How to save condo owners’ money mitigating the highest risks

Preventing Condominium Fraud

Managing risk is a crucial aspect of daily operations for condominium. As a business entity, the viability of a condominium and condo owners expenses depend on its ability to effectively manage risk. Risk management measures involve identifying and minimizing risks before they escalate and become unmanageable. By implementing effective risk management measures, condominium can run their building corporation more efficiently. This helps boards to proactively prepare for any potential losses and minimize risks to create a safe environment for board members, employees, and residents.

There is always a potential conflict of interests, condo owners vs management company.

Conflicts of interest in condominium can have serious repercussions if they are not avoided where possible or dealt with appropriately.

The most vulnerable management processes in terms of risks are tasks and processes related to identifying what to repair and replace, when, and who can do it  with the best quality, the best price and a speed. 

Main condo management processes related to replacements and repairs, risks involved and measures to decrease risks:

 

List of priorities

Potential Risks:


- Extra Condo expenses for repairs and replacements that do not need to be repaired or replaced (might happen because of an intention or just an error)

- Wrong priority (something might be done later, but something urgent is delayed).

Risks Mitigation:

Invite qualified condo owners (tech committee) or hire a PRO to:

-Evaluate what needs to be repaired/replaced,

- Identify a degree of urgency (urgent repairs or might be done later).

Scope Assessment

Potential Risks:

The scope of work might be overpriced if the scope is assessed in

conditions of a potential conflict of interests, if It is done:

-by the company that has long-term relationship, friendships, with a condo manager, management company, board member etc. OR/AND
-by the company that is paid based on percentage of the scope evaluated, OR/AND
-by if a company that evaluates a scope will perform the job based on this scope.
 

Risks Mitigation:

-Segregate the scop assessment job and the job itself between different companies.
-Invite a few independent contractors for a scope +  a job itself, -RFQ through the open public platform, use tenders.
Contractor Selection

Potential Risks:

Condo owners might get NOT the best price or NOT the best quality of job, if :

-a process of contractor s' selection is not  competitive and

not transparent, and

-if selection is done in conditions of a conflict of interests: example, if   condo board choices restricted by the companies that have long-term relationship, friendships, with a condo manager, management company, board member etc.

 

Risks Mitigation:

- create transparent and competitive processes of contractors selection
- RFQ from independent contractors, or use sealed bidding.
- disclose a conflict of interests in timely manner,
- request property manager to disclose any transactions between management company and service providers referred.
Performance

Potential Risks:

The job might be not done, done with low quality, or with increased price

(because of low skills or just intention):

- if the job performed in the condition of a conflict of interests, for ex. by the company that has

long-term relationship, friendships, with a condo manager, management company, board member etc. OR/AND

-If contractor does not anticipate a physical control what is actually done by independent party (a condo manager, board, or a tech committee of owners or a hired engineer).
 

Risks Mitigation:

-Selecting a contractor based on fair, transparent tenders/biddings process.
-Implement regular (for each job) a quality control by a condo manager & the board (or condo owners tech committee).

In the case of  a price increase, seek the second independent contractor’s opinion

Quality Control

Potential Risks:

The job might be not done, done with low quality, or with increased price

(because of low skills or just intention). 

 

Risks Mitigation:

-Make Performance Control mandatory (for each job done). Develop procedures of control for a condo manager & the board (or condo owners tech committee).

 

 

Does condo board make any decision in the process of contractors selections?

If your condo board selects condo contractors for maintenance, repairs and replacements based on 3 service providers proposals referred by your property management  company, your board does not decide anything. In that case, the board just takes responsibility for condo management company’s choice increasing risks for condo owners dramatically.

 

 

How to decrease risks for condo owners?

condo-fairtender.ca

is designed to mitigate all those risks related to conflict of interest through:

  • improved transparency (condo directors are notified about all applications and all changes in a tender, it is possible to send notification to common email-alias (to make it transparent to all condo owners) and all applications are participating (it is not possible to remove any application).
  •  better communication through QUOTES page https://condo-fairtender.ca/quotes.html) to check service prices in different condominiums and get in touch with directors to find out about their experiences working with a particular service provider.
  • improved quality of services and prices.

Just pure competitive market might give optimal combination of

a right quality and a price! 

condo-fairtender.ca

Take control of your own living!

Leave a Reply

Your email address will not be published. Required fields are marked *