WA: Dealing With and Selecting Contractors for Your Strata Building

These Q&As are about contractor selection after the new WA strata laws have commenced.

Table of Contents:

• QUESTION: If a strata company permits an owner/resident with no qualifications, certifications or insurance to perform maintenance on a strata property, are there implications for the strata insurance if there is an issue due to their work?
• QUESTION: Can we assume the strata manager has carried out their due diligence when supplying contractors?
• QUESTION: How do you set up an expenditure chart of accounts in the reserve fund specifically for the 10 year maintenance plan?
• QUESTION: As our strata council are not experts, how do we acquire a scope of works for contractors when organising strata maintenance for our building?
• QUESTION: The COO has identified several issues needing repair/maintenance. The commercial residents are insisting that no repairs are carried out during working hours and have asked that all work is done after hours.
• QUESTION: Our book keeper also acts (under a separate contract) as our yardman. Does the wording in the strata title regulations part 13, section 91 (1) forbid this?
• ARTICLE: Tips for Contractor Selection and Gaining Control of Your Budget!

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Question: If a strata company permits an owner/resident with no qualifications, certifications or insurance to perform maintenance on a strata property, are there implications for the strata insurance if there is an issue due to their work?

Answer: It is highly recommended that the strata corporation and owners engage qualified contractors for any work.

From an insurance perspective, there are no specific exclusions related to unqualified maintenance. However, it is highly recommended that the strata corporation and owners engage qualified contractors for any work conducted.

In certain circumstances, individuals may be required to hold proper licenses to carry out specific types of work, such as electrical, plumbing, or tasks exceeding a certain value.

Please note that the strata policy does not cover costs associated with rectifying faulty or defective work.

If an owner or resident is working in a voluntary capacity (i.e., not being paid), they may be covered under the public liability section of the strata insurance policy. Additionally, they have further coverage if injured while performing volunteer work. Conversely, if they are being paid, they should, at the very minimum, have public liability insurance to cover any injury or property damage for which they may become legally liable.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisenent Australia AFSL No 240549, ABN 15 003 886 687.

This post appears in Strata News #713.

Question: Can we assume the strata manager has carried out their due diligence when supplying contractors?

Our 50 lot strata company relies on the strata manager to organise contractors to carry out work on the property. Can we assume the strata manager has carried out their due diligence when supplying contractors? Do strata managers have some type of compliance checks in place when organising workers?

Answer: Have a conversation with your strata manager and ask what sort of checks they do.

I suppose the short answer is that they should. I’m aware of a lot of managers that do.

The compliance checks that they might preform are quite straightforward for example, ‘Are they insured?’, ‘Are they qualified for the work?’, Sometimes, that’s a necessity. If you need electrical work done, they need to be an electrician so they need to be licensed. Above and beyond that, there’s not too much more that you can do.

Insurances and licensing are the most important aspect. Most strata management companies I’m aware of check this. I’ve been in a situation where we had a plumber/electrician replace a hot water system in a unit. Fairly shortly after, the manager was getting phone calls that people were getting electric shocks whenever they use their tap. It turned out the ‘plumber/electrician’ was actually neither and they had earthed the hot water system to the copper pipe running through the entire building. So yes, you can run into those problems.

Have a conversation with your strata manager and asking what sort of checks they do. If an owner decides to do say some renovation work themselves, you can have rules around how renovations are to be carried out. Keep reminding lot owners of the rules and point out the safety issues to them and the building.

QIA Group
E: info@qiagroup.com.au
P: 1300 309 201

This post appears in the April 2022 edition of The WA Strata Magazine.

Question: How do you set up an expenditure chart of accounts in the reserve fund specifically for the 10 year maintenance plan?

Answer: Your accounting package will have the ability to add accounts under expenses.

Your accounting package will have the ability to add accounts under expenses.

The allocation and naming of those accounts would usually follow the listing of budgets set by your maintenance plan report, building component by building component.

You may want to break those budgets down further if you intend to carry out the work in stages. For example, in some of the staged developments that we see, 8 units were built in 2006, 8 units in 2009, 8 units in 2015 and 8 units last year. Each of these stages would be weathered differently and be at different stages of needing work done. Other developments may have towers built at different dates. In this case, I would recommend you engage your building inspector to break down the overall budgets by stages.

