3.5.2 Fixed fee arrangement | Owners Corporation Network

3.5.2 Fixed fee arrangement

A fixed price should mean an all inclusive annual service price. For example the fixed fee may include 10 strata committee meetings per year of 2 hours duration, all disbursements, and all strata manager work in the normal course of running the scheme. Inevitably there will be  a few unanticipated cost add-ons such as a disputes or legal cases, over runs on strata committee meetings, or additional meetings, and these need to be covered by a schedule of rates.

How much in administration costs and time would a strata company save if it didn’t have to track and bill time and disbursements? Imagine by how much the business could be streamlined. One major player catering for large prestigious buildings has been doing this for years and we wonder why they don’t all have an all-up fixed fee arrangement for the normal range of prescribed services. That way committees can budget for an agreed amount, with no hidden extras and maximum transparency. Again, both sides save on costs and end up with a much happier relationship.

Gerry Chia Secretary, Owners Corporation Network

Asking all proposers to provide a fixed price means you get similar tender pricing for easy comparison and also far better understanding of the ultimate cost. A fixed price gives a strata manager an incentive to communicate with owners in the most cost effective way and encourages email distribution of documents.

However, if a proposer is unsure of how much work they will have to do to manage your scheme then they will likely add a margin onto the fixed price. So be realistic with the information you provide them with.

Note: even if you ask for a fixed price quote and are purported to be given one – make sure you go through the costs schedules and check that there are NO hidden or obscure variable costs. Ask for an assurance in writing that the quoted headline fixed price as stated on the proposal will be the final charged price – with no extras. Most strata management companies are ethical and transparent – however there may be some that rely on the contract complexity and lack of time or expertise of those evaluating them to slip additional costs through.

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