6 Tips on Preparing HOA Vendor Bids and Evaluating Responses
HOAs exist for the benefit of all the HOA's homeowner members. The elected Board takes care of the day-to-day business of the HOA. Of course, the Board cannot complete every maintenance job or other work that the HOA needs. So, one of the Board's duties is to hire the best people (or company) for the job at the best price available. One way that the Board can winnow out the wheat from the chaff is by putting projects out to bid. Dealing with how preparing HOA vendor bids and evaluating responses can sometimes be a bit of a trial. No worries, though, because we have a few clever tips to help cope with this issue.
Three and done. Many people believe that throwing a project out for bids achieves due diligence if they solicit three bids and then select the company with the lowest bid. The problem with that approach is that sometimes selecting the lowest bid does not buy the best performance. While it's true that the Board owes a duty to the HOA to find reasonable prices, it also owes a duty to review the responses and compare qualifications (like years of experience, field certifications, reputation, best practices, including client communication). Also, randomly picking three companies does not satisfy due diligence if there are three or four times that number of potential bidders.
So, how does the Board choose the companies who will receive the request for proposal (RFP)? Unless one of the Board members has experience in the particular field that encompasses a work request, the easiest answer may include having the Board's attorney or the Board's professional manager help select the companies to bid and prepare the RFP.
The RFP questions should certainly reflect the Board's intent toward the completed project. For example, if the project requires a design aspect as well as a build aspect, then the RFP should clearly state so on that issue and the companies who respond should bid on all parts of the RFP and show they can fulfill the entire project. To do otherwise will mean the Board's comparison of responses is like comparing apples to oranges.
Schedule bidder visits to the community. It is important that the bidders on the HOA project visit the community to get a feel for what the community needs. The community's professional manager should guide each contractor's visit, giving each the opportunity to ask questions about the scope of the project. It also gives the professional manager the opportunity to develop a sense of how well the bidders will communicate with the HOA and how well they understand the project and the HOA's needs.
Calling all docs. The HOA must request certain documentation from the bidders and it should receive the same documentation from all of them for comparison purposes. Request documentation that provides work experience, examples of completed projects, list of subcontractors the bidder may use on the project, and certifications (like insurance coverage).
Doing due diligence. Obtain information on the company's licenses, bonding, references, complaints from former clients, etc. Make sure to call the references and check social media sites. Today's digital world makes it easy to find dissatisfied customers and complaints. Involve the HOA professional manager for guidance at every point of the RFP process as they have experience on fact-checking and may have experience working with some of the bidders you select.
Focus on what the HOA will get for the fee selected. Sometimes a company may bring extras to the table which may make price a secondary issue:
- years of experience doing the same type of project
- a reputation for excellence
- a reputation for timely project completion
- many satisfied customers
- a faster timetable than the other bidders.
While inviting bids on a project is a multi-faceted undertaking (simpler than just taking the lowest bid), the HOA professional manager and attorney can guide the Board through the various steps and make it flow smoother than going it alone.
For a closer look at the relationship between vendors and the HOA, read the cooperator.com article entitled "Vendor Relationship: Working With Those Who Work For You."