Selecting Qualified Vendors

HOA expert Chuck Miller recently wrote about Selecting Vendors in HOA Pulse, an electronic newsletter.

“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.”

One of the benefits of working with a CMA manager is the ability to compare bids and select qualified vendors whose reputation and skills meet our exacting standards.

CMA adds value in examining and requiring insurance and standard contracts which protect your association’s interests.  From his summary or general criteria to use when selecting vendors, Miller makes these points about vendor insurance and contracts.

Insurance

“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.”

Contracts

“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.”