3.4 Who do I get to tender? | Owners Corporation Network

3.4 Who do I get to tender?

When considering appointing a strata manager, owners corporations should consider the size of the building. Some strata managers have more experience at managing apartment blocks of eight rather than blocks of 100. Others may only manage residential blocks and not a mix of commercial and residential properties.

If you’re a big, new building, it’s pointless approaching a small strata management company that only looks after walk-up blocks of 12 units. They’d likely be totally out of their depth with your building – and, generous as you may feel, you don’t want to provide their learning experience at your expense.

Reducing Costs:

In the year 2011, it’s amazing how few owners corporations dispatch their agendas and minutes by email. At a time when a huge amount of business correspondence is done by email, including notices by public companies to shareholders, do strata managers have shares in pulp mills? Strata, like every other industry, has a duty to reduce its carbon footprint and give better value to its clients – or could it just be that the industry pockets huge mark-ups at 50c per page for copying and exorbitant costs for mailing? Everyone could benefit from email. Strata companies will enjoy huge savings on labour and materials and could, through a fee structure set on electronic mailing, share these with owners.

In my owners corporation of 228 lots, we have approximately 170 owners who have elected to receive all agendas and minutes by email, including those relating to AGMs and EGMs. We all win!

Gerry Chia Secretary, Owners Corporation Network

By the same token, if you’re a small, older-style building, you’d be wasting your time and money by going to a large company which is designed to manage 300-unit-plus complexes. Find out which companies manage buildings in your area similar to yours in size, location and facilities. Ask whether their committees are happy with their price and service. Get referrals from others through the membership of the Owners Corporation Network of Australia.

Ask at least three strata management firms to quote plus the incumbent.

Remember to do a careful check of the terms of the existing contract, especially for giving notice.

The basic duties of a strata manager are very similar contract to contract, strata to strata. It is mainly the pricing structures that vary between quotes and strata managers. There are however a number of variables that you may want to specify or look for in your request for tender.

  • Creating meeting agendas
  • Distribution of agendas and minutes.
  • Attendance or not at committee meetings
  • Number of committee meetings attended
  • Taking and writing of meeting minutes
  • Reporting requirements and flexibility (especially financial)
  • Insurance placement and claims
  • Financial budget drafting
  • Service provider procurement
  • Work-order process and approval
  • Records filling and systems
  • Access device / key distribution
  • Archiving options
  • Qualifications and expertise
  • Strata manager assistant
  • Services provided by others that the strata manager need not provide
  • Website access for the committee or a web page for the building and its documents

You must have a clear picture of your committee and owners corporation needs before approaching potential candidates. You probably have a pretty good idea of what you need that’s not going well - as that may be the impetus for looking around, but take the time to think about the whole service provision.

Cost is another factor the owners corporation needs to consider. When comparing costs it is essential to a make sure the comparison is with a similar property.

The cost of managing a property with a pool, gym and outdoor gardens and its own building manager will be very different to the cost of managing a simple block of eight apartments with no amenities. Generally speaking where a building manager is engaged, the duties of – and fees charged by - the strata manager will be less.

You can put together a detailed tender asking the strata companies to quote only on the requirements and services you and your committee think they will need. This list will include the above variables as well as all the standard duties that are usually provided.

Alternatively a very useful strategy is to ask the potential candidates for their best proposals, rather than be too specific with the request for tender service details.  This option will allow you to see the best offers. but you should not lose sight of the duties you have identified that you need performed. 

The minimum key information that you must insist strata managers provide is:

  1. Their reputation and experience (ask for references!)
  2. The background, knowledge and experience of the individual manager/s to be given responsibility for your building
  3. The proposed annual management fee and escalation percent
  4. Disbursement rates for things like printing, photocopying, phone calls etc - if it's not a fixed fee service
  5. The proposed term of Appointment – 1, 2 or 3 years?
  6. Would a longer term agreement mean a lower annual price?
  7. Additional Services offered and the cost of these services
  8. Insurance commission percent
  9. How many times will the manager visit the building?
  10. Location of the manager
  11. Technology system the manager uses – this impacts greatly on the reports and information you receive and the service efficiency a manager provides

Make sure you receive a written proposal from the strata manager that provides all of the above information. Before they provide this proposal, give the manager a good understanding of what your requirements are. For example, do you want a manager that does everything, or do you have an active committee that likes to organise repairs and maintenance for example? Does your committee hold their own meetings or do you want the manager to attend them?

It’s vital the strata manger understands the proposed level of involvement. Otherwise their quote will be unnecessarily high or too low to support sustainable service quality. 

One strata management company got caught out with a low margin, fixed fee contract. The strata got involved in a number of legal disputes which required substantial distributions of large NCAT applications and rulings. None of which was able to be charged by the strata manager. So expect to pay extra for exceptional circumstances or additional meetings – even for a fixed fee contract.