Whether a community is self-managed or employs a management company, a condominium board of trustees will at some point have to make decisions about how and from whom the building gets its supplies and services. Because of this inescapable fact, creating and maintaining relationships with vendors is an important component of a board’s physical and financial maintenance of a community.

The process of researching vendors and negotiating services and fees with them isn’t as clear-cut as it might seem, especially to those not experienced in the field. To board members and other residents who aren’t well-versed in construction, strategies for attracting the right bids for projects and vetting contractors for those jobs are best implemented by a professional, such as a property manager. Even so, a building’s management team should understand how to check a contractor’s references, reputation, certifications, professional credentials, insurance requirements and other requisite information.

How to Choose

The choice of a vendor isn’t merely a financial decision that could be costly; it’s also a decision for which the board will be held responsible if the vendor doesn’t work out and provides unsatisfactory job performance. But how does a board begin to choose the best vendor? Whether doing that research with the help of an agent such as a property manager, or conducting the research on its own, a board must do its homework to know who the best candidates are.

Ultimately, even if the property manager is leading the search for a vendor, the choice of the company to be hired is the decision of the board. A wrong choice of contractor could have consequences such as an unfinished façade renovation project that inconveniences all of the residents for months, or litigation between an association and a contractor that takes years and wastes thousands of dollars while the disputed project goes unfinished.

That’s why choosing the right vendor and picking the correct bid for a project is a job best shared by a property manager and the board of a community. The management company or property manager typically is the administrative arm of the board, and is responsible for providing the board with the right information and tools to make the best decision, says Jared McNabb, director of acquisitions for Crowninshield Management Corporation of Peabody, Massachusetts.

“A managing agent is essentially a consultant. Ultimately, the board makes the decision,” McNabb says.

Whether they are looking for roofers, landscapers or snow removal contractors, boards find service providers through the media, word-of-mouth, personal recommendations and manager research. Many boards rely heavily upon managers for these selections and often, property managers prefer to work with longtime, trusted contacts. Because of the specific skill set needed for the work, some property managers also seek out vendors who specialize in servicing condominiums, says Jean Dobbin, of Dobbin Management Inc., in Naugatuck, Connecticut.

“We like to use [vendors who are in] the CAI magazine,” Dobbin says. “If they support CAI (the Community Associations Institute), they have a leg up, because they want to work with condos.”

Some boards take a hands-on approach to everything in their community, even infrastructure improvements, and such a board often will suggest potential candidates to their property manager for upcoming projects. Other boards want the management company to handle the process, including finding qualified candidates. Those candidates also will be researched and vetted by the manager, who may do a full background check on a new vendor after the vendor is preliminarily chosen for a project.

Who Checks?

Usually, the community’s property management company is responsible for researching a vendor and checking the company’s credentials. The timing of this vetting depends upon the board, which can have a property manager check up on a contractor at any time. The timing of the background check also could depend upon the project. Some small projects, such as a quick fix on the exterior of a building that will cost a couple hundred dollars, might not call for a thorough check of a vendor, especially if the contractor has been recommended or has done work in the past for the condo community.

If a board is planning for a project such as a large roof replacement or the total replacement of balconies on all of the condos in a community, it will direct the community’s consulting engineer to create specifications for the work. Based upon those specifications, which will outline the scope of the work and some of its details, a Request for Proposals (RFP) will be issued by the managing agent. The RFP will be advertised and will start the bidding process for the job.

Vendors hoping to land the project will submit an estimated bid for the work. Those bids will be considered by the board, providing that the bids have the required supporting documents delineated in the RFP. Those documents can include copies of insurance coverage and licenses needed by the contractor.

Often, personal connections are important in choosing a vendor, based on the recommendation of a vendor by a board member for a job, or the longtime working relationship between a managing agent and a vendor says Lynne A. Kelly, owner of Kelly Property Management in Burlington, Massachusetts.

If neither the board nor the property manager knows a potential contractor, the would-be vendor should be checked out before the board awards the company any work.

“If you don’t know the vendor, you should check them out in advance, before the board makes a decision [and awards them the contract],” Dobbin says. “In some cases, references will be asked for after a preliminary decision has been made by the board.”

Because many construction projects done in condominium communities these days are being backed by special assessments levied on residents, paying attention to costs is paramount. But it is not more important than ensuring that the vendor can — and will — do the work. “In addition to making sure they have all of the required insurance, you want to make sure that the quality of work they do will be satisfactory,” McNabb says.

Some vendor skills are less obvious than others, and not as easy to verify. Still, boards and managers should try to find vendors that have the “soft skills” that are so important in working with condominium communities. Contractors for condos should be exceptionally communicative, and willing to keep residents apprised of a project’s progress as it moves forward. In short, they must fully understand the unique dynamic of a condo community.

Wise Negotiating

Two parties cannot negotiate unless they are communicating well. That’s why a board that depends upon its managing agent to be the administrator for its decisions in the community must ensure that the agent and the building’s vendors see eye-to-eye. Vendors for the building and the property management company need to have a good working relationship in order to effectively serve the community.

Property managers vary in their level of familiarity with the nuts-and-bolts mechanics of maintaining a community, but many have extensive backgrounds in construction and can be trusted to understand the intricacies of RFPs, as well as the finer points of façade restoration or landscape maintenance. Kelly, for instance, is a licensed Construction Manager, capable of managing a sizable construction project. She’s also a carpenter, and has a lot of personal experience related to the work done by contractors working for her clients.

Kelly recommends that boards reassess service contracts of their vendors on an as-needed basis. “You have to make sure that the vendor does the job properly, but does not hurt the association’s bottom line. You want to make sure the vendor keeps his pencil sharp,” she says.

Seemingly unnecessary cost increases by vendors, such as large annual hikes in fees by the community’s landscaper, should prompt the board and managing agent to scrutinize the vendor’s contract. In the case of a landscaper, increases in fees of 10 percent or more each year should make the board reassess the landscaper’s contract. There could be a legitimate reason for the increase, but the landscaper could be over-charging because he thinks he can get away with it.

Something as seemingly egregious as large hikes in vendor fees is not necessarily the only opportunity that a board may have to save money spent on those fees. Vendors may be open to bargaining, especially if the board is adamant about keeping a close eye on the bottom line of a project.

“Recently we did a project with one of our associations and all of the prices [for the work] were above what the association wanted to pay,” Kelly says. “We spoke with the vendor and asked if they could sharpen their pencil and come back with a better bid.”

Another way to hold costs down on vendor contracts is to negotiate multi-year contracts with them. Boards can lock in prices with a vendor by signing a two-year or three-year contract with the company. Such contracts always should include a clause that performance by the vendor cannot slip during the life of the agreement. Industry pros say that boards can getter better service and pricing by befriending their vendors.

Many industry professionals encourage boards to develop a working relationship with their contractors. That way, rather than scrutinizing the vendor’s bottom line each year and questioning the fees, leading possibly to a new contractor whose service could be less than desirable, vendors will be more responsive to the needs of the community. Changing vendors regularly actually can detrimentally affect service.

“Altering relationships with vendors every three or four years is not an effective way to manage a community,” McNabb says.

Jonathan Barnes is a Pittsburgh freelance writer and frequent contributor to New England Condominium.