3 bids?

We are a 16 unit self managed HOA in California. We use a financial service for the accounting but take care of the maintenance contracts and manage repair projects ourselves. The board is seeking to contract this out too. In the past we have generally gotten three bids for all the projects that are over a few thousand dollars, like roofs, paving, pool resurfacing, painting, etc.

When small HOAs hire property management do they usually ask to see three bids from the management company for all these type of projects or do they just let the management company make the decisions, with the assumption that the management company is trying to hold the costs down to keep their client happy?

The question really is how should the board be managing the property management company?

Tino

Tino as a genral rule no one watches YOUR money as good as you SHOULD.
Now in regards to contracts. Is it necessary to obtain 3 bids on EVERY project that owuld depend on a few things. Is it required in your documents? Is this a new tyep of work needed where you need to find a NEW service contractor?

Right now we are geting bids for a roof replacemnt on one building in our community. IF that project was priced fairly, I the work was completed in an acceptable manner and if we then needed more roof work done we might simply give that to the same contractor.

Nowas to leaving it up to the MC. IMO I would NOT turn that over to the MC in the hopes they will treat YOUR money as if it were their own. Some MCs have business relationships with contractors and funnel work to them and both parties prosper. My objective is what serves the community best no the contractor or MC. Some MCs would have no clue as to the price, or qulaity or a proposal and whether is was resaonable or not. They can only offer you what THEY know whether that is a lot or nothing.

I would not leave these decisions solely up to the MC perhaps better if the MC and the Board worked together so both parties wlaked away with the knowledge the property owners got a good deal, qulaity workmanship at a fair price.

It would be good if someone either a Board member or someone in the community had some knowledge as to the work to be perfromed and was willing to share their opinions and knowledge.

Fine good people, watch them and verify they are treating your property right, and then retunr the favor by trating them in the same fashion.

There are still good, fair, honsest, folks out there. But there are also some money hungry crooks who should wear a mask and carry and gun when they do business.

Hopefully boh you and the MC working toether can make sure you get the former.

Good luck.

Trust but verify that goes for the services of the MC too.

You can certianly hire a property manager or a management company if that is what you desire.

However, I would still keep awarding contacts at the board level. The Board should approve the request for proposal and then the MC could send them out and collect the responses. The Board should review all responses and award the contract.

The MC would then oversee the work.

Tim wrote: " . . . I would still keep awarding contacts at the board level. The Board should approve the request for proposal and then the MC could send them out and collect the responses. The Board should review all responses and award the contract."

This is how we do it too.

Picking a MC wasn't your question, Tino, so i won't address Matthew's remarks except to say that I don't recall ever seeing on the forum that bids must be sealed or that the low bid should be accepted. But perhaps I missed those.

The problem with soliciting for sealed bids is that it implies that your most important consideration is price. It says that you care nothing about experience, reputation, or dependability. That may not be what you meant but that is what is implied.

If I were running a successful established business, I would not waste a minute of my time bidding on such a contract because I have no need to jump through hoops for peanuts. That means the bidders will be those with so little business (for whatever reasons) that they have the time to submit a bid and are so desperate for work that they will slit their own throats to be the low bidder.

Preparing detailed RFP’s for an HOA may create more problems than it will solve. RFP’s require the bidder to spend time reading and responding. The average HOA is unlikely to provide enough work (and income) to justify taking the time to respond.

If I had a successful contracting business and received a lengthy RFP from an HOA my most likely response would be to send them my business card and a price list. I would have no incentive to get involved with a penny-ante HOA when there is plenty of other work available. This would reduce your pool of potential bidders by one. Repeat this for each established contractor and your pool quickly becomes reduced to the inexperienced and the incompetent.

Matthew, wouldn't you agree that reputable vendors will read and respond professionally to RFPs where the work or service is estimated to be over a certain amount?

Interesting point about sealed bids, Tim.

Carol,

I have no doubt that the more money is on the table the more likely you are to get a response. Money does talk.

But if I was a contractor with plenty of work lined up already I would have little incentive to spend hours reading and responding to an RFP when I could answer most of your questions in a few minutes either on the phone or in person.

I am not certain that most contractors would be thrilled working with an HOA. Associations are run by amateurs posing as business professionals. My association exists only to maintain some 300 miles of dirt roads and before we purchased our own equipment we could find only one grading contractor in the entire state who would even talk to us and I have to assume that was because we are an HOA. We also tried to hire temporary workers once through a local labor contractor and they also declined to do business because we had no bricks-and-mortar office or business phone listing.

16 units? Why would you bother with a property management company?
Assuming you have a 5 member board, you have 1/3 of your residents on the board at any given time, and over a period of a few years & election cycles, you will have had a majority serve at some point. a PM company seems like overkill.

We have a 20 unit community and a 5-member board. In the past 10 years, only 7 of the lots have not had representatives on the board, and at least one of the lots has had representation from multiple owners. Everyone knows everyone. No need for a PM company

thank you very much for all the comments and suggestions. I am passing these on to the other board members in our HOA.

I don’t see any issues with how you’re doing it now – if vetting every company is getting too much, perhaps you can organize some sort of subcommittee that will do all that for you. It would be cheaper than hiring a management company and you could have the committee gather the information and make a recommendation, but the final decision should belong to the board.

Personally, I like three bids because it’s a good way to compare companies – if someone comes in significantly under the other bids, red flags should go up (why are you charging so much less for the same work?). For each company, the Board should be considering other factors, such as if they’ve worked with homeowner associations before. If so get at least three references and check them (which may also mean going out
to the other HOAs and taking a look at the finished result. These are the things your subcommittee can do
While having the management company obtain bids is nice, I agree they shouldn’t handle everything. For example, some of the companies who submitted bids for work in our community would fax them to our property manager. However the fax was located in a central location at the time, and so our property manager’s maintenance department would see the bids – and then bid for the work themselves, charging a much lower price.

When we learned what was happening (I think our president before last found this out), we had the companies mail the bids directly to our property manager, who would simply make photocopies of everything and bring them to the meeting so all of us could look and make a decision. These days, our property manager uses an email system similar to what I have in my office – faxes come directly to her via email, so no one else sees them. We don’t work with sealed bids – we never tell the other companies who else is bidding.

Most of our bids come from companies we’ve worked with in the past – some have done several problems others just two or less. We’re also trying to educate ourselves on what certain projects entail – not so much for the technical stuff, but to see what type of materials are out there, pros and cons of using them, comparing warranties, etc.