When managing real estate, the most controllable portion of the cash flow stream is the day-to-day operations or variable operating expenses. This is the primary responsibility of the property manager and makes up the largest portion of your time when dealing with contractors and vendors. Not only are you working with contractors and vendors but you also have the administration of these contracts and any necessary reporting requirements as a part of your responsibility. Periodically you should be evaluating all of your building service contracts and -re-bidding them as part of your fiduciary responsibilities to the owner and maintaining or reducing the property’s operating expenses.
Some of these contracts might include:
- Janitorial
- Security
- Landscaping
- Elevator Maintenance
- Pest Control
- Trash Removal
- Window Cleaning
- HVAC Maintenance
Typically the property manager would begin by preparing a “Request for Proposal” or RFP for short. The RFP should be detailed and specific to include the scope of work or services required in order to complete the task. Selection of contractors or vendors is pretty much common sense I think. Depending on the properties managed, you can normally ask around or do an internet search for the most prominent contractors or vendors in your area. One rule I have followed most of my career is that I will not select a contractor or vendor to bid or a service or project unless I feel comfortable with awarding the service or project to them.
So do your homework before you solicit proposals and make sure you feel comfortable. You can interview each candidate separately prior to preparing your list and be honest. If you feel you have a good reason not to include a particular contractor or vendor, tell them. They might not like it but they will respect you a whole lot more than if you try to skirt around them by not returning a phone call or email.
When you prepare the RFP make sure you include a deadline for submission of all bids or proposals. Depending on the complexity of the task, you may want to include a template or format for the contractor or vendor to complete when submitting their proposal. This makes it a lot easier to compare bids or proposals and it keeps things fair.
There are many things to consider when selecting the most qualified contractor/vendor. Although price is an important factor, it definitely is not the only one. Basically you need to consider the contractor/vendor’s experience and reputation. Ask for some references as part of your qualification process.
A close look at a contractor/vendor’s proposal or bid can shed some serious light on whether you want them to provide a particular service for the building. Bad or poor grammar, typos in their presentation, calculations incorrect or just an overall sloppy job may lead you to believe the work they perform is consistent with their presentation.
These are just a few thoughts to consider the next time you are ready to bid out or solicit a building contract service.
Look for more articles on real estate management and building services in the future.
