PART 2: Why the Vendor Bidding Process Is Broken (and What It’s Costing Property Managers)

Can vendor bidding solutions like RoDevia Brigham’s Proposabid create more transparency and detect fraud?

That’s where we left off during Part 1 of this discussion on The Property Management Show. Let’s pick up the conversation about how the bidding process is broken, and how property managers can avoid wasting time and money. Here’s Part 2.

How has Proposabid Contributed to Fraud Detection?

When RoDevia was talking with her partner, they discussed how a lot of vendors would inflate pricing or maybe there would be work that was needed but didn’t really have to be done in the particular way that a vendor believed, or at a higher price point.

There are a couple of specific cases that she was able to detect, and she cautions owners and property managers that things like this could be happening without them knowing about it:

On-site staff may claim that work is necessary, or they’ll be billing you for work that may not be completed or required. If you’re an owner in Arizona with properties in Tennessee, you may not know that what you’re being told isn’t true. If your manager is overstretched and has 76 different properties to manage, she may not know that 34 doors need to be replaced in a specific way at one property.

There could also be a conflict of interest or some self-dealing going on. Staff or property managers may use companies they own. In San Francisco, we had a cleaning company that got a $15,000 per month contract at one property for 150 doors. It was on-site staff that was registered and had an EIN. Family members worked at this company, and they managed to claim contracts across other properties for almost $500,000 over three years without the owner knowing. There was no bidding process at all.

If you have a third party that doesn’t have a dog in the fight and can source bids for you in timely fashion and has comparables for you, the process is fully transparent. Proposabid also posts their bids online so other vendors can compare.

Any number of issues can crop up when a company is just assigning someone to source bids who isn’t qualified to do it or is too busy to give it the necessary attention.

Challenges for Property Managers in Analyzing and Comparing Bids

Let’s say a property manager does manage to get some bids. Now it’s time to analyze and compare them. What are some of the challenges and issues would a company face at that point in time?

First, RoDevia would be wondering if you have enough bids.