Service contracts
Directors are responsible to approve, and renew, contracts with various companies that service the corporation.
Most often, the board authorizes the property manager to select three
companies and have them prepare a proposal and submit a bid. If you
have a competent, and honest manager and management company, this is a
good way of finding a good supplier.
However, if the management company has ties with certain suppliers, and
is not fully transparent about commissions it may be receiving from the
suppliers, then there is a risk that the corporation could be ripped-off.
When signing with a service contractor, the board needs to be sure that all three bids address the following:
• What services are included and how frequently?
• What services are not included and what are their prices?
• Is there automatic annual price increases?
• Is there an auto-renewal if the condo does not state that they are terminating
the contract?
• How much notice does the contract state that the condo has to give before
the termination date?
• Who answers the off-hours emergency number?
• What level of emergency service can we expect?
At the minimum, the board—independent of the manager—needs to check on the bidding company's reputation.
Review existing contracts
All contracts need to be reviewed regularly to see if the corporation is getting the services it needs at a reasonable cost.
With automatic compounded annual percentage increases, over time
contracts may become costly. Only by asking for bids, can the board see
if the costs are now out of line.
One stacked townhouse complex in North York had the same property
management company for over ten years. When the board asked three
competitors to bid on the contract, they found all three offered prices
that were half the price of their existing management company. The
difference was staggering.
Here is an excellent article about a maintenance contract.
The ups and downs of elevator maintenance contracts
Wilson Blanchard Management
By: Harry Nielsen, Property Manager
Recent articles about the decrease in elevator service and the increase
in entrapments in the GTA would normally concern us… but PSCC 888 has a
solution… they have an Elevator Consultant!
auto-renewal if not notified six months in advance
During budget preparation in September 2015, PSCC 888 realized that
their 5-year elevator contract was coming due in May 2016. PSCC 888
talked to a local elevator consulting company about how they could
assist in negotiations. Before the Corporation had even read their
brochure, the consultant reviewed the existing elevator contract and
quickly pointed out that there was a requirement to notify the
incumbent six months in advance if PSCC 888 wanted to go out for bid
and avoid auto-renewal.
PSCC 888’s Board of Directors agreed that they needed assistance in
negotiating such a long term and binding contract. The current elevator
company seemed to be doing a pretty good job but they were unsure if
they were paying too much or getting the right level of service. The
Board agreed to engage elevator consultants, F. Shaw and Associates,
for $750 per year for each of the three elevators.
PSCC 888 has found that you don’t have to pay more to get better service
The elevator consultant began by conducting a comprehensive inspection
of the elevators and found several thousands of dollars in recommended
improvements. Then came the call from the elevator service company:
“We’ve got some good news and some bad news. The bad news is that you
need a few thousand in repairs and it will require some down time on
your elevators. The good news is that it is covered under your
comprehensive maintenance agreement.” Hmmm… wonder when they had
planned to tell PSCC 888?
Next the consultant reviewed the invoices and said that the Corporation
should not be paying extra for entrapment charges or the annual Fire
Alarm Test (F.A.T.). What? Really?
The consultant selected two other service providers, along with the
incumbent, to receive a request for quotation (RFQ). The incumbent
ended up with the lowest bid, more than 30% ($500 per month) lower than
the existing contract… and no extra charges for entrapments or F.A.T.
The incumbent even agreed to start the new contract, along with the
reduced rate, one month prior to the end of the existing contract.
Today when there is an issue such as a strange noise or slow closing
doors PSCC 888 notifies their elevator consultant. When they want to
repair a panel in the elevator or install cameras they call the
consultant to obtain quotes.
Back to those recent articles about elevators in the GTA; PSCC 888 has
found that you don’t have to pay more to get better service. And
regarding those entrapments? Turns out the abundant safety features in
elevators today trigger the elevators to stop proactively until the
situation can be verified. Like warning lights in vehicles, they are
bound to engage occasionally. For PSCC 888 the occurrences are rare and
the response from the elevator company is typically less than 45
minutes.
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