When your association hires a vendor, it could either be the best decision you ever made, or the worst; the stakes are high. A good vendor will execute your vision on time and on budget, whereas a not-so-good one can be the source of bad workmanship, unexpected delays, inconvenience, a whole lot of headaches, and could end up costing you more in the long run.

Navigating the vendor selection process is the necessary first step to getting things done in your community. 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 toward getting the job done right.

First and foremost, focus on more than the price.
We can’t say this enough. Some associations simply want to call three companies, get three proposals, and go with the lowest bidder. That sounds easy, but buyer beware. While your commitment to financial stewardship is certainly admirable, don’t award the contract just yet. You should assess each vendor based on the value it brings—its fees compared to what it offers.

A cut-rate vendor may use shoddy materials or employ poorly trained workers. That can mean substandard work that will cost your association more money in the long term when it comes time to repair work that should’ve been done right the first time. Sometimes it’s worth it to pay a little more to work with a quality company that offers benefits that don’t come with a price tag. The saying “you get what you pay for” has never been more true, especially in today’s tight labor market. It’s the combination of knowledge and experience, fiscal stability, and dedication to customer service that makes a vendor great.

Standardize your procedure.
By standardizing your procedure and focusing on what’s important, you can reduce hassles and increase your chances of getting better results. In order to effectively compare apples-to-apples, be sure each bidder submits a proposal that includes the same scope of work. Create a template for vendors to fill out in lieu of or in addition to any standardized proposal they provide. This template should include specs on all materials used, tool and equipment provisions, timeframe, total cost of the project, and how they will communicate if anything arises.

Do your due diligence.
You can’t put a price on reputation; you’ll know you’re looking at the right vendor if they’ve got a good track record with other communities like yours. The only truly honest way to get to know a company is to talk to some of their former clients. Build some extra time into your approval process so you can speak to a few former and current customers. They will give you the unvarnished truth.

Schedule individual walk-throughs with each vendor prior to seeking bids so they can ask questions that may affect the scope of work. It’s a great opportunity for you to ask questions, get to know your candidates, and see what kind of rapport develops.

Seek input from your management company. Its experienced team can help you decide whom to choose—and whom not to choose. Many management companies have longstanding relationships with trusted vendors and insights into key vendor strengths for the project at hand. Some may even have their own vendor certification process to ensure providers have the proper credentials and adhere to rigorous service standards.
Get your docs in a row.
It’s important to request certain documents and to obtain the same documents from all of the candidates so you can effectively compare and evaluate. What should you ask for? A list of the company’s qualifications, prior experience, past projects, subcontractors (if any), and applicable certifications. Make sure that the vendor meets the standards of professionalism and trustworthiness that come with being properly licensed and bondable, as well as maintaining an active registration with the state of Minnesota. These are not the only criteria you should look for, but these are some of the indicators of a quality vendor. These elements provide important protections for both you and the vendor, and they let you know you’re starting the relationship on firm footing.
Don’t forget their proof of insurance, and ensure that proper types and levels of coverage are in place before starting any job. If your association hires an unlicensed or underinsured vendor, it risks substantial financial penalties if injury or property damage results from their actions. Moreover, your association could also be responsible for making good on unpaid wages or worker’s comp claims filed by the vendor’s employees. 
Things to remember:
  1. If it’s too good to be true, it is. An extremely low price and a willingness to end final negotiations indicate a desperate contractor who really needs money.
  2. Watch the frontload. If the initial payment requested seems out of proportion with the work completed at that point, your contractor could be cash-strapped.
  3. Clean-up is part of the work. Be sure you’ve specified where contractors and their sub-contractors can store their materials and tools. Mandate how the work site should be maintained to keep an orderly appearance. Ask them to provide a map or a description of the work area so debris and tools don’t spill over to other parts of your community.
  4. Get a warranty or guarantee. Any warranties or guarantees offered should be provided in writing.
  5. Get everything in writing. Sometimes after a contract is complete, additional services or requirements can be discussed informally with the assumption that things are “understood.” Make no mistake: there is no legal understanding beyond what’s printed in black and white on the contract.
  6. When necessary, hire a consultant. On complicated or large magnitude projects it might be worth it to pay a consultant to write a project specification and oversee proper installation and completion.
Trusting a vendor to perform work in your community always involves risk. To minimize those risks, try eliminating as many unknowns as possible. After all, if things go south, the legal and financial risks to your association can be substantial.

  1. Minnesota Secretary of State - http://www.sos.state.mn.us
  2. Minnesota Department of Labor and Industry - http://www.dli.mn.gov/Main.asp
  3. Better Business Bureau - http://www.bbb.org/minnesota
Article by This article originally appears in the Nov/Dec 2016 issue of Minnesota Community Living | Tuesday November 15, 2016