In today's economic climate, every dollar counts for Georgia associations. Rising costs across the board – from labor and supplies to insurance and property taxes – mean it's more important than ever to maximize your budget. Ensuring you get the best value from your vendors is a key part of this strategy.
It's crucial to remember that "best value" doesn't always equate to "lowest price." While it's tempting to choose the cheapest bid, opting for substandard work that requires frequent repairs or replacements can end up being more costly in the long run.
When is it necessary to go through a formal bidding process for your association's vendors?
Your board should look for a variety of vendor options when you’re considering providers for
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Non-emergency work
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Major capital projects
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Professional services
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Service contracts
Your association’s legal counsel will help ensure compliance with any statutory or local ordinance bidding requirements.
While you have the freedom to do so whenever you want to evaluate your options, it's particularly crucial when making significant financial commitments or seeking new vendors.
Avoiding conflict of interest around board members and vendors has always been best practice. That includes vendors owned by or connected to anyone on your board or a committee, your manager and the management company. Your management company can recommend vendors they trust, but they can’t dictate who you hire.
Lucy Acevedo, a regional director at FirstService Residential, emphasizes that vendors can sometimes become complacent over time. She advises, “Even if you're currently content with your vendor's service and pricing, it's always beneficial to explore the market and compare your current offerings to other available options in your region. When considering a new vendor, it's wise to gather at least three proposals from reputable companies."
What kind of questions should your board be asking those potential association vendors?
The answers may matter more than you know. Make sure any potential vendor can answer the following questions to your satisfaction:
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Are they licensed, bonded, and insured?
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How many years have they been in business?
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Do their services fit within your required budget?
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Do they have excellent references from similar associations?
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What is their online reputation like?
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Have they communicated with you before and after the interview process?
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Have they provided a clear roadmap for successful project completion?
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Do they offer a warranty?
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Are they the right fit for your association?
A reliable property management partner can assist your board in developing a well-defined scope of work and implementing a fair evaluation system for potential vendors. Acevedo shares her approach, "I utilize a forced ranking sheet where we assign points to each vendor based on specific criteria. For instance, a company's longevity earns them points, while the prompt provision of comprehensive insurance and licensing documentation also contributes to their score. Ultimately, the vendor with the highest point total secures the contract."
Naturally, such a thorough evaluation process requires upfront effort. So, what steps should your board take before reaching the bid comparison stage?
Do your homework
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Ask your neighbors: A vendor's reputation is invaluable. Look for companies with a proven track record in similar communities in your area. Acevdeo suggests checking vendors with Google, the local Better Business Bureau and even Yelp.
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Plan walk-throughs: Before requesting bids, invite each vendor for an individual walk-through. This allows them to understand the project's scope and gives you a chance to assess their suitability. It also gives you a chance to observe their familiarity and level of comfort with the kind of work that needs to be done.
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Check provided references: Acevedo recommends calling the references and asking questions rather than just accepting a piece of paper. It’s a good idea to have a number of board members checking references so the work doesn’t fall on one person – that also makes board members feel more involved in the process. Getting multiple board members involved also provides a greater range of perspectives and points of view on the information uncovered.
Tap into your management company’s expertise
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Consult with professionals: Your management company possesses a wealth of knowledge and experience. They can work with your association counsel and insurance broker to determine what insurances and licenses are required for the work you need done, and ensure your contracts and warranties are reviewed by association counsel prior to execution.
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Explore established partnerships: Many management companies have cultivated strong partnerships with reliable vendors. They can offer a curated list of options, saving you time and effort in your search. Remember, the final decision rests with your board.
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Prioritize quality assurance: Some management companies have implemented their own vendor certification programs, ensuring that service providers meet stringent quality standards. Even if a vendor isn't certified, your manager can gather insights from colleagues who have worked with them, helping shape your expectations.
Remember, your management company is a valuable resource. They are there to present options and facilitate informed decision-making, not dictate your choices.
Establish and follow standards for vendor selection.
Creating a standardized process streamlines vendor selection and leads to better results. To ensure an apples-to-apples comparison, ask each bidder to submit a proposal that aligns with a clearly defined scope of work. You might want to develop a template for vendors to fill out, either instead of or in addition to their usual proposal format. This template should specify details like materials, tools and equipment, project timeline, total cost, and how they'll handle communication if unexpected situations arise. (That can become your forced ranking sheet!)
Safeguarding your community's financial resources is paramount. It's a core component of your fiduciary duty and commitment to the residents you serve. Selecting the right vendors plays a pivotal role in fulfilling that responsibility. Download our vendor checklist to learn more about the questions you should ask any potential vendor for your association.
If you're looking to streamline the vendor selection process and ensure you're making the best choices for your community, consider partnering with a trusted property management company. FirstService Residential can provide the expertise and support your board needs to navigate this critical aspect of community management. Contact us today to discover how we can help.