​How to select third party vendors for  your apartment building / resort

In this twelfth episode of our communal property essentials series I’m going to cover the process you should follow when selecting a third party vendor such as a management company, a maintenance contractor and so on.

A vendor is any third party employed by the committee to provide a one off or continual service or product.  This may include a property manager, lawyer, accountant, large maintenance contractor and so on.

Unless dealing with a large-scale building or resort, the Management Committee’s selection of a vendor does not really any advanced formal tender process. 

However, there should be a process to ensure that the vendor is suitable, and the best value for money. This does not always mean the cheapest quote, as you usually get what you pay for.

General good practice is to request like-for-like quotes to be obtained from a minimum of three providers.

Each provider should be correctly compared like for like to ensure the process is fair and unaffected by bias.

Dealing with confidential information

Quotations and confidential/commercially sensitive information received from vendors should be kept confidential and never shared with another vendor.

Additionally, the benefit of one vendor’s work or assessment should never be provided to another vendor to assist in the production of their quote. All vendors should be expected to do their own investigation work and propose their own solution.

For example: If you had a leak with the pool and requested for a pool maintenance company to come and find the leak and provide a quotation.  They then come inspect your pool and through their skill and knowledge they find your pool is leaking from one of the light fittings, and propose a solution with a quote factoring in the time they have already spent.

Unless you specifically paid for a leak detection service as a standalone service, it is unethical to use the time, skill and expense by the first vendor to assist the other vendors in bidding for the job.

So you should not then go to two other companies and say how much to fix a leaking light fitting.  They will be cheaper because they did not need to find the leak. 

Set minimum requirements

Create a set of minimum requirements for your vendors are to ensure that the selection is balanced and fair to all and provides protections to the Management Committee in the event there are any issues or incidents with the vendor.  For example, you may set that you will only accept quotations for pool maintenance from a registered company who uses CPO qualified staff and hold full liability insurance.

Avoid off the books vendors.

You should not entertain a quotation from an unregistered, unqualified cash in hand trader.  The cash in hand trader will no doubt be cheaper, however, it offers little or no protection, is operating illegally and is unlikely to carry any insurance or expectation of a guarantee.  Hiring this type of trader could also be seen as negligent by the Management Committee and open up additional liability issues.

Keep records of the selection process.

One of the other important steps is to keep copies of quotations, requirements, decision making process to make sure that you can demonstrate that you operated fairly and in good faith.  Remember legally, you could be sued by a vendor if they feel that they were not treated on a equal basis or if you breached confidentiality with their quote, information or work product.

If you want to know more about the vendor selection process I include this along with how to perform a complete tender process in the Ultimate Committee Handbook.