In order to help keep the costs under control, for works in excess of $50K, you may consider engaging your building inspector to help you tender a scope of work to safeguard the interests of Owners and check that those works are completed satisfactorily. For example, we saw a strata manager ask for pricing to re-roof 10 units, changing from tiles to metal roofing. The quotes which came back were vague and varying, because there was no thought as to:

• What order would the works be done?
• Where would materials be stored?
• What toilet facilities were available?
• What progress payments were required?
• What method of tie-down of the new roof was proposed (including council approval)?
• Is the contractor registered for GST?

A detailed Scope of Works prepared by the Building Inspector would have made sure that all these questions were covered.

Andrew Booth
ABBC Building Inspectors
E: andrew@abbc.net.au
P: 08 9200 4200

This post appears in Strata News #492.

Question: As our strata council are not experts, how do we acquire a scope of works for contractors when organising strata maintenance for our building?

Answer: There should be plenty of contractors who would happily sit down with somebody to map out a scope of works.

During the contractor selection process, there should be plenty of contractors like ourselves, for instance, that would happily sit down with somebody to map out a scope of works.

It’s not that difficult if you know what you’re doing. I would expect there are similar companies to ours who would do the same thing. Those who would actually want to make the industry better by helping council of owners put together a scope of works and head councils in the right direction.

Greg McCulloch
FVS Services Group
E: greg.mcculloch@fvs.com.au
P: 0413 228 224

This post appears in Strata News #447.

Question: The COO has identified several issues needing repair/maintenance. The commercial residents are insisting that no repairs are carried out during working hours and have asked that all work is done after hours.

I am in a multi-purpose strata building – half commercial and half residential.

The COO has identified several issues needing repair/maintenance; however, the commercial owners are insisting that no noise is acceptable during working hours and have asked that all work be one after hours.

The contractors are either not available or apply premiums for after-hours work. While the commercial owners are not impacted by the work, the residents are affected after hours.

What are the guidelines for regular maintenance and work relating to safety issues (i.e., steps/pathway needs high-pressure wash to remove potential trip/slip hazards)? Commercial owners have recently stopped the contractor engaged by the COO and told him to return on the weekend.

Answer: The commercial tenants need to understand that they are part of the building’s community and that building maintenance is part of the deal.

Were the commercial tenants advised that the work had to be done before work started?

Were the commercial tenants given the opportunity to select a date for the work to be done that would cause them minimal disruption?

Unless the work poses a safety risk to the commercial tenants it should proceed during normal hours.

The commercial tenants need to understand that they are part of the building’s community and that building maintenance is part of the deal.

If the commercial tenants don’t want the disruption during normal work hours then they should pay the difference between normal hours rates and after hours rates.

Greg McCulloch
FVS Services Group
E: greg.mcculloch@fvs.com.au
P: 0413 228 224

This post appears in Strata News #404.

Question: Our bookkeeper also acts (under a separate contract) as our yardman. Does the wording in the strata title regulations part 13, section 91 (1) forbid this?

Answer: This regulation refers to a contractor such as a Tradesperson etc who only performs contracted work required of them to perform an agreed task etc.

A “scheme function” is defined in the Act.

scheme function for a strata titles scheme means –

1. a function of the strata company; or
2. a function of the council of the strata company; or
3. a function of an officer of the strata company;

Your bookkeeper has a dual role and should perform the tasks such as Yardman under specific agreed terms of engagement.

Shane White

Strata Title Consult

E: shane.white@stratatitleconsult.com.au

This post appears in Strata News #381.

Article: Tips for Contractor Selection and Gaining Control of Your Budget!

The new Western Australia strata laws require all Council of Owners to act honestly, with loyalty and in good faith.

Owners have a duty of care to ensure building services are always operating effectively and are compliant. A significant portion of a strata company’s budget is allocated to repairs and maintenance. To gain greater control of your budget the Council of Owners should nominate and train a responsible person to oversee all matters relating to each major building service, even if a Strata Manager coordinates the work. It’s your money so take an interest.

Larger strata schemes have building services such as lifts, air conditioning, plumbing, electrical, security and fire systems. Before appointing a maintenance company, the responsible person should familiarise themselves with the various types of systems in the building and the relevant Australian Standards. If you actively engage in the management of the building’s services you are more likely to gain control over your budget.

