Contracts: You Better Shop Around For Bids!

It is inevitable—every Association has some type of annual expense for maintenance or a repair project that will cost a significant amount of money. Whether it is landscaping, a roofing project, or property management, the costs can vary dramatically from vendor to vendor.

It is important that the Association attempt to obtain at least three bids for every major project. Although some Associations have worked with the same contractors for several years, for services such as snow plowing, it is important that the Association perform its due diligence by ensuring that the contractor’s pricing is in line with the market rates.

Remember that the choice to enter into a contract should be a board decision—not the property manager’s decision, and not one board member’s decision. All contracts should be executed by at least one member of the Board. Property managers should not be entering into contracts on the board’s behalf.

Look into the specifics of each bid—for major construction projects, will the contractor mark-up the cost of materials by 10%? For snow plowing, is there a major difference in cost because one company is insured and the other is a self-employed, one-man business who does not have insurance (obviously, we want to require all contractors to provide current proof of insurance). Does the bid include the price of any permits or inspections that will be required on the project, or are those fees to be added in over and above the bid in hand? It is important that you are comparing apples to apples when you are comparing bids for a project—especially when it is a major expense for the Association.

Never choose on price alone. A bid that is significantly out of line with other bids may be the indication of inexperience or an inadvertent error on the bid. How is the contractor’s reputation in the community? Are there any pending lawsuits against the contractor? (A quick check of the local court’s docket can usually tell us this). Have you worked with this contractor in the past? When in doubt, ask for references from past customers.

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