How To Tender Competitive Contracts

Written by Shlomo Sharon | 18 August 2014

Condo Business

From time to time, a condominium corporation is required to tender contracts. Service providers may be engaged to conduct yearly or seasonal maintenance, such as landscaping, snow removal or elevator inspections.

 

Contractors may be brought in to remedy construction failure, such as roof replacement and underground garage repairs. And the performance audits and reserve fund studies condominium corporations are obligated to undertake can only be executed by qualified professionals.

The purpose of tendering contracts is to ensure that the corporation obtains the best possible price, from the best possible service provider, in a transparent process. The end result of the tendering process is a signed legal contract between two or more parties that outlines in detail the agreed-upon terms of the work to be performed.

Prepare an RFP

To start, the engineer or property management company acting on behalf of the corporation prepares a request for proposal (RFP) to solicit bids from potential service vendors. Following a thorough investigation of the issue, the corporation specifies the planned work to be scheduled, in detail, as per the engineer’s recommendations. The engineer will then prepare the tendering documents for Canadian Construction Documents Committee types of contracts.

A request for proposal should outline cost, materials, insurance and warranty requirements, as well as contact information for the contractors, as follows:

Cost

Include a breakdown of the cost of each aspect of the work. Indicate method of payment, including progress payments tied to the completion of certain aspects of the work. Contractors should detail the hold-back method, amount, percentage and the release of the hold-back in their tender submissions.

As well, provide for a contingency amount for unforeseen expenses and overages in materials, with detailed per-unit costs, with a maximum allowance. The contractor should outline any extra work he may contemplate in his bid, with a full explanation of his rationale.

Additionally, where a building permit is required, specify who is responsible for submitting and paying for the application to the municipality. It’s also important to remember that all the tenders should specify whether HST is included.

Materials

Specify the quality of the materials/supplies that are expected, such as the use of pet-friendly salt for snow removal, or the frequency with which the landscaping contractor should water or fertilize the lawn. Also, if the contractor intends to have a material variation/change, he must specify this, with all the relevant information, including the manufacturer’s name, the supplier, change in price, and the reason for and detailed description of the alternative. All parties, including the engineer (if involved), have to approve the required change order.

Insurance and warranty

The tendering documents should also specify warranty/guarantee for the work, as well as insurance and WSIB certificate requirements. These certificates should name the corporation so that the corporation is not liable in the event that a mishap occurs when the work is being carried out and results in an insurance claim.

Contact information

Ask contractors to include the name(s) of the parties (the contractor, the sub-contractor) that will be engaged in the work, their addresses and telephone numbers, the contact person’s name, the deadline for submitting a bid, the description of each stage of the work, and the timeline of the work, from the start date to the end of the contract.

Solicit bids

Send the RFP to a minimum of three contractors. Contractors should be solicited for bids based on having previous experience working with either the engineering company or the property management firm, or coming recommended for the specific work to be done.

Select a contractor

Once all the bids have been received, on or before the deadline, they should be opened by the engineer, property management firm and the condo board. Together, they should review the total price, the price components and any modifications proposed by the contractor.

The engineer or property management company should prepare and present its analysis of the bids so board directors can make an educated decision, and to avoid any future misunderstandings. Call contractors’ references to get feedback on the quality of their past work before making a decision.

Negotiate the contact

Once the contractor is selected, the corporation should investigate whether there is any room available to negotiate on the contract price, based on the information available. After this, the corporation signs the winning bid and, where applicable, the engineer draws up a CCDC contract for all parties’ review and execution. Thereafter, a meeting should be set with the contractor to schedule the work.

Check work prior to payment

The corporation should remember to have the engineer review completion of any stage of the work and issue a certificate of payment to ensure that the work was completed in accordance with the specifications before any payment is released.

 

Shlomo Sharon is CEO of Taft Management Inc. and a member of CCI since 2002. Taft Management Inc. is an ACMO 2000 Certified Property Management Company and has been providing property management services since 1996. Visit the website www.taft-forward.com for further information or email him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .