Trust but verify policy for jobs

Started by MikeA14 • 14 replies • 354 views

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MikeA14 (California)
Posts: 40

Posted:

Hello all,

I'm new to our board with many other members, and we're going to be voting on our first small job.

My gut feeling is the price seems very high for what it is. Because it's a maintenance item (probably still funded by reserves though), we didn't get 3 bids. I'm sensing that I should call around and get some of my own bids so I have something to compare agains, but by doing so am I undermining our property manager in a bad way? Are there other concerns here, maybe wasting vendor's time? (surely if every board member did this for every job, some companies would receive calls for the same job, etc.)

Any advice here for vetting prices without ruffling too many feathers is much appreciated.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Mike

the BOD not the MC decides when a project should be done and the cost of it. The BOD owes itself an its fellow owners to compare prices and qualifications before selecting a vendor.

AugustinD
Posts: 3,698

Posted:

MikeA14, I think you're right to be sensitive to the possibility of ruffling feathers here. Ask the board politely if it will agree to put on the next agenda a possible motion for the board to appoint you as the point person for obtaining bids for this item. Explain that you think the amount to be spent is high enough that it's reasonable to think that the board has a duty to get a few more bids.

MaxB4
Posts: 3,513

Posted:

You don't elaborate on what kind of "small" job this is and a ballpark dollar amount.

Did the Board request of the PM that three bids were required?

You should be getting board approval for going out on your own to obtain bids, as the association has a contract with an entity to provide such service. It is possible, 1) obtaining bids for your "small" job may not have gained much traction with some company, and 2) pricing has increased substanitally because of COVID-19, items like wood have doubled and even tripled within the last year.

If you, as a board member, feel the pricing is too high, I as a PM would not have an issue with seeing if the price is within reason, obtaining bids without board approval, might be an issue.

For maintenance items within a reserve study, from my experience, a PM can be very useful is listing items coming up for maintenance, based on end of use life in a reserve study. Ultimately though, it will be the board who make the final decsion on whether to move forward and what the association is willing to pay.

MikeA14 (California)
Posts: 40

Posted:

Quote:

Posted By MaxB4 on 08/13/2021 11:13 AM

You don't elaborate on what kind of "small" job this is and a ballpark dollar amount.

I don't think the details are relevant. This could apply to any job I feel costs too much but I don't know much about, and we only have 1 bid.

Quote:

Did the Board request of the PM that three bids were required?

No, presumably this item was added to the agenda by the president so clearly either the previous board members before the election authorized it or the PM has been given prior authorization for maintenance items.

Quote:

You should be getting board approval for going out on your own to obtain bids, as the association has a contract with an entity to provide such service. It is possible, 1) obtaining bids for your "small" job may not have gained much traction with some company, and 2) pricing has increased substanitally because of COVID-19, items like wood have doubled and even tripled within the last year.

If you, as a board member, feel the pricing is too high, I as a PM would not have an issue with seeing if the price is within reason, obtaining bids without board approval, might be an issue.

This is the information I'm looking for and the point of my post. If I were to get my own comparison bids, is the issue here simply that I could be in violation of our contact with the PM (which I have not yet even seen), or is there some other law / code of conduct I'm missing as a director? (Literature I can read is appreciated so I can avoid other, similar mistakes which might make me look like a 'rogue' director).

Quote:

For maintenance items within a reserve study, from my experience, a PM can be very useful is listing items coming up for maintenance, based on end of use life in a reserve study. Ultimately though, it will be the board who make the final decsion on whether to move forward and what the association is willing to pay.

SheliaH (Indiana)
Posts: 6,964

Posted:

First, don't be afraid of "gurgling feathers" as a board member. There are ways you can make your point without being an asshole, but wanting to ensure the association gets the biggest bang for its buck is part of your duty as a board member.

That said, it's inappropriate to run off and get your own bids without authorization from your colleagues. You're supposed to be voting on this stuff, and although there may be times you get outvoted, that doesn't mean you can run off and act like the lone ranger. All of you have one vote each.

You don't say how "small" the job is, but you have to remember you're talking about several homes. They may be detached single family or townhouses or a high rise condo, but you can't think about this as only one home. That's usually where people start and get into trouble and then they think the price is "too high." That's subjective - what's high to you may be reasonable to me or someone else. And you get what you pay for - you don't to pay the most expensive price, but there's a chance that low bid is from a vendor who's underestimated what the job will require.

If you're willing to do some research and find other bidders, suggest to your board and do the work. Return with actual figures and do your due will like checking references. Then let the board chew on this and decide if the agree with your recommendation, great, if not, that's ok too - you'll see sooner or later if you got the vendor who's right for you.

PS - you really shouldn't use reserves for routine maintenance. What are you doing with the operating budget? Get a few months worth of financial statements and have the treasurer and property manager review them with you, so you'll know where the money comes from and where it goes.

Your community should also have a reserve study - look at the most recent to see what they're supposed to pay for. Don't know what I'm talking about? There are several older conversations on this website that can enlighten you, along with a good Google search. Have fun!

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

MaxB4
Posts: 3,513

Posted:

If the project is in the reserve study and monies are allocated in the reserve for that project, then its payment should be coming from those funds. Any maintenance project of an asset of the association that's done after a period of more than one year, is a reserve item.

