Supplier Vetting: How Body Corporate Contractors Are Selected, Checked and Monitored

Q: Can a trustee recommend a contractor they know?

Yes, provided the contractor goes through the same vetting and quotation process as any other supplier. Any personal or financial interest must be disclosed.

01

What Is at Stake

Who is appointed, and how those appointments are made, has a direct impact on:

The quality of workmanship
The safety of residents and visitors
The financial health of the scheme

Regulatory compliance
Owner satisfaction and confidence

Poor supplier selection is one of the most common causes of owner complaints, repeat repairs, budget overruns and governance disputes. A structured supplier vetting process helps protect the body corporate from unqualified contractors, unfair pricing, payment fraud and conflicts of interest.

Most importantly, it gives trustees a clear and defensible record explaining how every supplier was selected and why a particular appointment was made.

02

The Short Answer

Good supplier management follows four key stages:

1

Vet

Register suppliers and verify their credentials before they are invited to quote.

2

Quote

Obtain comparable quotations against a clear written scope of work.

3

Approve

Assess quotations and appoint suppliers through the appropriate approval process.

4

Monitor

Track performance, inspect completed work and maintain supplier records.

Every stage should leave a documented audit trail. If owners ever ask why a contractor was appointed, trustees should be able to provide a clear explanation supported by records.

03

Why Supplier Vetting Matters

Contractors work on common property, interact with residents and spend money belonging to the body corporate. Without proper controls, schemes can be exposed to:

Poor workmanship
Safety incidents
Inflated pricing
Delays and cost overruns
Insurance complications

Procurement disputes
Undisclosed conflicts of interest
Banking-detail fraud
Unqualified contractors performing regulated work

Trustees occupy a fiduciary position in terms of section 8 of the Sectional Titles Schemes Management Act (STSMA) and must exercise reasonable care and diligence when administering scheme funds.

A documented procurement process forms part of good governance and demonstrates responsible stewardship of owner contributions.

04

Step One: Supplier Registration

Supplier vetting should begin before a contractor is ever invited to quote. Every supplier should first be registered and screened.

Services and Areas Covered

The supplier should clearly indicate:

Services offered
Geographic areas covered
Emergency response capability
Staffing and operational capacity

Understanding a supplier’s capabilities helps ensure they are suitable for the required work.

Required Documentation

Appropriate registration documents generally include:

SARS tax compliance status confirmation
CIPC registration documents
VAT registration documentation (where applicable)
Identity documentation for sole proprietors
B-BBEE certificates if relevant

Contractors that cannot provide basic registration documentation should raise immediate concerns.

Supporting Documentation

Additional documents may include:

Reference letters
Company profiles
Project portfolios
Trade certifications
Insurance certificates

These documents help trustees assess experience, capability and track record.

Banking Verification: A Critical Anti-Fraud Control

Suppliers should provide a bank confirmation letter and proof of account ownership.

Any future request to change banking details should always be independently verified before payment is processed. Many payment fraud incidents begin with fraudulent banking-detail changes.

05

Step Two: Supplier Vetting

Registration gathers information. Vetting confirms whether that information is accurate, current and suitable for the proposed work.

Business Verification

Trustees or the managing agent should verify:

Registration details
Director information
Tax compliance
VAT registration where applicable

The business should be exactly what it claims to be.

Reference Checks

Past performance is one of the strongest indicators of future performance. Reference checks should assess:

Work quality
Reliability
Communication

Time management
Cost control
After-sales support

Where possible, references should include other sectional title schemes or homeowners associations.

Insurance Verification

Contractors working on common property should maintain appropriate insurance. Depending on the nature of the work, this may include:

Public Liability Insurance

Protects against third-party injury and property damage claims.

Professional Indemnity Insurance

Relevant where professional advice, certification or design services are provided.

COIDA Compliance

Contractors employing staff should be able to demonstrate compliance with the Compensation for Occupational Injuries and Diseases Act.

Insurance documentation should be reviewed regularly and renewed documentation obtained when policies expire.

Trade Registrations and Certifications

Certain trades require specialist qualifications or registrations. Examples include:

Electrical Contractors

Should be properly registered and capable of issuing a valid Certificate of Compliance (CoC).

Plumbers

Ideally registered with the Plumbing Industry Registration Board (PIRB) and capable of issuing plumbing compliance certificates where required.

Gas Installers

Should be registered with SAQCC Gas and authorised to issue gas certificates of conformity.

Security Service Providers

Should hold valid registration with the Private Security Industry Regulatory Authority (PSIRA).

Failure to verify trade credentials may expose the body corporate to legal, insurance and safety risks.

06

Conflicts of Interest Must Be Declared

Procurement decisions should always be transparent. Conflicts of interest may arise when:

A trustee owns or has an interest in a supplier
A family member is involved

A business associate is bidding for work
A personal relationship exists between a decision-maker and supplier

This does not automatically disqualify the supplier. However:

The relationship should be disclosed
The disclosure should be recorded in the minutes
The affected trustee should not participate in the decision

Transparency protects both the body corporate and the trustee concerned.

07

How Suppliers and Contractors Are Selected

Once suppliers have been vetted, a structured quotation process should be followed.

