To Hire a Project Manager or Not? That Is the Question for Your Condo/HOA

March 2025

Tags: HOA Cost-Cutting Tips, Contracts

Some contracts with community association managers include a provision saying they'll charge extra to manage large projects. And those fees can add up.

But let's back up a bit: What types of condo/HOA projects do you really need to hire a project manager to oversee? And is your community association manager the best expert to hire? If not, how do you find the right person to handle this work? And finally, what's a fair price for project management?

Here's the skinny.

Start by Being Careful with Your Management Contract

All kinds of factors will be part of your evaluation of whether to hire an independent project manager when you're doing work like replacing your roof, renovating your clubhouse, or repaving the vast network of streets in your community.

“It depends on the project, whether your association is professionally managed, and what your contract with your manager looks like,” says Lydia Chartre, CCAL, a partner at Kaman & Cusimano in Milwaukee who represents 750-800 associations throughout Wisconsin. “For many communities, their management contract addresses the management of larger contracts and how the manager would bill for that. It's usually an hourly rate or a fee, and that's the become the norm. But I haven't seen any exclusive contact language that you must use the manger.”

Thomas W. Chaffee, a partner at O'Toole Rogers LLP in Lafayette, Calif., who, after he became the president of his own HOA, began to focus more on community association work in his legal practice, has—and he tries to knock those out of any contract before his association client signs. “When I'm reviewing management contracts for condos and HOAs, I try to take out provisions that say, ‘On a contract of a certain size, you have to use the property management company to manage the project,'” he says. “I think it helps to have a third party do that work.”

What to Consider as You Decide

If you're not required to choose your community association manager to be the person who oversees your capital projects, what should you consider in determining whether to hire a third party or sticking with your community manager? We'll get to Chaffee's strong advice on hiring a third party in a hot minute. First, our other experts do some weighing of your options.

“It boils down to two things,” according to Molly Peacock, counsel at Rees Broome in Tysons Corner, Va., who has represented condos and HOAs for 17 years. “Expertise and time.”

When Peacock talks about expertise, she means that oversight of some projects requires expertise that you as a board or that your property manager might already have on hand. “Presumably, a community association has a management team,” she explains. “And many times, there's a member of that team who's expert enough on the project management of a major capital management project. So they have the qualifications to oversee that project.

“Examples of those projects are the renovation of a clubhouse, a major renovation of a swimming pool, a major renovation of a building or any aspect of a physical plant, like a roof,” she explains. “Sometimes a roof can be done without a project manager, but that's a judgment call.”

Peacock also says the cost of a project can be a good marker for identifying when you need an independent project manager. “If it's $150,000 or more, that's kind of a factor that suggests maybe it needs its own project manager aside from your own community manager,” she says. “On a project that size, your board and management may not know the questions to ask and how to evaluate whether the project is going well or poorly.”

In terms of time, Peacock says your management contract may include an hourly charge for project management, and it may be reasonable for your management company to be paid for that time. “Managing a contract of a certain size requires a lot of work over and above regular community management,” she says.

Michael Kim, of counsel at Schoenberg Finkel Beederman Bell Glazer in Chicago, who represents about 500 associations, agrees that expertise and cost are important factors to consider.

“Property managers inherently have some coordination and management skills they deploy from time to time,” he says. “But if you have a major project that involves coordinating tradespeople, parking their vehicles, storing their materials, and so on, that starts to go up the ladder in terms of skills needed.

“I typically see management contracts that say that if there's a major capital project that the board wants the manager to be involved in, and that's going to require more than the normal work and coordination of day-to-day property management, the management company will charge a fee of 2-5 percent of the project contract,” he adds. “That can be rather substantial. But in my experience, 15 percent would be closer to the fee of a professional project manager.

“A board will probably use the management company to manage capital projects if the work is scheduling and coordination between the residents, the contractor, and the board,” says Kim. “And in my experience, it's really rare for boards to hire a professional project manager.

“But I have seen them economize, so to speak,” he notes. “The management contract says they'll charge a percentage basis for the work. The board says, ‘We don't want to pay 2 percent of the contract price for that.' So the board will hire some other person at an hourly rate who's assigned to deal with low-end activity like coordination.”

