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BIDDING
PROJECTS
 QUESTION: The president does not get
bids for a repairs over $500. Isn't that against the law? Aren't directors
required to get three bids anytime they spend the association's money?
ANSWER:
There is no statute requiring three bids. However, good business practice
requires bidding for large projects. The threshold amount for seeking bids will
depend on the association's budget. Those with a $5 million budget annual budget will have
a higher threshold before going out to bid than will associations with a
$50,000 budget.
Small Projects. Boards will have difficulty
obtaining bids for small
repairs, Many contractors will not waste time preparing written proposals for a $700 project. For routine plumbing repairs, most boards
will call a plumber who is familiar with the development and pay him as-needed to repair
leaks. This is an acceptable business practice.
 Large Projects. When it comes to large
projects, such as replacing a roof, painting buildings, paving streets, etc, bidding is a good business practice. If a board
receives a
single bid of $200,000 to paint buildings, it is impossible for the board to
determine the fairness of the proposal without competing bids. If the next two
bids (from comparably licensed and insured companies) come in at $60,000 and
$152,000, then the board will know that the first bid is excessive.
Low Bid. Boards are not required to
accept the lowest bid. Low bid is not always the best bid. The low-bidder may be
small and inexperienced. He may be operating on a shoe-string with low levels of
insurance, limited equipment and minimal staffing. If someone quits or equipment
fails, your project will suffer. With a more established company, the chances
are better the work will be done on time and on budget.
Specifications. A critical factor
for bidding projects is the preparation of specifications. It will be impossible to
properly compare bids if companies are not bidding the same work. For
a large painting project, are all bidders power washing the exterior? Are they
filling cracks and caulking around window frames? Are they using the same
quality paint and applying it to the same thickness? To compare apples to apples, have a consultant prepare the specifications. Only then can boards truly
compare bids.
Sincerely yours,
Adrian Adams, Esq.
Adams Kessler PLC
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