How hard to you work to lower costs?

Started by GregM14 • 13 replies • 484 views

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GregM14 (Washington)
Posts: 81

Posted:

I am just finishing up my first year on the board. It's been fun, but I am thinking that I will tone down my involvement a bit. First year I insisted (thus was the one to go get) multiple bids on every contract and took on a bit of a general contractor role for a big project, coordinating work between 5 vendors, all at no cost to the association. Project turned out great, on budget, but took a ton of my time.

Going forward, we have a big project that won't get a lot of visibility. Homeowners want us to get multiple bids (takes time) and keep costs down more (requires more board volunteer hours). I'm leaning toward hiring a full service vendor that can just take care of it, even if it costs more, rather than me playing general contractor again which I have no time for.

Wondering how extensive your boards go to in terms of cost savings. How much extra volunteer time do you spend trying to keep costs down? Where should I set limits?

TimB4 (Tennessee)
Posts: 21,062

Posted:

When I served on the Board, I invested a lot of time and energy (20+ hours per month).
This, fortunately, encouraged others on the board to assist as well.

Together we brought costs down a lot.
We fully funded the reserves.
By getting bids, we saved 10K per year on a trash contact which allowed us to fund badly needed storm water management projects.
We increased transparency by managing our website and posting all minutes of the Association.
We organized the Association files and developed written handbooks (hopefully) making it easier for those who followed.

When our board stepped down, the new board chose to not devote as much time.
They reduced transparency (no longer published financials or minutes on the website)
They didn't understand financials so hired a CPA to do that work.
Moved websites at a higher cost (self managed to managed).
They are also looking at pet peeves vs. simply managing the association.

A lot of what was done by the group I was with was changed (sometimes I think for the sake of change vs. an actual reason).
However, a some of what was done stayed and left the Association in a better spot.

Regarding your question of limits:

Your limits should be based on your skill set and the amount of time taken from your family.
If you are missing things with your family, I would cut back on your time.
If you are taking HOA work with you on vacation, I would cut back on your time.
If you are feeling stressed (mind you, some stress occurs simply because you care) enough to where your health is effected, you should cut back.

I think your goals should be:
Leave the Association in a better place then when you started.
Try to make it easier for those who follow you.

If you do that (I know I did), then when you step down you can step down knowing you did the best you could without disrupting (too much) the life of those around you.

Hope this helps,

Tim

SheliaH (Indiana)
Posts: 6,964

Posted:

What Tim said! He's one of the more knowledgeable people on this website, so consider what he says seriously.

I served 10 years on my board and put a lot of time in it to the point I flamed out and had to quit because it wasn't fun anymore. Some of that was my fault because I did far more than what I should have, and so the others didn't think they had to help or didn't want to do much more than show up once a month and decide how to spend money. That made it easy to talk them into doing some prone vs because they didn't want to put more thought into the issue than what was necessary.

For you, there's nothing wrong with pulling back a bit and telling your colleagues they need to pitch in. Tell them you'll do X and others will have to take up other parts of the project. If it doesn't get done or they do a half-ass job, they should be held accountable.

If you have a property manager, let that person do the research or look for people who want to volunteer for an advisory committee that would do the research. That should take some pressure off the board, although you'll still have to review bids and contracts carefully to ensure you get what you want.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

CathyA3 (Ohio)
Posts: 6,299

Posted:

I agree with Tim's and Sheila's comments. My experience was the same as Sheila's. I was doing over 90% of the work (3 person board) and after several years I was burned out.

What bugged me the most was the sense of entitlement that many of my neighbors had. They're all in favor of saving money as long as someone else was doing the work. That gets old fast.

In general, I think getting multiple bids is smart money management. The actual number will depend on what you want done, how much you intend to spend, and how many service providers are in your area.

Rather than focusing on keeping costs down, though, we focused on getting the most bang for our buck. If you focus simply on cutting costs, you lean toward short-term thinking and cheap, stop gap solutions. I believe that you get what you pay for, and we wouldn't hesitate to go with a higher bid if we got value for the additional money. But it's a balancing act: we didn't opt for a Jaguar if a Honda Accord would serve us just as well.

