Many Associations hire a professional management company just to handle the vendor selection and oversight process. With experienced professional managers representing the Association, you can generally have confidence that a vendor will be selected only after a rigorous qualification process.
The quality of vendor services your Association receives impacts the value of member property. While this is apparent in virtually all maintenance activities, it is particularly true in landscaping, painting, roofing, fencing, streets, and parking areas. Additionally, security services (although not a maintenance activity) potentially affect ALL maintenance activities and are the most visible “personal” service provided for most Associations.
Selecting vendors can be a challenging process. There are different sets of criteria for selecting each of the above described services. Many Associations hire a professional management company just to handle the vendor selection and oversight process. With experienced professional managers representing the Association, you can generally have confidence that a vendor will be selected only after a rigorous qualification process.
In addition to specialized criteria that relate specifically to a particular service, the following general criteria are very important.
Specialization of Services
The quality of vendor services is often determined by their specialization. This can be evaluated on two levels: (1) the vendor’s overall background and experience in the services they offer, and (2) the vendor’s experience in working with homeowners’ associations. Working with an Association of 100 members is not the same as providing the same services for a single homeowner. Membership in CAI should often be one of the first questions to ask a vendor. If a vendor does not value CAI membership enough to join, it is often a sign that the company does not have experience working with associations or an interest in specializing within the homeowners’ association industry. Some management companies will not even consider selecting vendors unless they are members of CAI.
Before a business is considered as a candidate for the job, an HOA service professional reviews the company’s reputation using a variety of resources, such as customer references, Better Business Bureau (BBB) records, and the business history of the company. Only the most reputable companies become candidates to receive a contract. An even more important indicator of reputation is previous work provided for other associations. Managers gain confidence in vendors that provide good services on a regular basis.
A business must carry insurance that covers injuries to residents, injuries to its employees, and damage to the property of either residents or the vendor that occurs during the fulfillment of the contract. Proper insurance protects both the vendor and the community from financial damages that occur in relation to the work performed. This is an often overlooked criteria, as too many managers assume that proper insurance is carried without ever requesting proof of insurance.
Some states require a business to be licensed before it performs a particular service. Before a contract is executed, a professional management company should make sure that any vendors requiring licensing do, in fact, have the appropriate licensing to legally render their services.
Contracts should only be executed when they contain the proper provisions and information. This includes credentials of the contractor, the start and end date of the contract, compensation and terms of payment, description of work to be performed, provision for the termination of the agreement, provision for warranties for services and materials, proof of insurance, and provision for legal costs. It is generally wise to have Association legal counsel review contracts prior to execution. This is one of those areas where the saying “an ounce of prevention is worth a pound of cure” really applies.
Unless an Association uses its own employees to perform ongoing services, it must generally outsource to third-party vendors to provide the necessary services. If the board of an Association is inexperienced at selecting vendors, the best first step is to select a qualified management company that has experience in the vendor selection process. With years of experience in performing the vendor selection process, such companies ensure that vendors are chosen based on their specialties, excellence in working for other communities, financial protections, and licensing, and that they have appropriate contract provisions.
Written by Chuck Miller