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Choosing the Right Vendor A Balancing Act

Choosing the Right Vendor

There’s always something to do around a condominium or co-op building. There’s landscaping to be done in the spring, summer and fall. A swimming pool adds to summer’s workload, and snow removal is one of winter’s most important chores. Maintaining common areas is a year-round job and can involve cleaning, painting, electrical work and services from general contractors.

Someone has to do all that work, and someone has to do the hiring. And making the right choice when hiring vendors is of utmost importance. Hirea landscaper whose work is shoddy, the community will suffer. Hire an electrician whose rates are way above normal and you’ll waste money.

Quality and cost are the two most important factors when hiring someone, but you also have to consider the vendor’s availability and responsiveness to concerns, what kind of contracts they offer and when they’ll do their work. If there’s an overnight storm, you don’t want the snow removal expert showing up after lunch the next day, and you don’t want the springtime lawnmowers waking up residents earlyon a Saturday morning.

Hiring the right vendor takes a little research in determining what your community needs. And the relationship with the vendor doesn’t end whenyou sign on the dotted line. In fact, it’s just beginning.

Who’s Doing the Hiring?

It is ultimately up to board members to decide which vendors will be hired, but in most instances the input of the association manager is seriously considered because he or she is usually savvier to the ins-and-outs of the property management business.

“The ultimate decision will be made by the board, but traditionally 90 percent of the time it is driven by the recommendations of the property manager,” says Bill Kasper, president of Urban Property Management Corp. in Boston.

Experienced managers will likely know vendors they’ve worked with before, and whom they’re comfortable with. Another avenue is getting input from fellow managers.

“It depends on what we’re looking for,” says Dorothea Johnson of RoBeck Management Corp. in Chestnut Hill, Massachusetts. “If we already have them on our vendor list, which [consists of] people we have used in the past, we will go to them first. Otherwise, you do listen to those in the industry and ask around about who does the best job for the best price. You want to make sure that you are getting people who are reputable.”

Nevertheless, Kasper says the board sometimes will go its own way.

Boards will sometimes go against recommendations of the manager, he says. “They will go with a cheaper bid or go with a particular individual that they have a rapport with. Sometimes a manager is new to the building and the board, and there might be someone in place [whom the board has already worked with]. The manager may come in and say he wants to use his own people but [the board says], ‘No. We like this guy who is on site and we want to stay with him.’ It depends. If I feel strongly that they need to use somebody, usually I will make [a strong case for that vendor].”

An important part of the hiring process is the screening of candidates. Lynne A. Kelly of Kelly Property Management Corp. in Burlington, Massachusetts, says this can be done by the property manager and the board, but the most common way is for the manager to do the homework, check references and make a recommendation to board trustees. When seeking recommendations from other managers, make sure to ask how available the vendor was, including if he or she was contacted after the job was completed.

“You want to check and make sure that prior individuals and companies that have used [the vendors] in the past have good things to say about them,” Kelly says. “It’s a little bit of legwork for the managing company, but that’s what you need to do if you want to do it properly.”

Let’s Make a Deal

As previously noted, the most important factors when choosing a vendor are usually quality of service and cost. Typically the goal is to find the right balance between the two but you want to be especially wary of contractors who offer rates that seem too good to be true.

When negotiating a new yearly contract with a landscaper or snow-removal service with someone the building has a working relationship with, Kelly says the condo is often at an advantage because the contractor doesn’t want to lose the business.

“I hate to use the words ‘beat them up,’ but you can beat them up,” she says. “But you have to be careful because you don’t want to beat someone up [to the point] they will give you the price, but won’t give you the quality of work. The quality of work and price are your first two priorities.”

Kasper says managers often try to use their buying power when negotiating contracts because the person may manage multiple properties and get a de facto bulk rate. But he, too, warns against trying to drive down the price too much.

“There are certain amounts of profit margin built into a lot of these contracts, and when you start trying to hammer them on price they are going to have to cut their services in some way and the quality will go down because they have stretched themselves too thin,” he says.

It can be tempting for boards—which are almost always concerned with the bottom line—to jump on the lowest bid, but those bargain prices often come from novices, and that’s risky for obvious reasons.

“You may be hiring people who are inexperienced or dishonest,” Kasper says. “The best people aren’t working for the cheapest prices, no matter howmuch you wish they would. That could lead to substandard work.”

Communication Situations

One reason that a property manager should be involved in the hiring of vendors is that they will almost certainly be the person communicating with the vendor before, during and after the work is being done. To keep communications with contractors streamlined and avoid confusion, it’s best to have one designated person deal with vendors, and it’s usually bestto have the manager be that person. Questions and concerns from board of trustee members or other residents should go to the manager, who will then pass them on to the vendor.

“It’s the manager who is dealing with the vendors, mostly, once they are hired,” says Johnson. “They are the point person and you want to make sure the board members don’t bother them all the time with questions and problems that arise. [The manager] should be handling that.”

When Good Vendors Go Bad

Obviously, things can go wrong over the course of a project. Lawns may get crabgrass, swimming pools get cloudy and, believe it or not, a contractor may occasionally not get a job done by the promised date.

“The first thing I would do is, if there is a problem, try to discuss the problem with the vendor,” Kelly says. “You don’t want to get rid of a vendor too hastily. If there is a problem, talk to them and try to negotiate and work it out. The manager has a working relationship with the vendor because they use them all the time, but if an association is getting rid of vendors all the time, there’s obviously a problem there and the association could get a bad rep as well.”

But what about those instances where being nice doesn’t get results? What if your lawns are overrun with weeds and dead flowers? What if residents are getting cranky because it’s taking two weeks to paint the lobby or the clubhouse?

Kasper says withholding payment can be effective, especially for property managers who hire vendors to work on multiple properties.

When a management company is buying collectively for a number of properties, says Kasper, “the vendors are indebted to that manager” because they realize they could lose all their contracts with the manager if a problemoccurs at one of the properties.

“A lot of times my vendors are bending over backwards because I am a great majority of their business and send them a lot of work. I get preferential treatment because I send them so much, especially when the going gets tough or you are in a pinch. I call and say, ‘I need you right now, I am in a real bind.’ It works well for everyone.”

Time for a Change?

Boards are usually dedicated to doing what is best for the residents they represent, but cost is always going to be an issue. Kasper says changing vendors who sign annual contracts, like landscapers and snow removal services, can’t be done every year, but boards should look into their options occasionally.

“You should be checking periodically, maybe every few years, on pricing,” he says. “But doing it every year, you run out of vendors. There are only a certain amount of vendors in a certain market.”

Kelly says one important cost factor is negotiating a fixed-price contract. With snow removal, for example, set a price for the season, not by the snowfall or how many inches are removed.

“These properties are on pretty much a fixed budget and there’s no sense going back to the owners and saying we need an assessment to pay for this season’s storms that weren’t put into the budget,” she says, adding that the board members should sign the contract, not the manager.

If you know the ins and outs of running a residential building, it’s a simple concept—get the job done well at the best price possible. It takes preparation and communication, but all that work will pay off in the end.

Anthony Stoeckert is a freelance writer for New England Condominium magazine.

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