Before your HOA begins its next capital project, it will first need to hire someone to oversee it. A project manager will offer valuable expertise in cost analysis, help you navigate the permitting process, ensure that all project deliverables are completed, and do other important things. This person could be an engineer, roof consultant, architect, or another professional.
One of the first things your project manager will do is hire a contractor, which is critical to ensuring the project will be completed correctly, on time, and within budget. Not all contractors are the same, however. If a contractor cuts corners, your HOA could face legal disputes, have to deal with safety concerns, or need to hire someone else to fix problems.
Here are some steps your project manager can take to help you find the best contractor for the job.
Find Potential Contractors
Your project manager can start his search by making a list of the contractors in your area. Referrals may provide additional insights into which candidates do good work and which ones should be avoided.
Ask for referrals
Those who have recently used contractors will have opinions on the quality of their work. People who work in different areas of real estate may also offer some recommendations. Some people may inform your project manager if they had problems with a contractor to save others from experiencing the same difficulties.
Use online directories
With online platforms, your project manager can check the ratings and reviews of contractors in your area. Popular online platforms you can check include Angi, Yelp, HomeAdvisor, and Google Reviews.
A contractor’s credentials—or lack thereof—are important factors your project manager will consider. Although they may not always indicate how well a contractor will do, verifying credentials may help you shorten your list of candidates.
Review licenses and certifications
- Contractors must be properly licensed or certified for legal compliance and to make sure certain industry standards are met. Your project manager can verify these things by checking with the state you live in or with the certifying organizations.
Verify insurance coverage and bonding
- Your project manager should make sure a contractor has appropriate insurance coverage to protect your HOA if something is damaged or someone is injured. If a contractor is bonded, your HOA may also be protected financially if the contractor fails to complete the project.
All contractors should be able to provide references, and your project manager should call the references you are given to make sure everyone is satisfied with the work that was done. If a contractor refuses to provide references for “client privacy,” it may be a red flag that he doesn’t have any good references to offer.
Your project manager should interview several contractors before making a selection. In-person interviews may give you additional insights about a candidate and what that person will be like to work with. Although not an exhaustive list, here are some important questions you can ask:
- Do you guarantee your work?—Will the contractor redo work if it doesn’t meet the board members’ expectations?
- How do you handle cost overruns?—Will you be promptly notified with detailed explanations?
- What is your change order process?—Will it be difficult to make changes to the project once construction has started?
- What is the estimated project timeline?—HOA members need to know how long the disruptions will last.
- Can you provide examples of projects you’ve completed?—Consider visiting previous projects to check out the quality of the work.
- What types of insurance do you carry and what are your coverage limits?—Will the HOA be liable if something happens?
After interviewing contractors, your project manager should obtain bids by submitting a request for proposal (RFP) to each candidate. The RFP includes the project details, preferred materials, and other relevant information.
Be sure to carefully evaluate each bid you receive to make sure all of the project details are covered. You can then compare bids to see which option is the most appealing. After making a selection, be sure to inform the other contractors of your decision.
Review and Sign the Contract
Carefully review the contract you are presented before signing it. Be sure it includes acceptable payment schedules, project milestones, a dispute resolution clause, and other important information.
Also, consider having a real estate attorney review the contract. Contracts are often complex, and an attorney can help you understand confusing legal terms and wording. An attorney may also have additional insights on some issues that you may not have considered.
Finding the Perfect Fit
Although something unexpected can come up with any HOA capital project, taking your time to research contractors may help to minimize delays, cost overruns, construction problems, and other issues. There are several ways you can refine your search, and it’s also important to thoroughly evaluate contractors’ credentials and work histories before making a hiring decision.
This article is for informational and educational purposes only and is not a substitute for professional advice. Valley National Bank does not provide any financial, economic, legal, accounting, tax or other recommendation in this article.