Homeowner associations often hire contractors to perform large renovation jobs or ongoing contracts like landscaping, janitorial and pool maintenance. Bidding for such work allows qualified contractors to fairly compare "apples to apples." This is good for the association and fair to the contractors. A clear, competitive process results in the best price for the association while addressing quality and performance concerns.

A bid should contain enough information to properly evaluate the contractor, a description of the work to be performed, materials list, work and payment schedules, and last, but not least, the contractor's price to perform the service. The bid should use the "Goldilocks" approach: not too little, not too much...juuuust right.

So what is "just right"? Every bid should have these components:

Contract With Proper Provisions

A document such as the AIA American Institute of Architects contractors' agreement should be used which includes:

• Contractor licensing information
• Name and contact information
• Description of the work (specifications, drawings and materials)
• Requirement for quality workmanship
• Time frame for work completion
• Reasons and procedure for termination
• Penalties for unreasonable delays
• Payment schedule
• Requirement for Lien Releases
• Signature lines for both parties

Detailed Drawings & Specifications

A description of the work and materials including blueprints and engineering reports if the work is complex. Common projects like roofing, landscaping and painting should always have considerable detail.

Addendum

If there is an exception or limitation to the work, an attachment should be included that fully describes it.

Insurance Information

On sizable projects, the contractor should provide a General Liability Certificate of Insurance naming the association as an "Additional Insured". If the contractor has employees, a current copy of the Workers' Compensation Insurance information should be included. If there is more than one worker, don't fall for the "We're all independent contractors" ploy. If they are, they should all produce business cards, General Liability insurance, proper licenses and other confirming evidence. If they can't, they aren't.

Performance Bond

On projects that are complex and expensive, it may be wise to require that the contractor provide a performance bond (the cost is a percentage of the contract amount, say 2.5 percent) that will pay for another contractor to finish the job if the original one is unable or unwilling. The association pays for it but it is good insurance. Contractors with poor credit can't get them.

References for Similar Work

Get reference contact information (names, addresses and phone numbers) and make the calls. This is your best screening tool.

A final word...When examining contractor bids, it's very important to use the services of a knowledgeable attorney to review the contract. The attorney will make sure that the contract contains provisions that will reasonably protect the association.

A comprehensive bidding system will ensure that the contractor does your bidding and not his or hers. A "bid" of precaution, will lead to "bidder" results.

For more information on this subject, see www.Regenesis.net.

Published: June 20, 2001

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Richard Thompson owns Regenesis, a management consulting company that specializes in condominium and homeowner associations. He is a nationally recognized expert on HOA management issues. Regenesis publishes The Regenesis Report, a monthly newsletter for HOA boards, developers and managers. To subscribe, go to Regenesis.net. He can be contacted by email at .