What red flags should you watch for when reviewing vendor proposals? What should your must-haves be? These eight tips help you review proposals the right way.
- Follow the rules
- Ensure the proposal is complete
- Verify certifications and licenses
- Check with vendor references
- Pay attention to presentation
- Be cautious of an exceptionally low price
- Recognize that vendor needs will vary
- Use a vendor management platform
One of the key duties of an association property manager’s is handling vendor relationships. It is much more than just managing schedules and invoices. Vendors need to be thoroughly vetted before being hired so the association doesn’t find itself in a risky situation, left hung out to dry when a vendor turns out to be less than ideal.
The biggest risks of working with vendors include legal implications, such as lawsuits and disputes, and financial trouble. These are in addition to the hits your association could take to its reputation or community systems.
Here are eight tips for reviewing proposals. Practice these strategies to ensure the relationship with your vendor starts on the right foot and association projects are completed successfully.
1. Follow the rules
The association’s governing documents (covenants, conditions, and restrictions [CC&Rs] and bylaws) will likely outline the process for hiring vendors. Often there will be a requirement to review a certain number of vendor proposals before making a decision to avoid choosing the first one that comes along.
Some states have laws in this realm, too. An association board must be careful to follow all applicable legal mandates for how to accept or review vendor proposals.
2. Ensure the proposal is complete
Before you start reviewing vendor proposals, it’s helpful to make a checklist of everything you need to see in the document. For example, common questions from the board may be what the overall cost will be and how long the vendor will take to complete the project. This is must-have information in each proposal, and should never be ambiguous.
Anticipate the questions the board or community members will have when you start reviewing. If there are a lot of what-ifs and uncertainties in a proposal, or if the terms are vague, the proposal may not have enough information for you to make a decision.
3. Verify certifications and licenses
Each vendor you work with will need to have all necessary insurance protections, certifications, and licenses. This information should be included with the proposal so you can make sure vendors are properly licensed before you consider working with them. Verify insurance policies by calling the insurance provider and asking if the policy is still valid. The association should also be listed as an additional insured.
Your state laws and governing documents may also outline which types of basic assurances vendors must have, including insurance. These should be the minimum paperwork requirements to review in each proposal.
4. Check with vendor references
One of the most effective ways to ensure you choose the right vendor is to evaluate their experience and clients. Vendors should provide references in their proposals so you can speak first-hand to those who have worked with the vendor or can vouch for them. Ask their references about your specific project to ensure that the vendor has the right experience and would be a good fit.
5. Pay attention to presentation
If a vendor seems unorganized or apathetic, that means the way they run their business is likely the same. How is their proposal being presented? Have you gotten a good first impression? What is the state of their vehicles, offices, or equipment? Good vendors will always be professional and will care about the way they’re presenting their business and services to you.
6. Be cautious of an exceptionally low price
Cost is going to be one of the biggest deciding factors of who you hire of course. Beware of extremely low offers, though. Ask yourself why the bid is so low. Does this mean they haven’t had the best customer satisfaction? Are they new to the industry? Is this their first proposal?
A low price or special offer could also mean they have no idea how much a job will actually cost, which can be a major red flag and cause issues in the future. A big benefit of reviewing multiple proposals is that you can get a better sense of what jobs should cost based on experienced vendors’ estimates.
Another red flag about payments is if a vendor says it is a cash-only business. This could mean that the business is not completely legitimate, but it also means you have fewer options of paying for services. The latter is an especially important consideration when something goes wrong during a project.
7. Recognize that vendor needs will vary
All of these approaches will vary based on the job in question of course. A small maintenance task is much more minor than replacing a roof, for example. While any vendor you hire needs to provide the basic minimums, be flexible on the process when you may not need to review everything in such great detail.
8. Use a vendor management platform
The vendor vetting and proposal reviewing processes will be much easier if you use a vendor management platform, like VendorSmart. All you have to do is invite vendors, they set up and customize their profile, and VendorSmart vets them and makes sure all necessary documents are provided and are current.
You can also use a vendor marketplace to post jobs and find vendors faster. VendorSmart allows you to do side-by-side comparisons, making it easier to review proposals and find the right fit.
Contact the VendorSmart team today to learn more. You can also download our comprehensive guide to vetting vendors, which has more best practices and tips about hiring vendors for your association.