As buildings age, small and large maintenance issues arise, and HOA boards are called upon to address these situations. The questions frequently revolve around whether to use in-house staff or to hire an outside company to fix the problem. If the complex retains a management company—especially one that has its own maintenance division—the situation can become a bit more complicated.

Let’s look at a typical maintenance issue. Say the balcony railings on nearly all of the 20 units in a self-managed suburban condo complex are deteriorating and need to be replaced. The HOA has one maintenance person on staff and he has carpentry expertise, but he’s never replaced 20 railings at once. The board needs to make a decision. Should he be pulled away from his regular duties to fix the railings, or should the project be outsourced to a contractor? There’s no easy formula to apply, but rather a few commonsense questions to be addressed.

Sizing Up the Job

First, board members need to consider the size and complexity of the job, and the expertise of their staff.

According to Paul Santoriello, president and director of property management for Taylor Management in Cedar Knolls, “A lot of the issues that associations deal with are similar to what companies deal with when they look to outsource—the positives and negatives. Obviously, the first aspect that you're going to look at is what service it is that you need provided. The second thing is whether the job can feasibly be done by an outsourced company, and the cost-benefits associated with it—and there's more to that analysis than just what it would cost to use an employee versus what would it cost to hire an outside company.”

Wayde F. Scheffer, president of Access Property Management in Flemington, uses a two-column “decision chart” to determine whether projects in his company's portfolio communities can be handled in-house or outsourced to contractors.

“A good way to proceed is to prepare a chart with each of the following categories and an 'In-house Maintenance Staff' column and one for 'Outsourced' column for outsource next to each,” says Scheffer. "Then place a check in the column that best meets the requirements:

• Are adequate staff available to do the job?

•Are personnel qualified/ skilled enough to complete the job?

• Is there adequate and qualified supervisory staff to oversee the job?

• Are personnel available to perform the work in the required time frame?

• Are personnel available for the duration of the project/job?

• Will personnel be taken from the assignment to perform other tasks?

• What is the most cost effective option?

• Does staff have the necessary tools, equipment, supplies, etc. to do the job?

• Does staff have the requisite insurance coverage for the job?

• Does staff have the necessary licenses and permits?

“Using a decision chart like this one addresses both the pros and cons for any particular job or project,” says Scheffer. “By truly understanding the scope of the job and then carefully analyzing the cost-benefits of handling it different ways, you can determine the best outcome.”

Feasibility and scale are the basics, but hanging over the entire issue is the matter of liability. “The number-one consideration [with outsourcing versus in-house labor] is that when you bring in a contractor, you're placing the liability in the hands of an outside party, rather than the association. The state of New Jersey is a very challenging state with all the liability aspects of having an employee and all liability aspects of the actions of that employee. So using a third-party vendor can enable you to offset some of that burden onto the vendor.”

Also, say the management professionals, boards should be aware that vendored services aren’t always more expensive than using an in-house staff member to do certain jobs. If you ask an HOA employee who works on an hourly basis to do a job he’s not trained for, the task could likely take more time than if it was carried out by a trained professional. It can also be more costly down the road to fix any mistakes the less experienced staff member may make.

Finally, it's important to consider what happens to regular maintenance when you take in-house staff out of commission for two or three days to work on a particular project. Smaller condo associations with fewer on-site employees may not have the deep bench needed to keep day-to-day operations going smoothly while special projects are done at the same time.

Most Large-Scale Jobs Outsourced

Clearly, large-scale capital projects such as roofs, paving, and pool replacement are typically outsourced. Projects that require specific skills or equipment, or special knowledge of building regulations and legal obligations, including trades such as electrical, plumbing, and HVAC, are also typically bid out.

The reasons for this are obvious, says Santoriello. ‘A community manager or superintendent is just that—a professional community manager or super. They are not architects or engineers, they're not attorneys or accountants. They may not have significant strength in physical maintenance and repairs. By outsourcing, you're getting somebody with specialized expertise. You're also dealing with a company that is responsible for the managing, supervising and all of the human resource aspects of its own employees. An additional benefit is that vendors and contractors typically have depth; they have a bench to go to if an individual worker falls ill or is otherwise unavailable to work. And they can typically do that on much shorter notice than you can as an employer of the association.”

Tony Nardone of Dovan Management Group in Bloomfield agrees. “Outside contractors certainly have their place. They can usually tackle a wider range of tasks. If I'm replacing a 4-x-4 section of sidewalk, that's something I'll do in-house. If I have to replace, let's say 30 linear feet of sidewalk, that's a little bit more challenging for on-site because now I'm using those resources to do that repair at the expense of everything else that needs to be done. Or say you have a windstorm like we had back in March, and a lot of siding rips off the buildings. Now your maintenance staff is running around with ladders and spending all their time installing siding. An outside contractor could probably do it a little bit more efficiently. So there are certain tasks that outside contractors can definitely do more efficiently.”