Vetting Contractors During the Contractor Selection Process

Modern building systems are complex in design; therefore, you need companies that have knowledge about the components, configuration and performance specifications of your systems.

1. Before calling for prices, confirm potential candidates have the technical knowledge to maintain your particular systems.
   
   • What is the depth of their knowledge?
   • Is it only held by one person?
2. Ensure a scope of works is provided to each candidate to provide the best chance of consistency with pricing. Special requirements should be in the scope of works such as:
   
   • access times,
   • response times,
   • spare parts kept on site etc.

   Can the candidate provide the level of service you require?

3. Arrange a site inspection to ensure each candidate fully understands the equipment to be maintained and the condition of the property. Also, interview a manager of the company to ensure you are comfortable working with them. This is important because when things go wrong it will be the manager that you rely on to resolve the issue.
4. What documentation is provided by the candidate? Most reputable companies have a customer portal that provides all the maintenance reports, repair quotations and invoices. They should also provide an asset register for each type of system.

Pricing

Conventional wisdom is to obtain three prices. Over time contractors have developed different pricing models to differentiate themselves. Each price may not cover the work you expect. If you have provided a scope of works then ensure all items are included in the price.

Remember that the lowest upfront price will not always result in less money being spent over the year. The price for routine maintenance should include all the usual consumables. Confirm if zero defects are found that no additional fees will be charged. The pricing model of a low initial price followed by expensive consumables is similar to that of some car mechanics.

It is important to confirm if the contractor’s salespeople and technicians work on commission. If a portion of their pay is reliant on sales then be aware that their advice may be biased towards the oversupply of products and services.

Confirm the call out charges for normal and after hours visits. What do the callout charges include e.g. travel and one hour labour? What are the labour rates once the included labour has been used? What are the normal and after hours time periods?

Strata Managers and Council of Owners generally don’t receive commissions from contractors. If they do this should be disclosed as part of the selection process.

Breakdown replacements are not normally included in maintenance agreements. It is best for the incumbent maintenance contractor to undertake the work, as they have the best knowledge of the system. Usually, it is an emergency and there is no time to obtain quotations. The relationship with the contractor should be strong enough to trust that the price will be reasonable.

For major upgrades confirm who determined the need for the work to be done. In some cases, an industry consultant should be called on to verify that the work is required and that the proposed work is the best solution. Obtain at least three quotes from suitable contractors based on a scope of works, prices can vary based on the workload of the contractors.

The Relationship

The relationship should be more than a visit by a technician and an invoice. The contractor should be part of the team that is looking after the safety and comfort of the building’s occupants. It is important that the relationship with the contractor is two way. Some maintenance requires access to all apartments, this can be very difficult to arrange because occupants don’t see it as a priority. In the event of an insurance claim, the assessor will review the equipment’s service records. Owner’s don’t want to be in a position of having a claim denied because the contractor was prevented from carrying out required maintenance. Contractors don’t want to be in a position of explaining to an insurer, or worse, a coronial inquest that the system failure was due to uncooperative occupants.

Implement an education program for all occupants of the premises to make them aware of the building’s systems, how they operate, the maintenance requirements and what the common faults are. Working together ensures faults are quickly investigated and fixed. It also ensures the systems are compliant with the relevant Australian Standards.

Strata Managers and the Council of Owners are responsible for managing contractors. Technical building systems should not be a barrier for non industry people getting value for money. The Strata Manager or Council of Owners’ representative should have regular meetings with all contractors to review their performance, maintenance records, outstanding defects and recommendations for improvements. If you are unhappy with any aspect of a contractor’s performance, then obtain a second opinion from a suitable alternative.

Westside Fire Services provides free of charge a contractor selection card. The card can be used for any building service to vet potential contractors and provides a record of the process. This will assist in the requirement for Council of Owners to act honestly, with loyalty and in good faith.

Greg McCulloch
FVS Services Group
E: greg.mcculloch@fvs.com.au
P: 0413 228 224

This post appears in Strata News #347.

Have a question about contractor selection or something to add to the article? Leave a comment below.

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Read next:

• WA: Maintenance Planning and Insurance: The Strata Titles Amendment Act 2018 (STAA 2018)

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