What to Ask Your Manager and a Third Party

It's possible your manager may be a perfectly fine choice. But you need to ask questions first to determine if that's the case.

“With any contractor, it's very important to thoroughly vet and review the contractor,” says Peacock. “What I'd do is try to understand what the project is. Let's say it's a major renovation, such as a full-scale, comprehensive renovation of a building, say a clubhouse. The manager might say, ‘Yes I can do that extra job for such-and-such an hourly rate.'

“I'd ask questions that would be appropriate for any project manager candidate,” she suggests. “I'd ask: What's your background in managing a project of this scope and size? What skills do you bring? What would you look for that I wouldn't know to look for?”

Chartre says the cost of the project management is certainly a factor to evaluate. “What's the manager's rate compared to what it might cost to hire an outside project management company?” she asks. “If it's a very complicated construction project where architects are involved, that might be the time to look outside your manager.

“There are people who do this project management work, and that's all they do, yet property managers are pulled in many directions,” adds Chartre. “If it's just a number of contractors to coordinate, the manager may be the way to go because, if you compare the hourly rates of your manager and a third-party manager, that may be a better financial choice.”

This may seem like it doesn't need to be said, but Peacock speaks from experience when she adds that, if you hire a third-party project manager, you should make sure you get the agreement in writing and that it's signed by the right people. “Sometimes I'm pulled into a situation where there's no contract at all, which drives up the cost of resolving dispute,” she says. “The indemnification clauses are important to address, and you need to make sure you can get out of the contract. In fact, that's advice I'd give clients related to any contract $1,000 or more.”

The Argument for Outside Help

As we noted, Chaffee is an advocate for third-party project managers, particularly because he's seen them save community associations big bucks.

“I start the conversation with boards by saying, ‘The fact that you're coming to me speaks to the need for a third-party project manager,'” he says. “A good one will ultimately save the association money because you'll have a third party to advocate for the association and to watch what the contractor is doing.

“In my career, I started out representing design professionals, then represented contractors, and then owners,” says Chaffee. “I started to see the games that can be played with, for example, a change order in a construction or renovation contract.

“I have an association client where I brought in a project manager because they had a contractor who was telling the building department they were fixing things,” he explains. “The building had substantial water intrusion. It was an old project built in the late 1970s, and it was at the end of its useful life with exterior finishes. Then there were heavy rains, which caused lots of water intrusion.

“The association hired a contractor to figure it out and fix the problems,” says Chaffee. “We came to believe the contractor was using the building department to increase the scope of the job. For instance, the building department would come in to try to determine the extent of framing that was needed. The building department and the contractor were both saying entire walls needed to be done.

“The building is three stories tall, and they were always choosing what I'd describe as the Cadillac repair, which was essentially rebuilding the building,” he states. “I told the board, ‘You need a project manager,' and they took my advice.

“I told the project manager, ‘I need you there every time the building department is on site,'” recalls Chaffee. “She started going to the inspections with the building department. She'd say things like, ‘I don't think we need the whole wall replaced. We can stop here, where there's no evidence there's leaking, do water testing on the rest, and go from there.'

“She has saved the association $100,000 by now, and we know there will be larger projects in the future,” he says. “At the end of the day, I think she'll have saved the client hundreds of thousands of dollars. “She's able to talk down the scope of the work and to save costs. If the scope of the work you're doing isn't known, I think it's time to hire a project manager.”

Chaffee also believes an independent third party can help owners understand why your community needs a special assessment or bank loan. “The project manager can often explain the work in a way the manager can't,” he says. “Before we get to a vote on a special assessment, I suggest to boards that they have at least two informational town hall meetings so everyone knows why this is happening.”

Chaffee says he's seen project managers make the case for both the contractor and the special assessment with a truthful explanation of their role and their track record. They're telling owners at town halls: “This is what I do. I help associations manage large projects and coordinate many contractors. It's my job to advocate for and to protect you. I don't make more money if there are change orders. This is what I've done for other associations in the past. And this is why I believe the board has chosen a good contractor.”

“I've seen project managers really sharing good expertise,” says Chaffee. “That then starts to create confidence among the membership that the board is looking out for them on the project and on the special assessment—that no matter how painful it is, the board is working in everyone's best interest.”

Reposted from HOALeader.com

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Housz, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Housz, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

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