My Views on Volunteers in HOAs and Condo Associations:

* Using Volunteers is Not Sustainable

People don't buy homes in order to have an unpaid side hustle. Just because you currently have a few folks who enjoy doing the work doesn't mean you will have a permanent supply of them. In fact, depending on your community's demographics, it's extremely unlikely that you will.

* You Won't Get Professional Quality Work

Unless some of your residents are experienced pros, your community will start to look like Amateur Hour pretty soon. In addition, if the professionals that the association hires do sloppy work, the board can call them back to make good on the terms of their contract. A volunteer can tell the board to go fly a kite.

Eventually the poor quality work will catch up to you and you'll need to repair or replace whatever it is. You didn't save money, you just delayed the expense.

Especially don't use a volunteer when paid expertise can actually save you money (eg. project management).

* Increased Liability Means Increased Costs

If you use volunteers, the association needs to carry workers comp or similar insurance.

Don't assume that you can have your volunteers sign a Hold Harmless agreement and skip the insurance. You should have them sign the agreement regardless, but that alone won't necessarily protect the association if a volunteer is hurt while working and sues the association.

* Using Volunteers Misleads Owners About the True Cost of Home Ownership

Eventually the board will have to hire professionals. Either they'll run out of people willing to give up their limited free time, or the community will start to look run down and less attractive to buyers. And then the board will have to raise assessments, both to pay the pros for routine work and to make up for all of the delayed, poor-quality work done in the past.

Owners will be unhappy about this even if the increase doesn't cause them financial hardship. It sets up future boards for grief, and they don't deserve that.

KerryL1 (California)
Posts: 14,550

Posted:

What size is your HOA, Greg? Detached homes? Condos? Or? Do you have a property manager?

I really think directors should keep their hands off projects such as you describe. There are many other initiatives that directors can and do take such as Tim describes.

If you have no PM, then someone on the Board will have to get bids, I guess. But managing a project is, I think, fraught with pitfalls where the HOA could be liable if the "general" doesn't have the right credentials and insurance.

GregM14 (Washington)
Posts: 81

Posted:

Thanks all.

I guess for this project, we found a vendor that I like a lot. I suspect that they will not be the low bidder, but they are experienced working with HOAs and will be an all-inclusive vendor. For this project, I think it's the right vendor to work with.

I'm just not sure the other board members will go along. I suppose that if they decide not to work with this vendor, they can always takeover the project.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By GregM14 on 12/09/2020 5:53 PM

I suspect that they will not be the low bidder,

Low bid is simply the least expensive, it does not indicate how well the work will be done.

Obtaining bids, in my opinion, are for the board to see what the average price of the work will be.
The Board, can now make an informed decision.

When we bid out our trash contract, we found the average cost was way less then we were paying.
However, we liked the performance our current contractor was doing.
Therefore, with our informed information on the the costs for service, we countered their offer.
They accepted and we saved thousands.

SueW6 (Michigan)
Posts: 814

Posted:

I’ll say it again: Board members don’t have to do everything, they just have to make sure everything gets done.

You may be micromanaging projects and getting involved when you don’t really need to. Find a dependable and trusted general contractor and turn all the stuff over to that person.

There are board issues that I am sure that need to be done and this is zapping your energy and time in preventing the board from dealing with issues that only boards can handle.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By SueW6 on 12/10/2020 4:57 AM

I’ll say it again: Board members don’t have to do everything, they just have to make sure everything gets done.

In self managed (no MC) associations, the Officers are appointed from among the directors.

Granted, Directors make the decisions and Officers implement the decisions, when the same individuals are filling both positions, the board members do everything.

SheliaH (Indiana)
Posts: 6,964

Posted:

Well, each of them only have one vote, as do you, so the best you can is make an argument in favor and see what happens. You have to responsible for your vote as they are - and this time you have to tell them you're pulling back and someone else needs to pick up the slack. The thought of doing actual work may prompt them to come to your side....

