Step 1: Defining the Project Scope and Requirements
Before a condominium manager begins the contractor selection process, the scope of work must be clearly defined. This ensures that proposals from contractors are accurate and comparable.
Key Considerations in Defining Scope:
Nature of the work – Maintenance, repair, renovation, or capital improvement?
Budget – What is the estimated cost, and will funds come from the operating or reserve fund?
Legal and regulatory compliance – Does the work require permits or specific qualifications?
Timeline – What is the expected start and completion date?
Without a well-defined scope, cost overruns and disputes may arise due to misaligned expectations between the condominium corporation and the contractor.
Step 2: Obtaining Board Approval for Contractor Selection
A condominium manager must consult with and obtain approval from the board before engaging contractors for significant projects. This process ensures transparency and protects the interests of the unit owners.
Board Approval is Required For:
Major repairs or capital projects, such as replacing common property infrastructure.
Service contracts exceeding the board’s pre-approved spending limit, as outlined in the corporation’s bylaws.
Long-term maintenance agreements, such as janitorial or landscaping services.
Exceptions Where Managers May Act Independently:
A manager may hire a contractor without prior board approval if:
The expense falls within the manager’s pre-approved discretionary spending limit.
There is an urgent repair or emergency, such as a burst pipe or electrical hazard.
In all cases, the manager must document the decision and provide an update to the board.
Step 3: Drafting and Signing a Legally Binding Contract
Once a contractor is selected, a written contract must be created to protect the condominium corporation. A proper contract ensures accountability and clarity for both parties.
Key Contract Elements:
Detailed Scope of Work – Specific tasks, materials, and expected outcomes.
Pricing and Payment Terms – Total project cost, deposit structure, milestone payments.
Project Timeline – Start date, major milestones, and expected completion date.
Insurance and Liability Coverage – Proof of insurance, Workers' Compensation Board (WCB) coverage.
Warranties and Deficiency Resolution – How defects will be addressed after project completion.
Legal Requirement for Contracts
The Real Estate Act Rules require condominium managers to act in the best interest of the corporation when entering into service agreements. This means contracts must be free from conflicts of interest and aligned with board-approved policies.
Step 4: Setting Up Payment Schedules and Performance Benchmarks
Establishing a Payment Structure
To protect the condominium corporation from financial risks, payments should be structured as follows:
Progress Payments – Payments tied to project milestones rather than lump sums.
Holdbacks – Retaining a percentage (e.g., 10%) of the total contract value until the work is fully completed and approved.
Final Payment – Only issued after final inspection and board approval.
Performance Benchmarks for Quality Control
A condominium manager should:
Conduct regular inspections throughout the project.
Ensure that deadlines and contract terms are being met.
Document and report any deficiencies or delays to the board.
If a contractor fails to meet performance benchmarks, the condominium manager should:
Issue a written notice identifying the problem.
Request corrective action within a specified timeframe.
Withhold payments or terminate the contract if necessary.
