M A n A G e M e n t tA l K s
Time Requirements one of the main details upon which Baum bases his bid price is how often his property manager must sit down with the board after the work-day is over. “the biggest variable in our fee is the number of evening meetings,” he explained. “We like to go to meetings but they cost more.” When there’s a management company, an association doesn’t have to meet as often. And he cited other means of communication that can be used between management and the board such as e-mail.
Management Service Questionnaire Baum also provides clients with a Management service Questionnaire which can be included in the RFP and which each bidder must complete with facts about his/her company. Among other things, information is requested on the age and experience of the management company and the size of its client inventory, the insurance it carries, about who the property manager will be and his/her experience, the same about any site manager who will be assigned, separate fees, if any, for board meetings or other matters and about financial issues such as frequency of financial reports, handling of funds and check signing. this questionnaire filled out by each bidder gives a board a common basis on which to evaluate each prospect.
Interviews After a board or a committee assigned to the bid review task pares down the proposals to the few it considers the best qualified to provide the services it wants, Baum recommends that association representatives be sent to interview each finalist at the company’s headquarters. they should talk with the president and key staff members. Baum spoke about alternative models of management companies might follow. “some prefer a model with several people involved but i like the model of one person knows all,” when it comes to a relationship with an association. An association should determine which arrangement it prefers.
References Also, as part of the selection process, client references should be requested from the bidders the board favors. “Actually,” said Baum, the association should, “go to a company’s website and pick three references.” Management might be inclined to provide only references that it’s sure will give good recommendations. References should be picked that are as close as possible in size to the associa-
tion doing the evaluation. it is probably a good idea to also ask for vendor references and verify their satisfaction in dealing with the management companies. if possible, the association should also try to ascertain each company’s client retention ratio when contracts have been renewed.
Evaluate Price After the interviews and reference checks, those responsible for the selection should evaluate price. “Remember,” said Baum, reiterating what so many others have pointed out when choosing almost any service or product, “the lowest bidder is not always the best. you get what you pay for.” that’s why comparing fees should be just part of the consideration along with reputation, experience, interviews, references, vendor opinions, etc. in looking at the comparative fees, keep in mind that some companies have add ons for a lot of little items that are not specifically included in the main fee stated in the agreement. “some companies charge one amount and that’s all,” but, “too many charge you for extras.” He recommends that an association set up a grid on which to plot all of the possible extra costs to determine when they may be excessive and the reason a company is charging a lower main fee than its competition. “Understand what you are looking at and then determine the best overall fee for the association,” in conjunction with the other criteria that should be weighed in the selection process. the final decision should await a legal review of the contract, which will be covered below.
Transition Between Management Companies once a board has made its selection and will be replacing one agent with another there will be a transition period between companies. Baum said
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that all of his competitors in the management business know that they will win some and lose some in vying for clients so they tend to get along and the handover of management is usually reasonably smooth. “We pretty much cooperate in transition,” he said. However, capturing the money from the preceding management company is occasionally an aggravation for Baum when he takes over, not usually because of the recalcitrance of the outgoing agent but because the association doesn’t follow through to see that it is transferred. Associations should not expect him to get the funds from his predecessor. “it’s up to the treasurer to tell us what money they have and he has to capture it because we can’t.” the money plus a list of all of the unit owners,” are the two things we need from the association.”
Orientation Meeting once the contract is signed the board and new manager must meet as soon as possible to discuss methods of operation, especially on such issues as financial reporting, check signing procedure and whether e-mail or phone communication is preferred. “We have to meet to discuss how you want us to make soup,” Baum said, to go over the nittygritty details of management.
Legal Perspective Pat costello of the law firm of Keay & costello provided a legal perspective on the management selection process, especially how an association can protect itself legally when considering and entering a contract.
Know Yourself in determining what kind of management company an association wants it should first know itself, what its needs and preferences are. What is good for one association-may not be good for another even though they may be somewhat similar in nature. “truly know yourself,” he advised associations. “What is important to you?” look for a management company that can best satisfy your needs at the most reasonable price, whether it is a large or small, local or national company.
Illinois Condominium Act in addition to the criteria that Baum said should be evaluated, costello referred to section 18.7 of the illinois condominium Act, which currently applies to all condominium, townhome and homeowner associations and to both management companies and direct employees of an association. Manager licensing becomes effective on July 1, 2010 but until implementation with direc-
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