The tender process focuses on selecting the best building management company. But the real relationship is defined by the contract you sign.

Most committees review contracts for price and basic scope. But the details that determine whether you'll be happy in 12 months are often buried in clauses you didn't read carefully.

Before you sign, make sure you've asked — and gotten clear answers to — these eight questions.

1. What's Actually Included in the Base Fee?

Some contracts include everything in a fixed monthly fee. Others charge separately for meetings, additional inspections, after-hours callouts, and contractor coordination. Neither approach is wrong, but you need to understand which you're signing up for.

Get a complete list of what's included and what's charged as extras. Compare total expected costs, not just base fees. The cheapest base fee often comes with the most expensive extras.

2. How Many Buildings Will My Manager Be Responsible For?

A building manager spread across 8-10 buildings can't give any of them proper attention. Industry research suggests 3-5 buildings per manager allows for genuine proactive management.

Ask for a specific number, not a vague assurance. If the answer is 'it depends' or 'we manage workload flexibly,' that's usually code for 'as many as we can get away with.'

3. What Happens When My Manager Leaves?

Building manager turnover in the industry is high — one industry source suggests an average tenure of just 7 months. When your manager leaves, what's the transition process?

Good contracts specify handover periods, documentation requirements, and how institutional knowledge will be transferred. Bad contracts leave you starting from scratch with each new manager.

4. What Are the KPIs, and How Are They Measured?

Contracts often promise 'professional service' or 'responsive management' without defining what that means. What specific, measurable standards will the manager be held to?

Look for response time commitments (e.g., 24-hour acknowledgment), reporting frequency requirements, inspection schedules, and compliance tracking obligations. If there are no measurable KPIs, there's no accountability.

5. What's the Termination Process?

Hopefully you won't need to end the contract early, but if you do, what's involved? Some contracts have lengthy notice periods (90 days or more), exit fees, or complicated procedures.

Understand the termination terms before you sign. A contract that's difficult to exit creates leverage imbalance — the manager knows you're stuck, which reduces incentive to perform.

6. How Are Contractors Selected and Managed?

Does the building manager use their own panel of contractors, or can the committee direct who to use? How are quotes obtained? Who verifies insurance and licenses?

Some managers have preferred contractor arrangements that may not offer best value. Understand how contractor relationships work and what oversight you'll have over spending.

7. What Insurance and Indemnities Apply?

The contract should specify the manager's professional indemnity insurance coverage. It should also clearly define liability limits and indemnification obligations.

If something goes wrong due to manager negligence, what protection does the committee have? Don't assume standard industry coverage is adequate — check the specifics.

8. What Reporting Will We Receive, and How Often?

Get specific commitments on reporting frequency and content. Weekly updates? Monthly reports? What information will be included?

Good reporting should cover work completed, compliance status, issues identified, contractor activity, and budget tracking. If the contract doesn't specify reporting obligations, don't expect to receive meaningful reports.

The Bottom Line

The best time to negotiate contract terms is before you sign. Once the contract is executed, you're working within whatever terms you agreed to.

Take the time to read the full contract, not just the summary. Ask questions about anything that's unclear. Push back on terms that don't seem reasonable.

A building management company that's reluctant to clarify contract terms or negotiate reasonable modifications might not be the partner you want for the next three years.

How does your building management measure up?

Take the free Building Management Scorecard to assess your current management against the standards that actually matter.

https://dino-p8buwtjz.scoreapp.com

Sources & References

• Accord Property: Building Management Services — industry turnover data (7-month average tenure)

• Macquarie Bank 2023 Strata Benchmarking Report — staff turnover rates in strata management

• Strata Community Association NSW — contract best practices guidelines