Did you hear the one about the condo association that went the do-it-yourself route? No, we’re sure you didn’t…because communities hire professionals for all but the most minor repairs and upkeep (no offense to your Cousin Rich, who was hoping for a summer painting gig in your complex). As a result, project time means bidding time.

Every condo board and property manager knows the drill: When there’s repair, renovation, or maintenance work to be done, bids are solicited, vendors submit proposals, and a decision gets made.

It isn’t as simple as that, of course. Bidding requires time, effort, and analysis on all sides, and a meticulous process will ensure that the association’s money is well spent.

To begin, says Stephen DiNocco, principal of Affinity Realty & Property Management in Boston, the board and property management company work together to define the general scope of work and, if necessary, hire an architect or engineer to develop project specifications. This step is vital to long-term success. Pamela Bowman, regional manager of Prime Touch Services in Hartford, Connecticut, notes, “The difference between doing a job right and doing a job is having specifications written by people who have experience.”

The goal of specifications, DiNocco explains, is to design them such that the contractor can be profitable while the condo association gets a fair price—and a menu of items from which to choose. He provides as an example a recent balcony project. The board didn’t want 100% pressure-treated wood; they wanted to cover some of it with PVC, but DiNocco knew that procedure would add 40-50 percent to the project. He didn’t think the board would want to spend that much money for the aesthetics, so he structured the solicitation to be a call for the following: a balcony with a pressure-treated wood base and a menu of various options.

One Step at a Time

Once the specifications have been developed, the management company solicits vendor proposals on behalf of the association and qualifies bidders. According to Bowman, who has worked as both a property manager and a contractor, a bid solicitation should include the following information: the scope of the project, location, how many units comprise the property, who the point of contact is, a bidder’s meeting with date and time, and the due date for the bid.

Vetting is another essential aspect of the process; prospective vendors aren’t names plucked out of the proverbial phone book.

Justin Gargiulo, senior vice president and director of corporate operations at Great North Property Management in Exeter, New Hampshire, advises against “just Googling” a vendor. “You want to meet them, see their office and equipment if possible, and get references. Some of our managers have actually made surprise visits to other jobs prospective vendors were working on just to see the quality first hand.” He adds that Great North’s pool of 30 or so managers speak with one another on a regular basis. That, together with having been in business more than 25 years, means they have a good handle on separating the vendor wheat from the chaff. “Picking out a quality vendor is key when it comes to the successful operation of a community,” he says.

Of course, companies used successfully in the past are at the top of the list. Referrals also get priority. Gargiulo says that his company is open “to using other vendors that someone from the board or community have had success with—as long as they meet the appropriate insurance and contractual requirements we set forth.” References from other property managers, organizations, and engineering firms are common. Bowman says referrals from engineering firms are helpful because they themselves “have a vetted list of capable contractors specific to the work for which they’re bidding.”

When past vendors and referrals aren’t a possibility, DiNocco recommends The Blue Book of Building and Construction, a comprehensive listing that includes general contractors, subcontractors, architects, engineers, facility and property managers, suppliers, and manufacturers.

For those who’d like a more hands-on approach to evaluating prospective vendors, Bowman suggests attending a condominium trade show—like the one at Boston’s Seaport World Trade Center, hosted by New England Condominium each spring—to meet and informally interview vendors. Board members who want to be especially involved, she says, should consider membership in the Community Associations Institute (CAI), which provides education and information to community associations and the professionals who support them. The next New England Condominium’s Condo Expo will be April 30, 2015 from 10 a.m. to 4:30 p.m.

Good things come in threes—including, for the most part, bids (DiNocco says on occasion he’s received as few as two and as many as five). There are no laws governing the bidding process, but the norm tends to be three bids. Bowman believes the advantage of that numbers lies in checks and balances. For example, if the first bid is high and the second is low, the third bid may help illustrate where on the pricing continuum the project should likely be.

The third bid can also facilitate questions and provide a sense of one vendor’s approach relative to another—in the event the underlying assumptions differ, one or more vendors may want to revise his or her proposal.

Although the process is streamlined, DiNocco perceives a downside to the “always get a bid” mindset. “Part of the problem for condo associations is that sometimes they rely too heavily on bids. They’re always seeking proposals, and then vendors grow weary of not getting bids.”

