Academy/Working With Professionals
Managing professional fees
A lower quote does not always mean a lower cost.
Compare fee structures, not totals. A written engagement letter that defines the scope of work, and what triggers charges beyond it, protects the board more than picking the lowest number. Competitive bidding rules often exempt professional services entirely, and even where bidding applies, the board is never required to accept the lowest bid.
Compare structures, not totals
Two quotes for the same job rarely mean the same job. Ask each professional whether they charge by the hour, a flat fee for defined work, a percentage of a transaction, or a contingency tied to results, then compare those structures against each other, not the bottom line.
The distinction matters even inside a single profession. A CPA quoting a low number for a "compilation" is not competing with a CPA quoting more for a "review." A compilation carries no assurance that the financial statements are accurate, while a review adds a defined, higher level of assurance on top of that baseline. The cheaper number is not a discount on the same work, it buys less scrutiny of your own books.
"To apply accounting and financial reporting expertise to assist management in the presentation of financial statements... without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements."
Source: A bright line in SSARSs, Journal of Accountancy (AICPA)
Put the scope in writing
A verbal understanding of what a professional will do is not a defense of anything; a written engagement letter is. Before work starts, get a scope of work specific enough that both sides can tell when it is finished, and ask directly what falls outside it and what that costs.
Architects' own industry contracts model this well. Standard owner-architect agreements separate basic services, included in the base fee, from supplemental and additional services that are named and priced on their own. Whatever profession you are hiring, ask for that same structure: one price for the defined job, and a clear, written answer for what triggers a charge beyond it.
"Services listed are divided into basic, supplemental, and additional services."
Source: B-Series Owner/Architect Agreements guide, American Institute of Architects
Bidding rules do not always cover professionals
Boards often assume that collecting three bids is required, and always the safest move. Neither is universally true. At least one state's competitive bidding statute exempts attorney, accountant, architect, community association manager, engineering, and landscape architect contracts from its bidding requirement outright, alongside emergencies and sole source vendors.
Whether your state requires competitive bidding for professional contracts at all, and which professions are exempted, varies by state and by your governing documents. Check your declaration, bylaws, and state statute before assuming a bid process is mandatory. And even where bidding does apply, collecting bids does not obligate the board to pick the cheapest one.
"Contracts with employees of the association, and contracts for attorney, accountant, architect, community association manager, timeshare management firm, engineering, and landscape architect services... nothing contained herein shall be construed to require the association to accept the lowest bid."
Source: Fla. Stat. Section 718.3026, Florida Legislature
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
Two accounting firms quote for the year-end financials. One quotes $2,000 for a "compilation." The other quotes $6,000 for a "review." What should the board do first?
A Florida board hires an architect without collecting competitive bids, even though the contract exceeds 5 percent of the annual budget. Is this a problem?
A collection attorney bills an extra $400 because a routine account was "escalated," but nothing in writing describes what escalation means. What should the board have done first?
Sources
- Fla. Stat. Section 718.3026, competitive bid requirements, Florida Legislature
- A bright line in SSARSs, Journal of Accountancy (AICPA)
- B-Series Owner/Architect Agreements guide, American Institute of Architects
Related elsewhere in the Academy
Working With Professionals
Once the fee structure is settled, the next question is what the engagement itself should promise: see Professional scopes of work.
Whether competitive bidding applies to professional contracts, and which professions are exempted, varies by state and by your governing documents.