Financial Oversight, Checks & Balances Who Holds the Purse Strings?

When it comes to hiring professionals – either to do work on a property, or provide some sort of service for a co-op/condo/HOA community—it’s generally the property manager who solicits bids, goes over proposals, and cuts checks to pay for whatever work or service is rendered. This is all done with the approval and oversight of the board, of course —or at any rate, it should be. 

Unfortunately, board members are usually working people themselves, many with families and tons of other responsibilities, and it can be all too easy to get lax when it comes to monitoring the ins and outs of a building or association’s daily business. This is why it’s so important for boards to be proactive and pay attention to how – and to whom – their managers are soliciting bids, writing checks, and otherwise directing business.

The Bid

Once the scope of a particular project is ascertained, the first step is to solicit formal bids. On the one hand, bidding offers boards and managers a way to make sure they’re not overpaying for goods or services (or underpaying, and getting a proportionally poorer result). On the other hand however, the bidding process also makes it possible for unscrupulous administrators to make a few illicit dollars by getting kickbacks from vendors – so oversight of the process is critical.

“If it’s major work, then the people involved are your property manager, the management company and supervisory staff, and the board,” explains Alvin Wasserman, director of asset management at Fairfield Properties, based in Melville, New York. “Who has the skills and qualifications to competitively bid the work? For a major project, you need a licensed professional to prepare the specifications. So to start with, proposals need to be solicited from either several engineering firms, or several architectural firms, depending upon the nature of the work. The first job of the property management company is to provide a list of names of engineers or architects about whom the management company has had positive feedback from other clients over their years of experience.” Good property management companies have extensive lists on hand of vendors to recommend for various projects. 

To make the process as fair as possible, each bidder should use the same forms, and there should be no fewer than three bids on any given project.

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