Skip the Bids?

That raises the question, are there circumstances under which it’s acceptable to directly hire someone and skip the bidding process altogether?

Yes, and these are often dollar values (e.g., projects above versus below a certain dollar amount) specified up front in the management agreement, DiNocco says. Furthermore, he advocates the cultivation of rapport. “Take the plumber who comes in at 3 a.m. or on a holiday again and again. Someone like that is an asset of the association; you have to understand and promote that relationship. It’s not just about the money.” Other intangible factors are at play—or should be.

Bowman echoes the point. “If there have been good working relationships and loyalty with a vendor, and you have integrity built up, it’s good to stay consistent.” However, she adds that even then, it’s good to bid out a job occasionally as a means of keeping the process in check.

Then there’s the matter of conflicts of interest, or the appearance of them, during the bidding process.

It happens, admits DiNocco, and unfortunately it wastes the time of the manager and other bidders. He offers the example of getting three bids, working closely with prospects on cost-benefit analyses, only to have a trustee give his friend the job—even one who doesn’t meet the bidding requirements.

Conflict of interest is a tricky concept, though. Bowman says it well: “What one may perceive as a conflict, one person may not. For example, what happens if the person receiving the bid is also bidding on the project?” If you can have a neutral party assisting the board, then, in her opinion, it’s not perceived as a conflict of interest.

The property manager or the engineering firm typically receive the bids. In DiNocco’s experience, some boards pore over the bids themselves, and some look to him to make a recommendation. Gargiulo, too, says his firm’s property managers present their opinions of the bidders and that the boards ultimately make the final decision. The benefit of such opinions, adds Bowman, is that the board can weigh the pluses and minuses of each bidder and make an informed decision.

Face to Face

In many cases, Gargiulo says, property managers recommend that the board meet with and interview the vendor depending on the size of the project. Bowman advocates a common bid meeting (an open meeting where everyone has the same information), particularly if there’s no property manager or engineer receiving the bid.

During the interview process, says Bowman, the board should pose questions such as the following: “Where do you get your employees?” “How many employees do you have?” “How much equipment do you have?”

An interview or bidder’s meeting allows for the clarification of details. Bowman provides an example. Say the topic is new pavement. At a complex, this includes sidewalks and driveways, but the solicitation might only have been for driveways. At a bidder’s meeting, a vendor can make a case for why the project should include sidewalks. Also, she strongly recommends that the board sits down and clarifies their expectations among one another—before the bidder’s meetings.

How low can you go? It’s a valid question for doing the limbo but not necessarily for bids. While cost is an important consideration, DiNocco, Bowman, and Gargiulo all make it clear that it’s not the only one.

For instance, says DiNocco, if there’s a landscaping bid where someone’s relative comes in with a bid to mow the lawn for $50/week per acre, it’s clear they aren’t a professional company. “They simply can’t afford to swing a price that low with equipment, men, and insurance, so on.”

Bidding too low can therefore be detrimental. “If I get two bids at $5,000 and one bid at $2,000,” says DiNocco, “I throw that bid out because I assume they don’t know what they’re doing.”

When a bid seems expensive, does that mean it’s on a more concentrated level and entails more labor? Or if it’s on the cheaper side, does that mean the project will be spread out over a longer time and employ fewer workers? Will there be change orders later? Again, says Bowman, these are questions to ask at a bid interview. How a vendor arrives at a price is as important as the price itself.

Gargiulo emphasizes the importance of legitimacy and a solid reputation. “The last thing a board or management company wants to do is to chase a vendor who went out of business.” Saving 5 percent to 10 percent isn’t worth it, he says, if there’s hassle down the road. “Quality workmanship should always be the number one priority.”

When all is said and done, Bowman says, the bidding process is about “managing expectations” in both directions. The board interviews the contractor and vice versa so there are no misunderstandings.

She offers one final bit of advice for condo boards: “Nothing is ever maintenance-free. There’s always something that has to be done for your property. Planning, planning, planning…if you don’t plan, you’re caught off guard and don’t budget.”     

Jodie Lynn Boduch is a freelance writer and a frequent contributor to New England Condominium.