Contractor Management

Contractor Management

The strata industry relies heavily on contractors to help maintain the overall appearance of buildings, along with routine service and maintenance of mechanical assets and common areas.

Fire compliance, lift servicing, HVAC and plumbing generally make up most of the on-going preventative maintenance required within a residential building. Also, if buildings are still within the defect liability period (DLP) or commencing a special building upgrade or rectification, engineers are relied upon to help identify potential risks or issues. Engineers are also used to prepare (or review) detailed scope of works when issuing complex work orders to various builders or contractors.

Within NSW, lot owners rely on professional contractors, strata managers and building managers to help them navigate through the many challenges of keeping a building well maintained and compliant, while reducing associated risks to lot owners.

Through our years of managing buildings under-going upgrades, rectifications, routine service and maintenance, Premium Strata continues to rely upon its contractor vetting process to ensure qualified and trusted companies are engaged across our portfolio.

This article highlights the importance of having an effective contractor management plan in place which will minimise financial loss by prolonging the lifecycle of your buildings assets and reduce regulatory compliance issues. We hope you find this article helpful!

Are you looking out for red flags?

Red Flag 1 

The right qualifications

Contractors and technicians can be employees of a business, sub-contractors or sole traders. It’s very important to ensure all contractors and technicians hold the required licence to perform the agreed scope of works being issued to them.

In NSW, a trade licence is required:

• For all specialist works. For example, fire maintenance, electrical and plumbing, air-conditioning and gas-fitting, regardless of the value.
• Where residential building works valued at more than $5,000 inc. gst in labour and materials are being performed by a tradesperson. This includes minor maintenance work.

The NSW Government Licence Check portal provides information about building contractors, qualified supervisors and tradespersons licences. The portal will tell you about current, expired and cancelled licences under the name or licence number being searched. To make best use of the portal, you should search for licence records under all names available to you including the individual’s name and the partnership or company name where relevant.

Red Flag 2

The right insurance?

It can be tempting to award a job to the contractor with the lowest price. Before committing, there are things to consider. One essential item is verifying if the contractor has the right insurance cover. You are best to engage your strata manager to assist with this review.

Public liability insurance covers property damage and personal injury caused by the contractor. Worker’s Compensation insurance helps contractors employees with financial compensation if they experience personal injury or personal property damage while at work.

Also, if engaging a licensed builder or tradesperson in NSW to undertake any works or repairs, Home Building Compensation (HBC) cover is required when the contract price or market cost of labour and materials is over $20,000 inc. gst. HBC cover, which used to be called ‘home warranty insurance’ will protect owners if a builder or tradesperson can’t complete building works or fix defects.

Ask your contractor for their insurance papers and contact their insurance providers to conduct thorough checks by referring to the scope of works on the quotation

Red Flag 3

Clear scope of works

Preparing a clear scope of works (SOW) can be a complex job. Its best done by an experienced contractor who has the right qualifications. Depending on the works being undertaken and the overall value of the project, its often best to engage a qualified person, like an engineer to provide a detailed scope for the builder and contractors to follow. This will also put some of the liability onto the engineer if the scoped works do not produce the expected outcomes.

For smaller projects or routine servicing, you can rely on a strata manager or building manager to engage contractors and determine a suitable scope of works, based on the contractors’ recommendations. Its also good practice to ask contractors for alternate scopes to help you consider all options.

When preparing a SOW for routine servicing, the asset name, location, frequency of service and costs should be included. Also, the SOW usually sits within the fee proposal and should be addressed to the correct entity, usually being a strata plan or BMC. It is also recommended to have the exclusions from the SOW listed where possible for better transparency of additional costs.

The most effective way to avoid potential issues on what was agreed is to get the scope of works in writing from the contractor. It is recommended that you receive a full written quote back to avoid extra charges or disputes. If a contractor will not provide a written quote, the owners corporation may be exposed to increased costs, or only half of the job completed.

A well-run building that is supported by a quality strata management company and building management company should have solid systems in place. These systems form the bedrock so that the building can operate smoothly. This includes procedures that follow a process to obtain a clear scope of works and formal quotes that clearly outline the required work. Collect all work licenses, insurances, and where necessary council approval to be held in a central system.

Conclusion

To recap make certain that you obtain a clear scope of works from the contractor that sets out the work with any exclusions. This should also include expected timelines and cost of materials. Ensure that they can present the correct documentation that includes insurance and qualifications. It can be challenging to manage contractors due to their complexity and multifaceted nature. As strata managers, we are here to support the owners corporation. Setting clear communication between the contractor, strata manager and the owners corporation allows for all parties to remain informed. This includes updates on progress, timelines and that all expectations are satisfied.