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Here’s my story from the last three years:
- 314 SFHs
- professionally managed
- was elected to the board due to open seat and no other volunteers
- spent a year on board working on all the projects because there were no other volunteers
- was elected as president while in the hospital for elective surgery
- was not told of election for three weeks and only then because I asked
- negotiated with VP to exchange roles (he did NOT want to be pres)
- pres sold his house a month later and moved
- back to pres
- worked my butt off for two years with almost zero help from any other board member (but, they did not fight me on anything)
- decided to move to another neighborhood
- I told board months in advance and asked for them to elect new president, but that I would stay on board
- no one would volunteer for either pres or VP
- I gave them date certain
- no one would volunteer for either pres or VP
- I resigned as president
- no VP or president
- newest board member, after urging by management company, volunteered to be pres, and was elected
- still no VP
- current pres very upset because of work and knowledge required
- I provide plan to shift more and more of the work to the property manager
- board agrees
- zero heard from community about open seats, opinions, etc
- one member (same) attends each board meeting to complain about an ARC issue

So, what does it all mean? IMO it means the community wants a “city manager” who will do all the work.

Trying to lower costs by working harder as a board member or officer may be a dead end in your community.

BarbaraT1 (Texas)
Posts: 821

Posted:

Quote:

Posted By CathyA3 on 12/09/2020 3:43 PM
I agree with Tim's and Sheila's comments. My experience was the same as Sheila's. I was doing over 90% of the work (3 person board) and after several years I was burned out.

What bugged me the most was the sense of entitlement that many of my neighbors had. They're all in favor of saving money as long as someone else was doing the work. That gets old fast.

In general, I think getting multiple bids is smart money management. The actual number will depend on what you want done, how much you intend to spend, and how many service providers are in your area.

Rather than focusing on keeping costs down, though, we focused on getting the most bang for our buck. If you focus simply on cutting costs, you lean toward short-term thinking and cheap, stop gap solutions. I believe that you get what you pay for, and we wouldn't hesitate to go with a higher bid if we got value for the additional money. But it's a balancing act: we didn't opt for a Jaguar if a Honda Accord would serve us just as well.

My Views on Volunteers in HOAs and Condo Associations:

* Using Volunteers is Not Sustainable

People don't buy homes in order to have an unpaid side hustle. Just because you currently have a few folks who enjoy doing the work doesn't mean you will have a permanent supply of them. In fact, depending on your community's demographics, it's extremely unlikely that you will.

* You Won't Get Professional Quality Work

Unless some of your residents are experienced pros, your community will start to look like Amateur Hour pretty soon. In addition, if the professionals that the association hires do sloppy work, the board can call them back to make good on the terms of their contract. A volunteer can tell the board to go fly a kite.

Eventually the poor quality work will catch up to you and you'll need to repair or replace whatever it is. You didn't save money, you just delayed the expense.

Especially don't use a volunteer when paid expertise can actually save you money (eg. project management).

* Increased Liability Means Increased Costs

If you use volunteers, the association needs to carry workers comp or similar insurance.

Don't assume that you can have your volunteers sign a Hold Harmless agreement and skip the insurance. You should have them sign the agreement regardless, but that alone won't necessarily protect the association if a volunteer is hurt while working and sues the association.

* Using Volunteers Misleads Owners About the True Cost of Home Ownership

Eventually the board will have to hire professionals. Either they'll run out of people willing to give up their limited free time, or the community will start to look run down and less attractive to buyers. And then the board will have to raise assessments, both to pay the pros for routine work and to make up for all of the delayed, poor-quality work done in the past.

Owners will be unhappy about this even if the increase doesn't cause them financial hardship. It sets up future boards for grief, and they don't deserve that.

Giving you a standing ovation at my desk! I may copy this and put it in my board handbook.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Greg,

Many of us have done exactly as you during our first few years.

Experience suggests that you should get someone to oversee the project management but that your direct involvement - in lieu of total deferral to the property manager - in obtaining pricing is where you'll be most influential in cost containment. You really won't need to micro-manage the actual project which will save hours of volunteerism.

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