Red flags of bid-rigging in building renovation
Is the aged building you live in going to undergo major renovation soon? Are you worried about bid-rigging and bribery in the process? Is the cost proposed by your management committee (MC) or estate management office (EMO) way higher than what you expected? Have you been invited to serve on the MC because you are a professional of some sort but building works isn’t your field and you are struggling whether to serve?
These are some of the concerns raised by many friends and contacts over the past decade.
There are many useful guides issued by various authorities, some of which have included some signs of bid-rigging, but not nearly enough. Here are some more down-to-earth red flags that you may want to look out for (they do not necessarily mean that bid-rigging/bribery is taking place, but would be a cause for alarm especially if a few occur at the same time):
A relatively new flat owner is unusually keen to participate in the MC, makes suggestions and tries to influence decisions in building renovation matters. (A syndicate may arrange a member to buy a flat in a building with major renovation on the way, so as to become an owner and exert influence in the process).
Someone such as an owner/tenant or his contact claims he has experience or contacts in the field, recommends a good consultant/contractor who can charge a ‘friendly’ price, and makes suggestions not to follow proper procedures.
Someone from nowhere suddenly appears very friendly and tries to approach and offer various “jet-so’s” to MC members and the Chairman.
Some MC members become acquainted with those someone and always support their views.
A bidder for the project consultancy offers a very low lump-sum price, giving reasons such as treating the project as a service for the community/neighbourhood, being a good friend of someone, etc. (The first thing a syndicate wants to do is to secure the project consultancy contract, after which the consultant can manipulate the rest of the processes. A more realistic pricing to ensure service quality should normally be based on the project scale which can be reflected by the total estimated project cost.)
The MC or EMO secretly appoints the project consultant without engaging other building owners, and involve other building owners only at the latest stage possible.
In a bid evaluation process, a few MC members, EMO staff and/or consultant strongly support a particular bidder, and criticize competitors with a higher score or lower bid with artificial reasons outside the scoring criteria (e.g., heard about poor performance elsewhere, ongoing lawsuit).
The MC, EMO and/or consultant provide various reasons to support the desired bidder/contractor’s proposed way-higher price (compared to the cost estimate provided by the URA’s consultant or other bidders), such as URA’s estimate is unrealistic and would result in a low quality, higher quality materials are proposed).
The MC refuses to disclose documents/records for examination by other building owners.
The MC/EMO or some MC members strongly object to adopting certain good practices or using URA’s Smart Tender service with unconvincing reasons.
The MC/EMO does not make a strong effort to encourage owners to participate in the voting personally but instead only tries to obtain a large number of proxy authorizations from the owners, and the vote counting is not transparent.
To better manage your building’s renovation project, I recommend visiting URA’s Building Rehabilitation Platform for their integrated, comprehensive guides and services.