If the board said to the PM, get a bid or get one bid, what should the PM have done? Not all projects require three bids, IMO, but again, as a PM, wer're going to be taking direction from the board.

MikeA14 (California)
Posts: 40

Posted:

Quote:

Posted By SheliaH on 08/13/2021 11:30 AM
First, don't be afraid of "gurgling feathers" as a board member. There are ways you can make your point without being an asshole, but wanting to ensure the association gets the biggest bang for its buck is part of your duty as a board member.

That said, it's inappropriate to run off and get your own bids without authorization from your colleagues. You're supposed to be voting on this stuff, and although there may be times you get outvoted, that doesn't mean you can run off and act like the lone ranger. All of you have one vote each.

You don't say how "small" the job is, but you have to remember you're talking about several homes. They may be detached single family or townhouses or a high rise condo, but you can't think about this as only one home. That's usually where people start and get into trouble and then they think the price is "too high." That's subjective - what's high to you may be reasonable to me or someone else. And you get what you pay for - you don't to pay the most expensive price, but there's a chance that low bid is from a vendor who's underestimated what the job will require.

If you're willing to do some research and find other bidders, suggest to your board and do the work. Return with actual figures and do your due will like checking references. Then let the board chew on this and decide if the agree with your recommendation, great, if not, that's ok too - you'll see sooner or later if you got the vendor who's right for you.

PS - you really shouldn't use reserves for routine maintenance. What are you doing with the operating budget? Get a few months worth of financial statements and have the treasurer and property manager review them with you, so you'll know where the money comes from and where it goes.

Your community should also have a reserve study - look at the most recent to see what they're supposed to pay for. Don't know what I'm talking about? There are several older conversations on this website that can enlighten you, along with a good Google search. Have fun!

Thank you so much, this is also very helpful. It sounds like I need a bit of an adjustment to my thinking and execution.

SheliaH (Indiana)
Posts: 6,964

Posted:

Yes and no. You're new to the position and too often there isn't any type of orientation to what's appropriate. Some route members try to take advantage and pressure the newbie to vote like them because its easier and they automatically get their own way.

Never be afraid of asking questions - that's how you'll learn bid people having to Bali at answering questions, it may be due to them not knowing either (they've always done it this way) or hate being questioned in anything because they live being the know if all although close inspection would show they're idiots or sociopaths or both.

I often refer new board members to the CAI website to get game a look at their educational materials on many HOA issues, with some tailored to new members. Between them, reading your documents and simply using common sense, you'll become an effective board member. You're already off to a great start by realizing you don't know everything and want to learn that's the beginning of wisdom!

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

KerryL1 (California)
Posts: 14,550

Posted:

Agree with all others: get board approval before you seek bids, Mike. It really would be "loose cannon" behavior. Take Sheila's advice and get some CAI literature.

Our contract with our Mgmt. Co(MC) is that our PM must get up to three bids for matters costing more than $1,500. But that amount may be too high for a smaller HOA, etc. Does your contract with your MC specify anything about bids or proposals?

If the bid is just for touch-up painting around the remiss, I'd say it comes form your operation budget. If it's for painting entire structures, probably from reserves.

While reserves items should be for components that last for a year or more, they also should be for components that cost above a certain amount.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By MikeA14 on 08/13/2021 11:22 AM
is there some other law / code of conduct I'm missing as a director? (Literature I can read is appreciated so I can avoid other, similar mistakes which might make me look like a 'rogue' director).

My opinion: Any time a person represents the corporation's needs to vendors without authority of the board, the person is risking violating those covenants, bylaws, and statutes that state that only the board (or its delegated agent, like the HOA manager, the HOA attorney, or a chosen director) has the authority to do (xyz) with contracts on behalf of the HOA.

I expect you are going to have to get somewhat more experience to understand. But FWIW, asking here is a good first step.

MikeA14 (California)
Posts: 40

Posted:

Quote:

Posted By AugustinD on 08/13/2021 1:04 PM

Makes a lot of sense, thanks again.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Mike

As others have said. Do not be going off and doing things by yourself. Those on the BOD might view it as going around them. Get the BOD's blessing then have at it.

MikeA14 (California)
Posts: 40

Posted:

Thanks again everyone, very helpful and informative as always!

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Mike,

If you're new to board service....

I believe there is a hidden "HOA Tax" applied when property managers solicit bids on behalf of the community instead of community board member who lives there. No, it's not necessarily purposeful and certainly isn't something one can prove. It's like a bidding company can sniff the opportunity squeeze a couple of hundred bucks out of a job by seeing a passive board of directors.

Frankly, some jobs in my community (14 years experience), I insist on getting bids on behalf of the BOD (Granted, I'm familiar and trusted by the directors). I get better results on bigger projects than my PM and that's cool with the board.

For some jobs, I know we'll see elevated prices but the convenience or speed of service is important or necessary OR I don't have better leads in my rolodex. But, when you find a trusted vendor, stick w/ them and your prices will improve as the relationship deepens...and end if the prices get higher!

You'll find your groove and if you prove yourself to be able to gain competent "apples to apples" bids, your directors will appreciate it and you'll immensely improve your community influence. But, don't go cheap on jobs to save a penny....the pound of cure for bad job spec'ing will see your influence decline or be eradicated.

But, you've got this!

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