4.11 Appointing and retaining service providers | Owners Corporation Network

4.11 Appointing and retaining service providers

Service providers for many strata buildings have become commodities, not the trusted advisors they could be. Depending on the service needed and the skills of the executive committee this may be appropriate. As long as you really know what it is you want and have the time and skills to engage, monitor and properly evaluate the work proposals, the work itself and resolve any disputes – then by all means go for the cheapest.  However, if you are short on time or expertise then you may need to consider finding for service providers who are really skilled and interested in a long term relationship – but who many not provide the cheapest upfront quote.

As with determining suitable executive committee members an extremely useful policy is to avoid conflicts of interest in appointing service providers. Ignore it at your peril.

NO CONFLICTS OF INTEREST WITH ANY SERVICE PROVIDERS

However, if there is a goods or service provider that you think is absolutely suitable for the work but they have a conflict of interest (e.g. they are an owner but are keen and skilled and willing to do the job cheaply because it is for their building) you would be very wise to ensure you get three other quotes and evaluate them as objectively as you can. In fact, three quotes are sensible to in most instances. If the cost is anything substantial you would be wise to present the quotes to the owners corporation at a general meeting and ask for a vote – while clearly declaring any conflicts of interest alongside any of the quotes.

You or your building manager may find it easier and even more cost effective to sub-contract regular, ongoing maintenance to just 1 or 2 providers. However, if your building manager is in any way associated with any contractors then this must be transparently stated and alternative options and quotes fully explored.

Advising on their own work?

  1. A fire certification company advised a strata building that the air-conditioning system building fire suppression panels on each of 30 floors  had been installed the wrong way around, and hence did not comply with Australian standards and that they needed to be replaced at great cost. The executive committee was confused as the same company had been doing the certification for years and had not raised this issue before. Further investigation revealed that this same company had actually installed and originally certified these panels.  They had waited until the defects period was up before advising of the fault. This company is currently being sued by the owners corporation for negligence.
  2. A strata lawyer employed by a developer to write the building’s by-laws and strata management statement. He was retained by the strata as their ongoing preferred advisor – without any comparative quotes. At a later date it was found that here were sections in the by-laws and SM statement that needed clarification and this original lawyer was consulted. His advice was extremely conservative. Alternative advice was obtained which lead the executive committee to employ the other lawyer. Perhaps they should have done this earlier.

Be very cautious about getting into long term strata and building manager contracts (lift and energy contracts are the exception here as long as they are well researched and negotiated longer terms can provide significantly beneficial saving to the owners corporation). If the service they provide is good then the owners corporation will most likely renew or roll-over their contract. A long term contract provides less incentive for good, consistent performance.

If you want to retain your valued service providers, ensure that they are paid promptly and fully. Usually your strata manager is responsible for this and they usually do weekly bank transfers. However sometimes things get held up or miss-communicated.  So if here is confusion fix it promptly and sort out the process so it does not happen again.

Always check service providers licences, registrations and insurances.

A key service provider sub-contracted by an external project manager to renovate a strata front lobby area provided invoices with a licence number on them. It was only after the work was done and was not quite what you would expect did anyone actually go on-line and check the license details. The number did not exist. The strata scheme is still currently in dispute with the project manager for this and many other renovation issues. A quick check upfront may have revealed that corners were being cut.

Do not assume that ‘someone’ has checked the references, licence or insurances of your service providers. Ask who has done this and get the answer in writing on the strata record. Set-up a process and record keeping system where-by existing and new service providers ‘bonafides’ are automatically checked and entered.  This is of course important for any job, but be especially beware of one-off, cheap or seeming discount quotes. Of course you may get a genuine great deal – but do your checking very carefully.