Managing Vendors and Contractors in a Building — 8 Costly Mistakes and How to Actually Prevent Them

I manage an office building, and over the years I have seen that almost every operational headache — a fire approval not renewed in time, an elevator out of service exactly on the day an important client is in the building, a maintenance bill that swelled with no reasonable explanation — begins and ends in the same place: vendor management. Not in technology, not in "bad luck," but in the way the building interacts with the contractors and vendors that maintain it. In Israel it is customary to choose a vendor by price and by whoever is available this week, and to trust that they "know what they're doing." This is exactly the approach that produces the biggest expenses and the most serious risks. In this article I will break down the eight most common mistakes — and explain, from direct experience, how to prevent each one.

Why Vendor Management Is the Heart of Building Management

A building manager does not personally maintain the chiller, the main electrical panel or the fire pump. All of these are done by vendors and contractors. The meaning is simple: your building's level of maintenance equals exactly the level of your vendors — and the level of oversight you exercise over them. You can hold the best standards in the world and write a perfect maintenance plan — if the vendor does not perform it properly and no one checks, all of it stays on paper.

The basic mental mistake is to see a vendor as "someone you call when something breaks." A good vendor is a long-term partner who knows your systems, documents their history and warns before disaster strikes. The gap between these two conceptions is the gap between a building that functions and a building that bleeds money and constantly responds to fires — sometimes literally.

In practice, an average office building works with between ten and thirty different vendors and service providers: elevators, electricity, air conditioning, plumbing, fire suppression, fire detection, generator, gardening, cleaning, security, monitoring, BMS and more. Managing all of them correctly, simultaneously, over years — is not trivial. The mistakes detailed below are the ones I see repeating themselves again and again, even in well-managed buildings.

Mistake 1: Choosing a Vendor Only by the Lowest Price

This is the first mistake, the most common, and the one that produces all the rest. A vendor who gives a quote significantly cheaper than the competitors is not doing it out of generosity — they are cutting corners on quality, on the frequency of visits, on manpower, on the parts they replace, or on their insurance coverage. In maintenance, what you don't pay for up front you pay for later, doubled: a breakdown fault instead of preventive maintenance, replacing an entire system instead of a targeted repair, a regulatory fine for an expired approval.

I once tried to replace an air-conditioning vendor with a cheaper one. Within half a year it emerged that he would arrive, sign a "completed" form and leave within twenty minutes — work that was supposed to take an hour and a half. The chiller was not properly maintained, and we discovered this when it collapsed at the peak of summer. The cost of the emergency repair, including the Saturday labor, was more than the entire annual saving on the vendor's cost.

A proper quote is measured by what is included in it, not by the bottom line. Two quotes for "elevator service" can look identical and be worlds apart: one includes a monthly visit, wear parts, 24/7 emergency-call availability and a licensed-inspector inspection — and the other includes only a quarterly visit, with every part being an addition to the bill.

How to prevent it: draft a uniform specification that defines exactly what you require, and ask all the vendors for a quote on the same basis. This way the comparison becomes fair and the price becomes a real metric — not the sole reason for the choice.

Mistake 2: Working Without a Written, Detailed Contract

"We agreed on the phone" and "he's a veteran vendor, we trust him" are the classic prelude to a dispute. Without a written contract, there is no definition of what is included and what is not, what the frequency of visits is, what the response time for an emergency call is, who is responsible for parts, and what happens when something goes wrong. When an incident arrives — and it always does — each side remembers something different, and the building owner is the one left exposed.

A proper maintenance contract includes, at the very least:

• The exact scope of service — what is inspected, how often, and what is and is not included.
• Binding response times (SLA) — for faults by severity: critical, high, normal.
• Responsibility for parts and labor — who buys, who installs, what the warranty on the part is.
• Insurance certificates and professional liability coverage — valid, with the required amounts.
• A commitment to documentation and to delivering reports — what is delivered, when and in what format.
• Renewal of statutory approvals — a commitment to renew on time, with a contractual sanction if not.
• An orderly exit mechanism — advance notice, overlap, delivery of all documentation.

How to prevent it: do not sign the vendor's version as-is — their version was written to protect them. Insert the clauses that protect you. An experienced managing party holds tested versions that have already been through several contract cycles.

