HOA Maintenance Projects: Proper Planning and Accepting Bids

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In our first post on HOA maintenance projects, we discussed the right way to budget for and determine the need.

The next step your association has to go through is a formal process to plan the project according to its CC&Rs.
One of your HOA’s board members should serve as the de facto project manager, someone responsible for accepting vendor bids for the project and reporting back to the board to be voted on accordingly.
This person may not have a lot of experience with regard to contractors or building projects. That doesn’t mean that they won’t be able to receive a thorough “education” with regard to those matters. In fact, it’s the responsibility of the HOA on the whole to understand all the parameters executing a potential . But if they don’t know what they’re getting into it could become a detriment to the entire complex.
Review State Laws and Regulations
A thorough set of HOA governing documents should detail all the pertinent state laws and regulations with regard to requesting bids on certain projects. These regulations vary from state to state.
For instance, in Florida the state rules specify that any project which would cost more than 10 percent of the annual budget of a complex needs to accept multiple bids for that project.
In Michigan the guiding principle is referred to as the “best business judgment rule,” while Nevada requires that the board review proposals from vendors, which must be sealed and opened only at a meeting for discussion.
This is interpreted loosely as saying it only makes sense for HOAs to solicit multiple bids so that’s exactly what they should be doing. Common sense would prevail that no matter what size the project is, get multiple bids.
In fact, The Management Trust recommends getting at least three competitive bids to choose from, and having a community association management firm lend a helping hand at crafting a request-for-proposal (RFP).
While it’s easy to look at the price and pick the most cost effective bid you also have to factor in the level of experience and qualifications a particular contractor might have.
Finding a Contractor
As you begin the process of accepting bids you’ll need to find the right vendor. Apologizes for the self-promotion, but a great resource for HOAs located in Arizona; California; Denver, Colorado; Las Vegas, Nevada; Oregon or Washington, a good place to start would be the Trusted Partners Vendor Directory. Here you can find approved vendors who have been used by professional management organizations and understand all the issues of compliance.
Another resource for potential vendors could come from fellow residents or board members. However, the caution is to avoid any possible conflict between a board member and a potential vendor. In those cases a board member might have to recuse themselves from voting on the final accepted bid.
Thirdly, disseminating a request for proposal (RFP) is the most traditional way of going about finding the right vendor for your project.
Get It In Writing
It goes without saying that all of your contractors who are bidding on projects should be licensed, insured and bonded to do this kind of work in your state. Don’t take their word for it but obtain copies of their information. This should all go into the separate CIP file designated for this individual project.
As with all important matters in life, the bids for your HOA maintenance project should be accepted as a formal document. These bids should spell out in great detail all the costs that will be associated with the project including labor and materials. When possible there should also be a time frame included as to when the work is expected to begin and will be completed.
That timeframe is especially important because once the bid has been accepted you’ll need to inform the residents of the project going forward. This is also be put into writing not only as individual letters to each resident but also as a memo posted in common areas.
This article is provided by The Management Trust.