Before allowing a contractor to repair, replace, or maintain the association’s maintained areas, associations must make sure the contractor is licensed and insured. Jim Lyons, owner of Construction Services Inc. says, “Successful construction requires proper planning.” Let’s look at this simple concept in more detail.
“The process begins by vetting vendors before they are invited to bid on your project,” says Connor Doyle, National Sales Director for Vendor Information Verification Experts (VIVE). Doyle shared an all-too-familiar story about a recent incident where a manager was tasked with a small (cost wise) drywall repair project.
The board hired a contractor and collected insurance information prior to the job start. The contractor hired a sub who set off the interior sprinkler system causing a catastrophic loss destroying three units.
The sub had no insurance, and the contract’s general liability policy lapsed prior to commencement of the job. The board/manager attempted to do due diligence by collecting insurance info. But, did they go far enough to safeguard the association and ameliorate risk?
Perhaps, the most important item to look for when reviewing a vendor’s insurance is whether it has a “Multi-Family” or “Multi-Unit” exclusion in their insurance policy. If they do, they are essentially uninsured if they perform any work for a condominium association. If that is the case, do not hire the vendor.
Pushed by boards to “get jobs done,” managers find it hard to get apples-to-apples bids. It takes time to investigate the site conditions and prepare a written scope of work for which most managers don’t possess technical expertise.
“When requesting an RFP (Request for Proposal), it is most important to provide the contractor a clear scope of work,” says Mark Greening, Principal of RFI Construction Management, Inc. The request should also include a bid request form or a clear format of how the bidder should present the bid. Lastly, the RFP should ask the contractor to include any clarifications or exclusions, including insurance exclusions for multifamily housing, that are not included in the bid. These three elements should provide the manager and the board what they need to perform proper bid comparisons and to evaluate the most complete and competitive bid. Managers can also hold a pre-bid walk, so everyone can ask questions and agree on the scope of work. Still, managers should lean on experts who are too often underutilized.
Lyons says, “It’s very hard to evaluate bids without a scope of work. Whatever you pick may or may not meet your needs.” Construction managers are best utilized on larger projects that require property condition assessments, multiple scopes, competitive bids, and the proper oversight to ensure the property and the community receives the best quality work delivered on time.
While the internet has made sealed bidding somewhat obsolete, CACM recommended, as recently as 2016, that managers employ a sealed bid process wherein all bids are received sealed and are opened in the presence of the client board or its designated representative.
In other words, it is unethical to bid on a shop by taking another vendor’s scope without their express authorization and asking for competitive bids or asking vendors to beat this price. It is ethical to answer vendor questions about the scope of work and reply to all bidders with the answers.
Remember, it’s not about selecting the lowest bid. It is about selecting the best company for the job. Managers succeed when they provide context to bids and show a higher level of professionalism by preparing a complete bid presentation including exclusions.
If you are lucky enough to manage a community where prior managers have stressed board education and reliance on professional advice, then you don’t need this article. But, if you’re like most of the rest of us and have board members who are completely convinced they can run a community association without professional help, diminishing managers, and professional service providers, then “we need to help clients move away from trying to save money, which is not how boards have thought historically, and toward risk management above all else,” says Doyle.
The CACM Code of Professional Ethics and Standards of Practice, June 7, 2017, Standard of Practice 1-01: Education, c, that all managers sign, reads “The Member shall encourage officers, board members, and committee chairs of clients to participate in courses and seminars which will improve their abilities to serve community association members.”
Caroline McCormick, CAMEx, CCAM, is the Internal Auditor of Client Services for OMNI Community Management LLC, ACMC and has been certified through CACM since 1993.
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