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When selecting a vendor or contractor, it is critical to use due diligence and have a process in place for making these selections. By having a thorough process, you will satisfy your obligation as a board member while also protecting from potential liability.

When evaluating vendors or contractors for selection, there are some key pointers to follow:

  • Establish a thorough process for vendor “vetting.” Better yet, document the process for future boards to ensure consistency.
  • Conduct personal interviews (or engage in some kind of personal contact).
  • Confirm insurance coverage/documentation. Note that not all vendors need or have insurance, but this is an important aspect to take note of.
  • Confirm any licensing, credentials, or certifications a vendor may have depending on its specific industry.
  • Request multiple references and check them.
  • Proposals are not contracts, even if all parties sign it. Always ask for a formal contract that includes important terms regarding the relationship (i.e. termination, dispute resolution).

There are also special considerations for specific types of vendors and projects:

Construction Projects

  • Always get multiple bids to compare costs, operations, and qualifications. Ask for Certificate of Insurance and ensure that it is current and up to date through the anticipated length of a project.
  • Check with the Minnesota Department of Labor and Industry to confirm license status, learn of potential enforcement action, or history. Follow up on any issues.
  • Explore resources such as BBB, Angie’s List, Google reviews, and more. However, take all reviews with a grain of salt.
  • Confirm contractor’s ability to complete project within your desired timeframe.
  • Clarify methods of communication for project ahead of time.

Management Companies

  • Consider the amount of control you are relinquishing—full management? Partial?
  • Ensure agreement covers what is expected in as much detail as possible, including things like termination options, governing documents, and auto-renew provisions.
  • Have a thorough understanding of what services are included and what may require payment of additional fees.
  • Understand the relationship between management and the Board and how it translates in terms of a contract.

Routine/Ongoing Service Vendors

  • Ensure there is a termination or dispute resolution process in place in the event there is an issue.
  • Understand the schedule of services and what triggers action (i.e. inches of snowfall, days for garbage collection).

As general rules of thumb, you can (and should) always negotiate a contract if there are concerns over the terms proposed. If multiple bidders are involved, allow for a process to give all bidders a fair chance at the project. Finally, make sure there is always a way to end the relationship if needed.

At the end of the day, it is important to do your homework on the front end of the relationship to circumvent future issues. Do thorough research and check all available resources and negotiate for terms that you find acceptable.

Luckily, Sharper Management offers a Preferred Vendor Directory. All preferred vendors are required to provide a certificate of insurance and be in good standing with the state of Minnesota. This can be a fantastic starting point in the vendor selection process: https://sharpermanagement.com/preferred-vendors/