The Arrogance of Choice

There is something I have increasingly noticed about owners corporations, and the more I see it, the more fascinated I become by it.

People who are perfectly capable of making difficult decisions in other parts of their lives can become remarkably uncomfortable with decision-making when they are sitting around a strata table.

I don't mean disagreement. Disagreement is healthy. In fact, I would be far more concerned about an owners corporation where everyone simply nodded along to every recommendation without asking questions.

What interests me is what happens when the desire to preserve choice becomes more important than actually making a decision.

I have started thinking of it as the arrogance of choice.

The irony is that owners corporations often have a great deal of choice. They can choose contractors, consultants and advisers. They can consider different approaches to a problem and, where the circumstances allow it, they can choose how and when to undertake work. They can also make decisions about how they fund significant expenditure.

But those choices exist within a framework of obligations. The fact that owners have choices about how something is dealt with does not necessarily mean they have a choice about whether it needs to be dealt with.

That distinction sounds obvious, but in practice it can become surprisingly blurred.

When having choices becomes the problem

Imagine an owners corporation facing a significant building issue. The owners know the problem exists. Reports have been obtained. They understand that work is required, and they have been given recommendations about what needs to happen.

Then the questions begin.

Should we get another report? Should we get another quote? Could we find a cheaper contractor? Could we do less work? Could we wait another year? Could we investigate a different solution? Could we borrow the money? Could we increase the levies instead?

None of these questions is unreasonable in isolation. In fact, they are exactly the sorts of questions owners should be asking when they are responsible for a substantial financial decision.

The problem is what happens when the questions become an endless loop and the owners never actually get to the point of deciding.

I have seen owners corporations spend years circling around the same issue because every attempt to reach a decision generates another reason to investigate something else.

The frustrating thing is that the owners often believe they are being prudent. They are trying to make sure they don't make the wrong decision.

But there is a point at which caution stops being prudent and starts becoming avoidance.

And the consequences of that can be significant.

The cost of waiting

One of the things that makes this particularly interesting in property is that delay rarely means that nothing happens.

The building continues to age. Defects can deteriorate. Construction costs can increase. Contractors and consultants change. Funding conditions change. Regulations change. Circumstances change.

In other words, the owners corporation is making a decision even when it thinks it isn't.

It is deciding to wait.

Sometimes waiting is absolutely the right decision. There can be very good reasons to defer work, obtain further information or reconsider an approach. The point isn't that every difficult decision should be rushed.

"The point is that delay should be a conscious decision with an understood consequence, rather than the default outcome of an inability to agree."

I was reminded of this by an owners corporation of around 60 lots that I came across a few years ago. The owners were facing approximately $2 million in building works. They knew the work was needed, but they couldn't agree on the scope, they were resistant to the cost, there was concern about using strata finance and there was a general reluctance to commit to such a significant expenditure.

So they waited.

Several years later, the estimated cost had grown to around $4 million.

Of course, there were a number of factors involved in that increase. Construction costs had changed and the project itself had evolved. But the fundamental issue remained: the owners had been unable to make a decision when the problem was smaller and their options were greater.

Their attempt to avoid making the wrong decision had not protected them from the consequences of a decision.

It had simply moved them further down the road, where the choices were more expensive.

We are very attached to the idea of choice

Perhaps this is partly human nature.

We like having options. We associate choice with freedom and control. We tend to feel more comfortable when we believe there is still another possibility available to us.

That can be particularly powerful when the alternative involves spending a lot of money.

Nobody wants to be the person in the room who says, "Yes, let's spend $2 million."

It is much easier to say, "I'm not convinced yet. Let's get another report."

And sometimes another report is exactly what is required.

But eventually someone has to make the decision.

This is where I think good advice can be incredibly valuable. Not because an adviser should make the decision for the owners, but because someone needs to help separate the genuine choices from the choices that are really just different ways of postponing the inevitable.

There is a significant difference between saying, "We have three viable options and we need to decide which one best suits this building," and saying, "There must be another option because none of these options is particularly appealing."

Sometimes there isn't another option.

Sometimes the choice is simply which of the available options is least painful.

The financial decision is often only part of the problem

This is particularly relevant when significant expenditure is involved.

Owners can become very focused on the size of the number in front of them. That is completely understandable. A special levy of hundreds of thousands or millions of dollars is not an abstract concept when you are the person who has to pay your share of it.

But the question shouldn't simply be, "How do we avoid this cost?"

It should be, "What is the most sensible way to deal with this obligation, given the building, the owners and their financial circumstances?"

That opens up a much more productive conversation.

Perhaps the work can be staged. Perhaps the scope can be refined. Perhaps there are different funding options worth considering. Perhaps the owners need more information before proceeding. Perhaps the recommended approach is not actually the best one.

All of those are legitimate questions.

But they are questions aimed at finding the best available solution. They are different from continually searching for a way to make the underlying problem disappear.

Choice needs context

This is probably the part of the issue that interests me most.

Choice is valuable, but choice without context can become paralysing.

Owners need to understand what they are required to do, what they genuinely have discretion over, what the consequences of each option are and what is likely to happen if they simply do nothing.

Only then are they really in a position to make an informed decision.

And I think that is particularly important in strata because the people making the decision aren't necessarily professional property investors or building experts. They are ordinary owners who have suddenly found themselves responsible for a complex asset worth millions of dollars, collectively with their neighbours.

They should absolutely ask questions. They should challenge assumptions. They should seek independent advice where appropriate. They should understand the financial implications before committing themselves.

But there is a difference between informed scepticism and perpetual indecision.

At some point, the owners corporation has to move from asking, "What other choices do we have?" to asking, "Given the choices we actually have, what is the best decision we can make?"

That is a much harder question.

It is also usually the more useful one.

Perhaps the real arrogance is believing there will always be another option

I don't think the answer to difficult strata decisions is to take choice away from owners. Quite the opposite.

Owners need enough information to exercise their choices properly.

But I do think we sometimes overestimate how many choices we actually have.

A building has physical realities. Legislation creates obligations. Money has to come from somewhere. Contractors operate within market conditions. And time changes things.

We can debate the scope of the work, the timing, the contractor and the funding. We can question whether the advice we've received is sound. We can look for better alternatives.

What we can't always do is negotiate with reality.

And perhaps that is the uncomfortable lesson behind the arrogance of choice.

Sometimes the decision isn't between doing something and doing nothing.

Sometimes it is between dealing with a problem now, when you have more options, or dealing with it later, when you have fewer.

The difficult part isn't always finding the perfect answer.

Sometimes it is having the courage to accept that there may not be one.