Ideally, an in-house maintenance person or building superintendent would advise the board about possible contractors for jobs that make sense to outsource, says Walt Williamsen of Reserve Strategies, LLC, in Harwinton, Connecticut. That person would likely be familiar with local companies and contractors. He or she might also be able to facilitate multiple bids from those companies for the board to consider. And the on-site person would be in the best position to keep an eye on the contractor during the work and act as a go-between with residents, board, and contractor.

“There are two components,” says one property manager. “Doing the job, and explaining it to everybody.” A dedicated on-site person knows the property intimately and is able to speak the contractor’s language. He or she will have a working relationship with the owners and the board and be able to talk with them. These so-called “soft skills” are useful in communicating to residents what will be happening, how, and when. “Condominium complexes are, well, complex,” he continues. Members of self-managed boards may have experience with some maintenance issues from past home ownership, but they are less likely to comprehend infrastructure, financial, and legal issues.

The Case for DIY

When very specialized expertise or equipment isn't an issue, there are some compelling reasons to keep some maintenance and repair jobs in-house, managers say. “We have associations that do just about everything in-house,” says Santoriello, “and I mean, porter services, landscaping, even exterminating. They get licensed, and do an enormous amount. Some of the associations are running multiple businesses.”

Nardone points to the issue of control as being a prime reason some boards opt to keep things closer to home. “It’s an issue of control,” he says. “When you're dealing with outside contractors it's often, ‘Something else came up,’ ‘I've got an emergency I can't show up today,’ or ‘It's raining.’ So you're not getting work accomplished everyday. So that's one of the biggest differences between the two. With in-house, you have more control. We implement a work order system, for example. With in-house staff, the property manager can better track the repairs and see to it that they're getting done. You get more productivity. Say you're pouring a sidewalk, for example. When they're done with that sidewalk, you can have on-site employees do other tasks. Even if it's as simple as painting a curb yellow or picking up some trash, policing the area. You can utilize them for other on-site tasks. I'm a big proponent of on-site maintenance.”

A Possible Compromise

There is something of a compromise between in-house and outsourced labor in the context of a condo building or HOA, and that's where management companies come into the picture. When a condominium board decides to launch a big repair project involving contractors, often the management company can provide project management services, saving members the hassle of overseeing the project themselves. Management companies also benefit associations by drawing up 5- and 10-year preventive maintenance schedules and keeping tabs on punch lists.

In recent years, management companies—like companies everywhere—have sought to generate additional revenue by adding services, and maintenance has become a lucrative component. Some management firms—usually larger ones with multiple large properties in their client portfolios—have even established entire maintenance divisions for the purpose of serving those client communities. Such arrangements allow for more oversight and control over construction and maintenance projects, as well as faster response time for service calls.

“Management companies that have either a maintenance division or affiliated maintenance company can be a big benefit to a community,” says Scheffer. “Those divisions or affiliated companies are devoted to the management company’s clients exclusively, and consequently there aren’t competing interests from other jobs from different sources. Immediate access, flexibility and institutional knowledge are other benefits along with the ever present knowledge that the maintenance workers' performance is being held to an even higher standard since they are tied directly to the management company.”

With the convenience comes the potential for conflict, however. Critics of in-house maintenance divisions have doubts about possible conflicts of interest.

Nardone is one such critic. “If a management company hires their own in-house maintenance department," he says, "are they really getting competitive bids? Or what if the in-house maintenance company does half-hearted work? Is the property manager really going to tell the HOA, or will they just kind of sweep it under the carpet? Those are really important questions.”

The answer to these questions depends on how much trust an HOA has in their management company, and how their contract with that company is framed. “There is only a conflict of interest if the management company doesn’t disclose that it has a maintenance division or affiliated company,” says Scheffer. “After disclosure, the association’s board can decide whether they are comfortable with allowing the maintenance division to be considered for work in the community. Assuming that there is no objection, the maintenance division/affiliated company needs to subject to the same competitive bidding requirements and standards as any other vendor serving the community.”

The bottom line: The bigger and more specialized the job, the more it should be outsourced. Small repairs involving carpentry, tile, or plaster work can often be tackled by a skilled on-site maintenance person, whereas large-scale jobs such as roofing and paving should be carefully considered for outsourcing.

April Austin is a freelance writer from Lexington, Massachusetts. Additional reporting by David Chiu.