It Ain’t What It Used to Be: 5 Tips for Managing the Bidding Process
In the wake of pandemic delays and a new focus on deferred maintenance since the Surfside tragedy, many associations have significant projects to bid out to contractors. But the process has changed in the past couple of years. Read on for advice on navigating it effectively.
A Shifted Landscape
Gone are the days of the board considering a project, the manager putting out a request for proposals (RFPs) to a handful of preferred contractors, and multiple bids coming in. Instead, boards and managers are scrambling to find contractors who even have the bandwidth to bid on new jobs — even larger scale projects such as roofing, siding, balconies, and windows.
“For the most part, communities don’t have the luxury of having a whole host of contractors to choose from,” says Katie Anderson, CEO of Aperion Management Group, LLC, which manages around 65 associations in Central Oregon. “In some cases, we’re lucky if we have two contractors bidding.
“It’s a tough situation because in most markets contractors aren’t paid for their time to go out and look at a project and bid, so their willingness to do so just isn’t there. I’ve never really seen it like this in the past 20 years.”
Communities may struggle even more to get bids on smaller projects. “I have a community trying to replace about 10 feet of sidewalk from a burst pipe, but the contractor said the project was too small,” says Brad van Rooyen, president of HomeRiver Group-Florida, the management company for about 160 associations in the state.
“Contractors will say they’re only taking on projects over X amount of dollars.”
Much of the problem stems from the tight labor market and supply chain issues affecting the cost of materials. “They don’t have the staff and they can’t hire the staff,” Anderson says. “And the ups and downs of the materials market have really been challenging.
“Contractors have a hard time providing numbers they’re able to stand by because of the fluctuations in labor and materials costs,” Anderson says.
How to Adjust
Hurdles aside, many associations have a real sense of urgency when it comes to their projects. So what can you do to expedite an effective bidding process?
1) Start ASAP. Anderson advises associations to start the planning process earlier. “You can’t just decide to do a project, bid it out, and start it that season. If you have stuff that needs to be done this year, you should be working on that now.”
Van Rooyen agrees. “We’re telling our boards that, if they’re looking to do large project, they need to start bidding on those projects six to 10 months out because material or labor issues are likely.”
2) Revise the standard RFPs. It’s time to update the RFP templates. “The bidding process basically has stayed the same in terms of looking for quality vendors and getting the bid package together; it’s what’s inside the package that has changed,” says Paul Grucza, director of education and client development at the Seattle-based management company CWD Group, Inc.
“In Washington, for example, we have to include COVID qualifiers, asking what they do to protect their staff and residents. The pandemic has dictated extra steps of caution that vendors have to demonstrate.” Such provisions should be standardized.
Surfside has affected RFPs, too, with the circle of voices weighing in on the RFP expanded for savvy associations. “You’re seeing more communities grasp the need for construction engineers to write scopes for RFPs,” Anderson says.
“It used to be more unusual to engage those folks, but it’s become more and more common. You need an engineer, a project manager, and other professionals who can provide advice the manager usually isn’t qualify to provide.”
Unfortunately, those people also are in high demand — and they’re adjusting their rates accordingly. Your clients will need to budget for this and reach out to them, like other vendors, ASAP.
3) Cultivate positive vendor relationships. Van Rooyen stresses the importance of relationships with vendors — they’re more likely to be interested in working with managers and associations that consistently treat them well. “We try to pay our vendors timely and develop a draw schedule, and it’s inured them to us.”
Transparency also can go a long way. “We’ve had some contractors ask upfront how serious the association is about pursuing the project, whether it’s going to pull the trigger,” van Rooyen says. “When boards ask us to go out and get bids, we make sure they have the money and relay that the funding is there because we don’t want to burn out our vendors.”
4) Manage board expectations. Board members, especially those who have served on the board during previous projects, may harbor unrealistic expectations about the amount of time required to complete current projects or the costs. You’ll need to temper those.
For example, board members must understand how much costs have skyrocketed. “We have one community with a lot of exposed wood that has to be maintained and stained every year. They saw a 40 percent increase over what they’d budgeted.”
Boards also need to know that the topline price in a contract isn’t necessarily the final price.
“Many of the contracts for bigger, longer-term projects have caveats put in that, although the vendor is willing to do the job for X dollars, the associations should be mindful of the vendor’s ability to pass along supply cost changes to the end user,” Grucza says. “The vendors are trying to protect themselves from price increases.”
If board members remain skeptical, you might want to integrate them more closely in the process. “We’re seeing more board involvement because, when we tell them some of the challenges they can experience on a project, I don’t think they believe us,” van Rooyen says. “They want to hear it themselves that the roofer can’t start the project for six months.”
5) Take deep breaths. “Managers need to have more patience than they’ve ever had before,” Grucza says. “They have to recognize that so much is out of their control because of outside elements that affect what used to be a normal process.”