1

Define the Scope

Before obtaining quotations, a written scope of work should be prepared. This should include:

Work requirements
Materials and specifications
Standards required
Timeframes

Site access arrangements
Compliance obligations
Certification requirements

Without a consistent scope, quotations cannot be compared fairly.

2

Obtain Quotations

Quotations should be obtained from appropriately vetted suppliers. For significant non-routine work, obtaining three comparable quotations is widely regarded as good governance practice. Exceptions may apply where:

Emergency repairs are required
Specialist services are involved
Only one suitable supplier exists

Where fewer quotations are obtained, the reason should be documented.

3

Compare Quotations

Trustees should evaluate more than price. Factors to consider include:

Total cost
Scope of work
Exclusions
Materials
Timeframes

Guarantees
Warranties
Insurance
References
Experience

The cheapest quotation is not necessarily the best value.

4

Recommendation

The managing agent may prepare quotation comparison schedules, supplier evaluations and recommendations. However, it is important to understand that:

A managing agent does not approve expenditure simply because it is budgeted
The managing agent acts on the authority delegated by the trustees
Even routine expenditure within the approved budget is performed in accordance with authority granted by the trustees through the management agreement, a trustee resolution or approved operating procedures

The managing agent may recommend.

The trustees decide.

08

How Appointments Are Approved

The approval authority depends on:

The nature of the work
The cost
The approved budget

Trustee authority limits
Legislative requirements

Routine budgeted work

Delegated to the Managing Agent

Routine repairs and maintenance may be administered by the managing agent where trustees have expressly delegated authority in writing.

The authority originates from the trustees. The managing agent does not independently approve expenditure.

Larger or non-routine work

Trustee Approval

For significant projects, trustees should:

Review quotations
Consider recommendations
Approve the appointment
Record the decision in the minutes

Emergency work

Pre-Approved Emergency Authority

Emergency repairs necessary to prevent injury, further damage or service interruption may be authorised in accordance with pre-approved emergency authority limits.

Trustees should be informed as soon as possible and the expenditure should be formally ratified.

Where the law requires it

Member Approval

Certain expenditure may require owner approval in terms of the STSMA, the Prescribed Management Rules or the registered scheme rules.

Trustees cannot override these requirements.

09

Monitoring Supplier Performance

Appointment is only the beginning of the process. Supplier performance must be monitored throughout the contract.

During the Work

Good monitoring practices include:

Site inspections
Progress reports
Photographic records
Written approval of variations
Safety compliance reviews

Any changes to scope or pricing should be approved before the work proceeds.

Completion and Final Payment

Before releasing final payment:

Work should be inspected
Defects should be identified and corrected
Compliance certificates must be obtained
Guarantees and warranties should be received
Invoices should be checked against approved quotations

Payment controls help protect the body corporate from defective work and billing disputes.

Ongoing Service Contracts

For recurring services such as security, cleaning, gardening, pool maintenance and waste management, trustees should regularly review:

Service levels
Attendance
Complaint logs
Reporting quality
Contract performance

Poor performance should be documented and addressed promptly.

The Supplier File

Each supplier should have a documented performance history containing:

Registration documents
Insurance records
Quotations
Approval records

Contracts
Complaint history
Performance reviews
Expiry dates for compliance documents

These records assist future procurement decisions.

10

Warning Signs in the Procurement Process

Trustees and owners should seek clarification when they observe:

One supplier receiving all work without competition
Related businesses submitting multiple quotations
Work commencing before approval
Repeated cost overruns

Missing insurance documentation
Frequent banking-detail changes
Undisclosed conflicts of interest
Persistent defects

These circumstances are not necessarily improper, but they should always be explained and documented.

11

Questions Owners Can Ask

Owners are entitled to understand how body corporate funds are spent. Useful questions include:

How are suppliers vetted?
How many quotations were obtained?
Who approved the appointment?
Is the contractor appropriately insured?
Is the contractor properly qualified?
How is performance monitored?
Were any conflicts of interest disclosed?

A transparent procurement process should answer these questions easily and provide supporting documentation where appropriate.

12

Frequently Asked Questions

How many quotations should a body corporate obtain?

The STSMA does not prescribe a specific number. Obtaining three comparable quotations for significant non-routine work is widely recognised as good governance practice.

Can a trustee recommend a contractor they know?

Yes, provided the contractor goes through the same vetting and quotation process as any other supplier. Any personal or financial interest must be disclosed.

Who checks insurance and compliance documents?

The managing agent often collects and reviews documentation, but trustees should satisfy themselves that appropriate verification has taken place, particularly for higher-risk work.

Why isn’t the cheapest quotation always accepted?

Price is only one consideration. Quality, scope, guarantees, qualifications, insurance and experience all contribute to overall value.

What happens if a contractor performs poorly?

Defects should be corrected, warranties and guarantees enforced where appropriate, and performance recorded for future procurement decisions.

13

Conclusion

Suppliers and contractors influence the safety, appearance, maintenance standards and financial performance of every sectional title scheme.

A structured process that includes supplier registration, vetting, quotation comparison, appropriate approval and performance monitoring helps protect owner contributions, improve outcomes and strengthen governance.

Most importantly, it provides trustees with a clear and defensible record explaining how procurement decisions were made.

Good procurement is not about appointing the cheapest contractor. It is about appointing the right contractor, for the right reasons, through a transparent process that owners can trust.