What does a “typical” change in management companies look like and why is this not optimal? What is the best approach? Click here for answers and best practices.
Contact three companies, request three price quotes and proposals, and select the lowest bidder. Does this sound familiar? If it does, you’re not alone as this seems to be a standard practice more often than not. It might be the easiest and most direct way to get things done, but is it the best approach?
This is definitely a case of buyer beware. Fiduciary oversight is an important responsibility of all board members and the vendor selection process is instrumental in achieving success. Remember, in many cases you get what you pay for
when chasing price as the sole or primary evaluation criteria.
Of course, reasonable fees are important, but there are many other considerations your association should weigh before selecting a vendor including experience, qualifications, certifications, reputation, and communication. Let’s be clear, that’s just for starters.
“What we have found is the bidding process can become complicated and even a point of contention for many associations,” said Katie Ward, Executive Vice President, FirstService Residential in California. “And, all too often the results are not what was promised creating additional issues.”
Is there a solution? Yes, structure and streamline the vendor selection bidding process. This includes focusing on the most important criteria specific to your association and the results you want to achieve, as well as standardizing the overall procedure. This will have the effect of reducing hassles and increasing the likelihood of success.
How do you simplify this complex process? If your community is professionally managed, ask your property management team for guidance and support. To help get you started, here are five proven guidelines from the pros:
1. Who you invite to the dance matters.
Does it often feel like you’re attempting to compare apples and oranges? There are a myriad of options and vendors typically offer various services that complicate the selection process. As an example, construction companies offer design and build services, while others only offer design or build. If you select a firm that only offers design you will still need to hire a build contractor. Another option is to select a construction manager as your direct vendor, who would then be responsible for putting together a team.
Regardless of the route you choose, it is essential that all vendors submit proposals aligned with the same scope of work. In the example above, comparing proposals between companies that are offering design services only to others offering design and build services makes comparing difficult. Additionally, the coordination that will be required between separate organizations providing the design services and build services introduces variables and unknowns. A knowledgeable property manager will be able to guide you accordingly and often can draw from past experience overseeing the vendors bidding on your project.
2. Seeing is believing.
“We have solved this problem hundreds of times, it’s straightforward.” Have you heard this before? Nothing replaces seeing the scope of work firsthand. It is vital each prospective vendor visits your community. On a related note, we have found many communities attempt to select a community management firm without a site visit making the assumption their needs are straightforward. In reality, they are often more complex than they realize and this can lead to unfilled expectations. The same holds true for any project or issue you are solving by contracting experts.
Schedule individual walk-throughs with your community association manager and each contractor. This provides an opportunity for the vendor and board to ask questions, clarify areas of potential misunderstanding, and brainstorm possible solutions that only a site visit could uncover. The added benefit is a chance to build rapport and a comfort level that written proposals alone cannot provide. How serious are vendors about solving your needs and specific project? Will you be a priority or fill-in project? Meeting face-to-face can give you a much better sense.
3. Apples to apples.
Know what you need to know. Depending on the scope of work and vendors you are evaluating various licensing and certifications will come into play. It is important all necessary documents are requested and that all bidders provide the same documents for comparison. What should you ask for?
- A list of the company’s qualifications
- Past projects
- Prior experience
- Subcontractors (if any)
- Applicable certifications
- A list of references
- Confirm all bonding and insurance as well as licensing
Another resource for performing due diligence is online review and social media sites. A word of caution, take extra care to evaluate the legitimacy of feedback. Many popular online review sites contain great insights but also plenty of illegitimate gripes. Look for trends or patterns when reviewing actual feedback, which can quickly give you a sense of fairness. An experienced property management team can offer guidance on the proper documentation and fact-checking you need at every phase to ensure there are no risks or liability.
4. Do the dollars make sense?
As previously mentioned, focusing solely on price can easily cloud the rest of the evaluation process. It is easy to review all bids and choose the lowest price, it’s tempting. While your commitment to financial stewardship is certainly admirable, don’t award the contract just yet. Instead of asking, “how much will this cost?” you might want to consider leading the discussions and deliberations with questions focused on value. Such as, “how long will it take to complete the project”, “will the job get done right the first time?” and most importantly, “do they have the ability and will they stand behind their work?”
The answers to these questions can uncover factors that transcend price including experience and reputation. It is a question of value and comparing the costs to the additional value the vendors bring. Sometimes it’s worth it to pay a little more to work with a quality company that offers benefits you can’t put a price tag on.
5. Don’t take on the task alone.
Don’t be shy about asking for help. Your community manager should have the experience necessary and supporting resources to provide guidance. They have firsthand knowledge of what you are trying to solve as a board and how that fits into the larger vision and goals you have for your community. Ideally, your community manager can reach out to colleagues for additional best practices and vendor insights. They can ask the right questions, request the proper documentation, and pre-screen potential vendors saving time and frustration. This can move the process forward quickly and effectively while you focus on other association business.
Navigating the vendor selection process is a necessary first step to getting things done in your community, but sometimes, it can take on a life of its own. But by following these helpful steps, you can streamline and simplify the bidding process and connect with the best contractor to fit your needs – and that goes a long way towards getting the job done right. For more helpful tips on simplifying the vendor selection process, contact FirstService Residential