Question: We are looking for a new body corporate manager. Is there a standard template that covers the appropriate services and suitable requirements for a BCM?
Our current management agreement ends this year, and I would like to send a request for quotes or tender to our local body corporate managers (BCM). Is there a standard template for this, or does anyone have a template for a request for quote (RFQ) or request for proposal (RFP) that covers the appropriate services and suitable requirements for a BCM?
Answer: Be wary of judging on costs alone and remember that it costs good body corporate companies good money to provide good services.
If you want to change body corporate managers, it is important to consider all costs and qualities of any alternative management companies.
There isn’t a specific quote request template or an assessment format. What works for one scheme may not work for the next. Any search will depend on what you value from a manager. This will dictate how you conduct your search.
As a manager, I have seen many individual schemes create templates. As LookUpStrata is a participatory forum, I encourage any readers who have created their own to share their examples in the comments.
Below, I have created a table that might help you consider some of the cost and value comparison points for managers. If you use a template like this, ask managers bidding on your scheme to complete it.
Most body corporate contracts are a mixture of fixed fees plus additional costs for individual services required by the scheme.
The fixed fees cover what is known as the agreed services. These should be specifically outlined in your contract. Typically, the agreed services are for things like arranging the AGM, managing your financials, issuing levy notices and the general work required to run a body corporate.
The additional service fees are charged per item or for the time taken – usually at the hourly rate for a manager or strata team member. Again, the contract should list these fees. Professional service fees can be applied for anything that is not an agreed service. This could be helping with maintenance issues, issuing by-law breach notices, assistance with caretakers, additional meetings and extending to any legal request that the scheme asks the body corporate manager to undertake.
Unfortunately, body corporate contracts can be tricky to read, and it can be hard to determine the actual costs. This isn’t an accident – many companies don’t want you to know what they are really going to charge. As a manager, I find that many of the contracts we see are difficult to read, and I imagine owners have the same problems.
If you are comparing companies, perhaps the most useful question to ask is what is the total amount of all fixed fees? This isn’t just the managerial fee plus the disbursements, but it would include fees for insurance and BAS filings, fees for software provision and anything else the body corporate company will definitely charge you. This includes fees for line items such as communications charges or WHS fees that some companies like to hide in contracts to inflate the real costs you pay. Take that total and divide it by the number of lots, and that’s your real cost per lot for the agreed services.
Regarding costs for additional professional services, this isn’t something body corporate owners should be afraid of. Many owners seem to think that paying the manager for these services is a waste of money, but if you need help and the manager provides it, that’s a fair trade. The question is not how much you pay but whether your manager is helping you with your scheme. Are they making things easier for you? Are they available when you call, or do they reply promptly to your mail? If the answer to these questions is yes, you are probably getting good service and value for money. If the answer is no, that’s probably a good reason why you are looking for a new manager.
In making this value assessment, think realistically about how much time it takes to manage your scheme. Some schemes have low additional costs. Others contact their manager every day, and costs will be high. Be realistic about the demands of your scheme and expect managers to charge for that. Price those costs into your budget, and if you want to bring them down, discuss strategies with the manager about how to do that.
That said, what you need to watch out for in the additional services are inflated costs that add to the body corporate’s bottom line but don’t improve your scheme. Paying a manager for 30 minutes of their time to help you issue a professional by-law breach notice is fine. But if the management company charges you say $50 for a welcome pack that’s just a PDF they created years ago, it is probably a waste of money. How about an insurance certificate – it might take the manager 30 seconds to send one through to you. Many companies will bill $30-$100 for this. Are you happy with that? Consider your scheme’s needs and ask the manager what costs are included.
In your evaluation, you must also consider the costs of any insurance commission paid to the manager. Commissions are usually a percentage of the premium, and as premiums are rising, so are the commissions. There is truth to the argument that if the commission were not applied, body corporate contracts would increase in other areas or that inclusions would be cut, but still, you may be surprised by the total of the commission paid and considering this amount in any comparison is imperative. The commission is a real amount of money that you pay, so you need to add it to your calculations.
Lastly, be wary of judging on costs alone and remember that it costs good body corporate companies good money to provide good services. If a company offers you a low price, think about why – maybe they have a lot of hidden additional fees, or maybe their managers are overloaded and won’t have time to give you service.
Ultimately, any proposals you receive will only tell half the picture, and plenty of people can put together a flashy presentation that makes their company look great. Turning that into a reality is much harder than it looks. It’s a good idea to interview the company and chat with them about how they work. Plenty of good companies are out there offering fair offers that people overlook by considering costs alone. You might have to pay a bit more for a good company, but those companies will bring your scheme savings over time by using their industry knowledge to help you make the right decisions. Remember it is OK to ask questions – if the body corporate can give you a straight answer, that’s a good thing. If they can’t, it’s a warning sign. Speak to the people at the company and get a feel for if they are the right fit for your site.
Management comparison chart
Download your FREE management comparison charts: Fixed Fees + Additional Professional Services
Fixed Fees:
Additional Professional Services
For additional fees, note that if you are comparing against your current manager, you should be able to get an exact amount from them or your financials for fees charged over the past 12 months. A new manager may be able to list their costs, but they can’t know the total charges. It will depend on your scheme and the amount of help you need. Be realistic about the amount of time it takes to manage your site. If you need a lot of help, that’s OK, but it won’t be for free.
William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924
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