When it comes to awarding work to contractors, Strata Councils are notorious for choosing the lowest bid! I think that a lot of it comes down to lack of knowledge, and wanting to make an easy decision that won’t be questioned by the owners.
But the lowest price isn’t always going to be the smartest choice, and here’s why…
The contractor with the lowest price can either have some excess capacity, or simply have lower overhead to cover.
If the contractor is offering a lower price because they have a gap in jobs, then this may be a good time to select them, but taking advantage of their idle time.
If the contractor is able to offer lower pricing due to better systems, training, and technology, now this might be a very good thing.
If the contractor is able to offer pricing due to their size, purchasing power, and economies of scale, this might be a good thing.
But if the contractor is simply running with lower overhead and thus able to offer lower pricing, then you may want to dig a bit deeper. Do they have the manpower and enough staff to do the job?
Do they have proper administrative support for invoicing and potential customer service issues?
Do they have sufficient capital to stay in business through downturns in the economy. Having a 20 year warranty on your roof isn’t going to do you much good if the company isn’t around in 5 years.
Do they have property insurance and Worksafe coverage in case something goes wrong?
One-man operations will always be able to offer the lowest price when it comes to quote, but it’s important to ensure that the best price is the best option.
Our recommendation is to always do your due diligence when comparing quotes and not just go with the lowest price option.
Looking for Strata Management advice? Reach out to us here!