Dear Tony: Our strata corporation has just approved $125,000 from our contingency fund for roofing replacement. We received an estimate from only one company, and several owners are concerned that we have not detailed the project correctly and did not get at least three bids before proceeding.
As independent corporations, are we required to obtain multiple bids or for any specific values? It would be a good consumer practice, but there are not always more than one or two companies available to do the work on the Sunshine Coast.
If a three-bid minimum were imposed, we would never likely be able to comply.
JDR, council member
When it comes to how a strata corporation spends its money, purchasing and financial practices are determined through its bylaws and the wording of resolutions the owners approve at general meetings.
The Strata Property Act does not set a minimum number of bids or special procurement conditions. For an expense on a major project or an operating contract, the owners at a general meeting can direct or restrict the council by majority and give specific instructions on the methods or limitations for purchasing.
In a normal sequence, the strata council will establish the proposed resolution for the project, including the project details and how the funds will be approved, either through reserve funds or a special levy.
A meeting is then held where owners debate the resolutions and either approve or defeat the proposed projects. Many resolutions fail due to lack of information or unknown purchasing procedures that are challenged by owners. This results in mistrust between strata councils and owners, and delays in projects that inevitably cost more for everyone. While the act does not require any minimum purchasing requirements, it is in everyone鈥檚 best interest to set specifications for projects and develop a bidding process on the specifications.
Multiple quotes for projects are helpful to set budgeting plans and targets for scheduling, but they are not comparable, as they are established from the perspective of each of the companies providing the quotes.
Major construction and renewal projects have many variables that affect pricing and the contracting relationship. Consultants, technical writers and project managers routinely set the specifications for the scope of work and assist with the processing of tendering projects to ensure the client is provided with comparable bids that meet the minimum conditions of product and materials, methods and details of construction, insurance requirements, site conditions, warranties, access to the property, environmental conditions and any other contractual conditions a strata council negotiates.
Depending on the value of construction or the risks associated with the project, a legal review of the bidding process and contract conditions and terms is highly recommended. For a small investment, usually below $2,500, you can avoid a number of disputes that originate from a lack of a written agreement or failure to detail the conditions of the contract.
Remember your objective as the client and owners: the best pricing for the best products, terms and conditions. The solution is competition and detailed written agreements.
Even if you can only obtain a single quote, it is in your best interest to have the terms and conditions in a detailed written agreement. A contractor that is unwilling to enter into a written agreement is unlikely to act with integrity.
Whether it is a $5,000 contract to replace gutters or a $125,000 roofing project, a written agreement is essential to protect your interests. With or without consulting or legal services, confirm all details in writing before you proceed with your projects.
Tony Gioventu is executive director of the Condominium Home Owners Association.
