Evaluation Criteria for Reserve Study Proposals

Can anyone share the evaluation criteria you have used to evaluate proposals for s full reserve study? We issued and RFP last week to 6 potential bidders and have already received two proposals. What factors did you use to chose between responsive bids?

1. Get report samples. See if the end product is explained at a level that your folks want and understand.

2. Get a clear picture on how they handle interest rates and inflation. Make sure your comfortable with their approach. These numbers can have a huge impact.

3. Make sure that it's a 30 year study.

4. Interview the reserve specialist who will actually prepare the study. As Kerry stated, not uncommon for specialist to miss things. Example for us - We share a retention basin with neighboring apartment complex. Docs make us responsible for 1/3 the cost but specialist missed it and made us 100% responsible.

Interesting blather, but not necessarily appropriate.

Appears that OP is preparing to do first RS. Very likely that they will have the first RS done, and not fully understand the nuances of what they need until it's time for a RS update in a few years.

RS is a professional evaluation of future needs. Silly to think that OP's HOA should figure it all out in advance.

Generally speaking, all RS providers offer 3 options.
A. Full study.
B. Update with site visit.
C. Update without site visit.
If you choose A, B, or C, scope of project is usually very similar from any qualified provider.

I do agree on your points about not choosing the cheapest or the lowest qualified bid.

To take this a little further, David, for a full study, you'll want the RS to also review your CC&Rs.

Ours, for example, refer readers to our original Condo Plan and DRE Budgets that are registered with the state Dept. of real Estate (now Bur. of RE in CA). But it was necessary that he review all of these to understand our reserves components and in which of the three areas they belong.

Is this your first full study? How have you reserved for components up until now?

Your point seems to be that OP should get identical proposals from all candidates. I would agree with this approach if the OP was building a wall where the materials, dimensions, labor, etc. can be specified up front. It does lead to an apples to apples comparison.

But here we are dealing with a professional opinion. Whether it's a doctor, a lawyer, an accountant, a reserve specialist, etc. - it's not very likely that you're going to get advance proposals down to the level that you would when building the wall. If you are looking for an accountant, you can choose from (a) an audit, (b) a review, or (c) a compilation - but generally speaking, you're getting their work product that they perform in their own particular style. If its a reserve specialist, you can choose from (a) a full study, (b) an update without site visit, and (c) an update with site visit. They too are going to perform their work in their own particular style. If it's a doctor, same story.

The other difference between building a wall and a professional opinion is that the unknowns when building the wall should be minimal. Not so with a professional opinion - which often has more to do with exploration and evaluation than it does with construction or assembly.

IMO, the best you're going to get when you're dealing with professional opinions is something that's "usually very similar". Also IMO, asking professionals to do things "the same" is unrealistic.

Keep in mind that there are different methodologies for funding the Reserves (which is part of the study). They may be called different names, but the two main options are:

Cash Flow Method - A method of developing a reserve funding plan where contributions to the reserve fund are designed to offset the variable annual expenditures from the reserve fund. Different reserve funding plans are tested against the anticipated schedule of reserve expenses until the desired funding goal is achieved.

Component Method - A method of developing a reserve funding plan where the total contribution is based on the sum of contributions for individual components.

Each method has there pros and cons. Make sure that you are asking for the study to be based on the funding style you desire.

Here are some additional links that may be of interest:

Reserve Study Definitions

Reserve Studies Management from CAI

CHOOSING BETWEEN STRAIGHT LINE AND CASH FLOW

CUTTING THROUGH THE FOG Cash Flow vs Component Understanding Different Methodologies

From my limited experience, most reserve studies I've seen do the analysis both ways.

As I stated previously:

A. I've seen significant variations in how reserve specialists deal with inflation and interest. Minor differences can have a big impact.

B. Get report samples. See if the end product is explained at a level that your folks want and understand.

Words have meaning. Different words have different meaning.

Perhaps you MEAN:

{When we send a request for bids, we specify the scope of work required.}

eg.

Please propose a reserve study for xyz hoa.

vs.

Please quote a 30 year infrastructure replacement 'reserve study' for xyz hoa. Said hoa contains/manages multiple storm water retention facilities in addition to a xxx' clubhouse and pool.
The selected vendor will be responsible for ascertaining the reserve components necessary for the study with the aid of the BOD. etc.

This topic (RFP vs. RFB) is a personal 'bug-a-boo' resulting from my neighbor's attitudes of "But that's what the contractor gave me!" which has resulted in 100s of thousands of $$$$ wasted over the years.

eg. get proposals on 'topping' the parking lot - pick the lowest cost - pay for work - work fails in 3 years - obtain and send out specs for depth and type C asphalt - pick lowest BIDDER - job now done properly with 2" overlay of quality material AS SPECIFIED for $27,000 - original cost of $22,000 wasted

REMEMBER:

The bitter dregs of poor workmanship linger long after the sweet taste of a low price.