NSW: Benefits of conducting a formal tender for strata management

On 19 September, 2024 Lookupstrata hosted a webinar presented by Megan Parkins from Tender Advisory about the benefits of conducting a formal tender for strata management. Choosing the right strata manager is a crucial decision for any NSW owners corporation. A competent and professional manager can significantly impact your building’s financial health, maintenance, and overall harmony. Conducting a formal tender process is a strategic approach to ensure you select the best possible candidate for this important role. By following a structured tender process, you can increase transparency, mitigate risks, ensure competitive pricing, enhance service quality, and build long-term relationships with your strata manager.

NSW Choosing the right strata manager: Your guide to tendering

Why Choose the Right Strata Manager?

A well-managed building attracts higher property values. Effective maintenance and proactive repairs contribute to a desirable living environment. Therefore, a competent strata manager is crucial for maintaining asset value.

A good strata manager fosters harmonious communities by encouraging engagement, facilitating communication, and mediating disputes. This creates a positive living environment for all residents.

Furthermore, a strata manager is responsible for financial management and budgeting. Transparent financial reporting and effective budgeting ensure that funds are used efficiently and responsibly.

Finally, strata managers must navigate complex regulations to avoid penalties and legal issues. A competent manager understands the intricacies of strata law and ensures compliance.

The Risks of Not Performing Due Diligence

• Neglected Maintenance: Delayed repairs, decreased property values, and legal issues can arise from inadequate maintenance.
• Lack of Experience: Ineffective management, maintenance, or conflict resolution can lead to increased costs and community disharmony.
• Poor Communication: Misunderstandings and mistrust can result from a lack of transparency and effective communication.
• Financial Mismanagement: Hiring a manager with a history of financial errors or misappropriation of funds can damage your building’s reputation and financial health.

Benefits of conducting a formal tender for strata management

• Promotes Transparency and Accountability: A tender process demands transparency and accountability from potential strata managers.
• Mitigates Risk: A competent strata manager can help mitigate risks associated with legislative requirements and building maintenance.
• Ensuring Competitive Pricing: A tender process encourages competitive pricing from multiple bidders.
• Enhancing Service Quality: A well-structured tender allows you to evaluate service quality and identify the best fit for your building.
• Building Long-Term Relationships: A clear contractual agreement can foster a positive and collaborative relationship between the strata manager and the owners corporation.

The Tendering Process: A Step-by-Step Guide

Step 1: Preparation

Begin by clearly defining your building’s requirements and preferences. Consider factors such as the desired level of service, specific maintenance needs, and preferred communication style. To ensure you maximise the benefits of conducting a formal tender for strata management, involve the strata committee and consult with the owners corporation to ensure that their needs and priorities are accurately reflected.

Step 2: Request for Tender (RFT)

Develop a comprehensive RFT that outlines the owners corporation’s expectations and criteria. Include detailed information about your building, its specific requirements, and the desired services from the strata manager. Use clear and concise language to ensure that potential companies understand your expectations.

Step 3: Analysis and Shortlisting

Evaluate the responses received from potential bidders and shortlist the most suitable candidates based on your criteria. Consider factors such as experience, qualifications, references, and proposed pricing. Use a scoring system or weighting matrix to objectively compare different bids.

Step 4: Interviewing and Evaluating

Conduct interviews with the shortlisted candidates to assess their suitability and experience. Ask questions about their approach to management, communication style, and understanding of NSW strata law. Consider their ability to align with your building’s specific needs and values.

Step 5: Appointment and Review

Appoint the chosen strata manager at a general meeting of the owners corporation. Implement a review process to evaluate the manager’s performance and ensure that they meet the owners corporation’s expectations. Regularly review the strata manager’s services and make any necessary adjustments.

Common Pitfalls and How to Avoid Them

• Inadequate Due Diligence: Conduct thorough reference checks and background investigations.
• Deciding Based on Price Alone: Consider factors beyond price, such as experience, qualifications, and service quality.
• Overlooking the Finer Details: Carefully review contracts to avoid hidden fees or unfavourable terms.

The Role of a Strata Consultant

A strata consultant can provide invaluable support throughout the tender process. They offer expert guidance, unbiased advice, and practical assistance, ensuring that your owners corporation makes informed decisions and achieves the best possible outcome. Here’s how a strata consultant can benefit your owners corporation:

• Expertise and guidance: Strata consultants possess in-depth knowledge of the strata management industry and can provide expert guidance on all aspects of the tender process. They can help you understand the complexities of NSW strata law, evaluate bids, and negotiate favourable terms.
• Objectivity and impartiality: A strata consultant acts as an independent third party, free from conflicts of interest. This ensures that their advice is unbiased and solely focused on the best interests of your owners corporation.
• Tailored solutions: Strata consultants can help you identify the most important criteria for selecting a strata manager and develop a RFT that accurately reflects your building’s unique characteristics.
• Time and cost savings: Engaging a strata consultant can save your owners corporation time and money, allowing your strata committee to focus on other important responsibilities. Additionally, their expertise can help you avoid costly mistakes and ensure that you select the most suitable strata manager for your building.
• Negotiation support: A strata consultant can assist you in negotiating favourable contract terms with potential strata managers. Their experience and knowledge can help you secure a better deal for your owners corporation.

Conclusion

By conducting a formal tender process, you can significantly enhance the management of your strata community. This proactive approach allows you to select the most qualified and suitable strata manager, ensuring that your building is well-maintained, financially sound, and a harmonious living environment for all residents. By carefully considering the factors outlined in this article and seeking expert guidance from a strata consultant, you can optimise the tender process, negotiate favourable terms, and ultimately achieve the best possible outcome for your owners corporation. A well-managed strata community not only benefits individual residents but also contributes to the overall value and desirability of your building.

Download the slideshow from the session: Benefits of conducting a formal tender for strata management

You can download a copy of the slide presentation from the session here: Choosing the right strata manager: Your guide to tendering.

Presenter
Megan Parkins
Tender Advisory
E: info@tenderadvisory.com.au

Article author:
The Lookupstrata Team

This post appears in Strata News #713.

Read next:

• NSW: Q&A How do we Deal with Strata Manager Complaints and Bullying?
• NAT: Many strata managers who handle apartments are conflicted: here’s how

Visit Strata Managers OR NSW Strata Legislation pages.

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