should not be the issue. But it seems like there is a wet spot on the back of the house where a gutter has rusted out.

Why did the gutter rust out? The gutters have not been cleaned frequently enough and the back yard has lots of large trees.

Why weren’t the gutters cleaned out? You hired a gutter cleaning company. They told you that they would service your property 3 times a year but they only came out a few times. When they stopped cleaning the gutters, you didn’t notice and as a result you did not hire a new company -- out of site out of mind.

A property is like a living organism, it needs so many details taken care of on an ongoing basis that it is hard to keep track of. This is why there is a need for professional property management. You focus on your job, your business, your retirement, or your real estate investing; and just let a property manager focus on the maintenance of your property.

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