Negotiating with Vendors Working for Management for the Best Deal

Negotiating with Vendors

Professional service providers or contractors are vital to the day-to-day operation and maintenance of any condo or co-op community. Since it's rare for a residential community to retain an on-site staff of landscapers and unheard-of to keep a team of roofers on hand for minor repairs, contracts are arranged with any number of vendors to provide certain services, either on a by-project or ongoing basis.

Ultimately, you'll never know if a vendor is right for you until he or she starts working on your property. But by prioritizing, conducting a little research, communicating and understanding intricacies of the vendor-board-manager relationship, the process can be kept relatively painless. Doing everything right can also improve your chances of hiring the vendor or vendors, who are most suited to the task and your community as a whole.

Choosing Vendors

Typically, the managing agent and board work together to choose vendors. Your managing agent should know all the particulars of the hiring process—which vendors have good reputations, deliver quality work, and maintain fair prices—but since the board ultimately makes the decision, it's best for board members to get involved and become knowledgeable as well.

"It's a team effort," says Robert Hastings of MAMCO Property Management in Mt. Laurel. "When we pick vendors, communication is the name of the game, and I try to get a committee or a board member involved in the selection process."

The best way to get an idea of the quality of service a potential vendor will provide is for the property manager and board members to do a little leg work and look at some of the work the vendor has done.

"It depends on what service you're looking for," Hastings says. "If it's a landscaper or snow removal company, we'll go out to some of the properties where they work and see if we like what they do."

It's also important to check references, and again, it's helpful for your board—or a specially-appointed board committee—to work with the property manager in doing so. There are boards that choose to be less hands-on and don't get as involved with day-to-day business, but the obvious risk with that approach is that you could easily end up with a service provider you won't be happy with.

Vendors are chosen based largely on their reputation. Not only do property managers make recommendations to each other, but vendors also recommend each other—your landscaper might recommend a good pool service provider, for example.

The Bidding Process

Depending on the type of service being provided, the bidding process for vendors can vary. For a one-time project, a specific bid proposal should be put together with as much detail as possible.

"If the association asks me to get a roof put on one of the buildings, we'll figure out the square footage of the roof and put together a bid package," Hastings says, and adds that he will then compile a list of service providers from building-materials vendors his company has relationships with.

"Then we'll send out our bid with our specifications and they'll fill out the blanks, attach their insurance information and references, and we'll check it out and make the decision," he says.

Vendors who are on properties regularly, like landscapers or snow removal specialists, are useful for checking out places they've worked before (because unless you're a roof expert, visually inspecting a roof job done by a potential vendor won't give you an idea of the quality of work). After getting a few examples of companies you like, Hastings says a Request for Proposal form [or RFP] should be put together, detailing what kind of work is to be done, as well as other details, like how often the grass should be cut.

"[The form] goes out to those companies that we're interested in, they fill it out and get it back to us, and we sit down with the board at a meeting and go through them and compare them," Hastings says. "In most cases, we try to narrow it down to two or three, then bring them in and talk to them and go from there."

Most boards consider various factors when making a decision, but there are some boards (or board members) who instinctively want to go with the lowest bidder. Though at time the lowest bidder may in fact be the best option, automatically going in that direction can potentially result in substandard work or a vendor, who isn't responsive to your association's specific concerns.

Jackie Bartilucci of JB Management Services in Voorhees says that all properties are cost-conscious, but going with the lowest bidder may not always be the best option.

Insurance Matters

Another important part of choosing vendors is to make sure that you check during the bidding process that all candidates are properly insured. With vendors used on an annual or seasonal basis, it's most convenient if their insurance will cover the entire season. Beware, however, that's not always the case.

"A lot vendors' insurance renewals are scheduled in the middle of the year," explains Hastings. "When they get the job, they'll give you their current certification of insurance, and you don't necessarily know when their annual is up. So we find out when it's up and try to bookmark those to make sure they continue to carry workman's comp insurance and liability."

This isn't to say that a vendor should be chosen based on when his or her insurance is due for renewal, but if the best landscaper for you in June happens to have insurance that expires in July, make sure you stay on top of it.

Good Communication is Key

The relationship between the vendor and your property manager is all-important. "It's pivotal," Bartilucci says to maintain an open line of communication.

That's because the property manager and the vendor are the conduits through which work on the property will be discussed. While a board needs to consider its own concerns when choosing a vendor, those concerns are best addressed when the manager has confidence in that vendor.

"If a resident has a concern, they're going to call me—not the vendor," Bartilucci continues. "So I have to know that I'll be able to reach them. We have one [vendor] who's at a particular property five days a week, cleaning around trash areas, taking care of small painting jobs. We're both on [wireless walkie-talkie handsets], so I know I can contact him when I need to."

Hastings defines a good vendor-property relationship as one in which the vendor is available via a cell phone or pager, is responsive, and is also willing to come to meetings if necessary. If a vendor shows up only when work is needed and isn't available—otherwise, it can become difficult to inform him or her of things that need to be done.

"With snow removal, if they keep missing a walkway because it's not lit well, they need to know about it," Hastings says. "And I have to tell them while they're on the property—not after."

But even if a vendor-property relationship with one of your HOA's vendors is going well, you still may want to re-bid the job every so often—just to make sure you're getting the best deal for the best service.

"Being in the management business, we've established relationships along the way and there's a level of service we don't like to go below," Hastings says. "Every management company I know of has a circle of people they like to use, who have performed up to certain standards and who can be counted on to do at least the minimum, if not more."

"But when the contract comes up for renewal," Hastings continues, "I go out and bid, even if it's just to make sure their price is in line, and even if we're happy with their service. That's to protect the association's interest."

In the end, it takes a concerted, cooperative effort between board and management to find the best vendors and service providers to fit your HOA's needs, to get the best price for those services, and to re-examine contracts and agreements regularly to make sure that last year's good deal is still holding its own. With clear communication of expectations, attention to detail, and an insistence on quality and availability, even the biggest project can be handled smoothly and efficiently.

Anthony Stoeckert is a freelance writer and a frequent contributor to The New Jersey Cooperator.

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Comments

  • Assuming that quality of service is properly considered, are bidders encouraged to resubmit bids to be more competitive or does only their first bids count?