How Many Bids Should Your HOA Get for Contract Work?

There are good reasons for homeowners associations to obtain multiple bids for contract work. Bids help the association create a budget for long-range planning and ensure that the board selects the best contractor who can complete the required work within the timeframe and contract specifications. Some boards believe they need three bids for every contract, no matter how small or how undefined the scope of the work is. That’s not always the right thing to do.

Requiring three bids for every service or repair can put a property in an undesirable position in the marketplace. For one, preparing bids comes at an expense to the contractor. It also leads to more time spent by board members and the community manager reviewing bids, which slows down progress on making repairs.

An association should evaluate all possible repair and maintenance needs before soliciting bids. It should establish a specific price range, length of the contract, frequency of the service, or complexity of a repair to determine how many bids it needs. If writing these bid specifications is beyond the expertise of the board or community manager, hire a professional to do it.

As a community association management company executive, I know my managers are good at what they do, but they are not experts in all fields. I don’t want them taking on the risk and burden of preparing a scope of work if they don’t have to. A contractor, architect, engineer, or builder may be better able to help determine the scope of the work.

Small jobs that cost only a few hundred dollars should not be put up for multiple bids; some contractors would not justify the expense of preparing a bid for these types of jobs. The bidding process should be saved for extensive repair work or long-term services, including:

■ Landscaping

■ Pool maintenance

■ Road and sidewalk repairs

■ Pest control

■ Re-roofing

■ Exterior painting

Associations also can look to state laws for guidance. In Nevada, three bids are not required if the cost of the project or service is less than 3% of the association’s annual budget for communities under 1,000 homes, or less than 1% of the annual budget for communities with more than 1,000 homes.

Associations do not need contracts for all of their services and repairs. Once you’ve determined when your community will solicit bids, you’ll want to be sure your specifications are detailed. Doing so will ensure you can be fair to all bidders and that you’ll obtain the best job at the best price.

Tips for Working with a Contractor

■ Consider the pros and cons of spreading total work costs over a 12-month period.

■ Consider doing some types of work in the off season to save money.

■ Communicate closely with the contractor about all contract services.

■ Don’t anticipate getting more than what is contained in the contract and specification sheet.

■ Direct complaints through proper channels.

■ Contact the contractor if an employee does not complete the job properly.

■ Consult with an insurance agent to determine association and contractor insurance needs.

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