Acquiring services based on multiple mismatched bids is one of the most irresponsible things you can do as a board of directors. I will explain using an example.
A family of 4 needs a car that can carry all of the members of the family. They do a search online for “cars for 4 people” and they get two results.
The results come back as:
Chevy for 4: $1,000
Ford for 4: $1,500
A responsible family should purchase the lowest cost vehicle right?
Wrong. Making a large purchasing decision with such incomplete vague information would be completely irresponsible.
A responsible consumer would compare the vehicle’s features, apples-to-apples before they make a purchase. Let’s add a little detail to the example to highlight the point.
The Chevy is a Camaro that gets 22 MPG, has a 36,000-mile warranty, power seats and USB Ports.
The ford is a Fusion Hybrid that gets 43 MPG, has a 36,000-mile warranty, Bluetooth and backup camera.
With more details, you see that the Ford offers TWICE the MPGs and has the added safety benefits of hands-free phone calls, and a backup camera.
So the real responsible thing for them to do would be to buy the Ford Fusion and get better gas mileage and added safety features, right? WRONG.
You see, at this point, they are comparing a hybrid with safety features (apples) to a sports sedan with luxury options (oranges). The responsible thing for them to do would be to compare hybrid cars with safety features to hybrid cars with safety features.
Luckily, this family happens to be super savvy and responsible so their next search is “CHEVY hybrid with safety features”. From that search result, they get a Chevy Malibu that gets 49 MPG, has a 36,000-mile warranty, Bluetooth and backup camera for $1, 650.
Now that the specs on the vehicles they are comparing are nearly identical, they are comparing apples-to-apples. The family can then focus on things like the makers’ reputation, available color, and minor details when making their final purchasing decision.
Thankfully, it is NOT the majority, but I still see
HOA board of directors who fail to fully fulfill their fiduciary duty to examine apples-to-apples bids before making a decision.
A common example I see is when boards get multiple bids from termite companies. One company’s bid is for local treatment of termite activity using a liquid termite control solution such as Termidor or Altricet, another bid is for full structural fumigation, and a third bid is for non-traditional local treatment such as freezing or orange oil.
Like in the example above, these three scopes are so inherently different in terms of results, cost, and impact to occupants that making an apples-to-apples comparison is impossible.
Just because three bids were all submitted by termite companies, does not mean that they all match in scope, as you can’t expect three different car companies to produce a car with the same features and functionalities.
An apples-to-apples comparison would be having three companies all bid the same scope. That is, all three bidders bid for local treatments using traditional termite control products, or all three companies bid fumigation of the structures or all three bid for non-traditional termite control application.
Failing to make large purchasing decisions based on comparable scopes on behalf of your communities is a rookie mistake.
The only beneficiary in this scenario type is the vendor. Here are just a few of the problems with that type of decision-making process:
You could never prove to the HOA’s membership that you got the best value for the service you purchased because you only got one price from one vendor on the scope you bought.
You could never prove you got the most qualified vendor to perform the service you purchased because you hired the only vendor that bid that particular quote and did not compare their qualifications to perform that scope to others’.
You could not guarantee that the scope you purchased offers the best long-term benefits to your community. When you realize the scope you paid for lacks a certain feature or benefit you hoped you would get, your vendor can simply say, “That was not a part of the original scope, for that, you should have asked us for our upgraded scope.”
In short, it’s important to make sure the different bids received are all bidding on the same scope of work, otherwise, you cannot make an informed decision.
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