Mistake 3: Not Verifying Licensing, Certifications and Insurance

A large portion of the work in a building requires a specifically qualified professional. Under the occupational safety regulations and the requirements of Israeli regulation — not an "electrician" in general, but a holder of an electrician's license appropriate to the type of work and the voltage; not an "elevator technician" but a licensed inspector for the periodic inspection; not an "air-conditioning person" but a party authorized for the purpose of approving smoke systems for the fire authority.

Work performed by someone who is not qualified may be unlawful, uninsured, and may disqualify an insurance claim after an incident — even if the damage occurs months later and has no direct connection to the specific work. An inspector from the Ministry of Labor who arrives at the building after an accident will first ask: who performed the work? Are they qualified? Where are the approvals?

The second layer of protection is the vendor's insurance. If a contractor is injured in your building or causes damage to a third party, and they have no valid professional and third-party liability insurance — the liability may spill over to you. A valid certificate of insurance (COI) is a threshold condition, not a technical paper.

• Licenses: make sure the license fits exactly the type of work, not just the general field.
• Certifications for statutory inspections: a licensed inspector for elevators, an authorized party for electrical and grounding inspections, a recognized installer for fire detection and suppression systems.
• Certificate of insurance: valid, with the appropriate amounts and coverages, renewed annually.
• Occupational safety: work at heights, in confined spaces or with voltage — in accordance with the occupational safety regulations.

How to prevent it: keep a vendor file for every contractor with copies of the licenses, certifications and insurance, and an expiry date for every document. A document that has expired — the vendor does not enter the building until it is renewed. No exceptions.

Mistake 4: Paying for a "Visit" Without Demanding a Report and Documentation

This is a quiet but expensive mistake. The vendor arrives, "does a service," has you sign off and charges. But what exactly was done? What findings were there? What was replaced? What requires follow-up? Without a written report, you are paying for presence, not maintenance — and you have no proof whatsoever that the work was performed when an inspector, an auditor or an insurance company arrives.

From experience: a contractor who knows they are not being checked — cuts corners. A visit that is supposed to include eight inspection points ends in three. It is not always malicious; sometimes it is simply time pressure. But your building pays for eight points and gets three.

A proper service report includes: date and time, the performer's name and certification, a list of the actions performed, findings and defects, parts replaced, and recommendations for follow-up. This report is your asset — it builds the system's history, allows you to identify recurring problems, and constitutes your first legal defense after an incident. Israeli Standard (SI) 1525 for building maintenance defines principles of maintenance documentation — and warranty checks begin exactly there.

How to prevent it: make the delivery of the report a condition for payment. No report — no approved invoice. Within two months all your vendors will learn this rule.

Mistake 5: The Absence of Oversight of the Actual Performance

You signed an excellent contract, the vendor is qualified and insured, and they even send reports. And yet — who checks that what is written in the report was actually done, and done properly? A contractor knows very well whether the person facing them is a party who understands the system and checks, or a client who signs off without looking. Oversight is not a lack of trust — it is an inseparable part of the role. A good vendor actually appreciates a client who understands, because it produces fair work for both sides.

Effective oversight does not require being an engineer in every field. It requires knowing which questions to ask, checking that the approvals are being renewed, physically reviewing the work from time to time, and cross-referencing what is in the report with what you see in the field. A simple question like "what is the condition of the filters?" after an air-conditioning visit — and the vendor knows you are checking. That alone changes the nature of the work.

How to prevent it: set fixed control points — a monthly review of what was done and what is approaching expiry, and a sample physical inspection. A single managing party that holds the full picture is the best protection against "work on paper."

Mistake 6: A Multitude of Vendors with No Party That Centralizes

A typical building maintains dozens of systems: electricity, air conditioning, elevators, fire suppression, fire detection, plumbing, cleaning, gardening, security and more. The common mistake is to hold a separate vendor for each of them — without anyone holding the full picture. Each vendor handles their part, but the overall schedule, the cross-references between systems, and the tracking of approvals fall between the cracks.

The classic example: an annual fire approval depends on an integrity inspection of the fire-suppression system, an inspection of the fire-detection system, an inspection of the passages and emergency exits, and sometimes also an electrical inspection. Each of these inspections is a different vendor. If there is no party that centralizes, each vendor schedules for themselves — and sometimes it emerges that one of the inspections does not fit the time window of the approval renewal.

In addition, duplicate work and gray areas are created: "I thought he was responsible," "I did coordinate with the one before." Each vendor assumes the other is handling it.

How to prevent it: you can work with separate expert vendors — that is even preferable — but there must be a single managing party that centralizes all of them, holds the overall schedule, and ensures no approval falls. This is exactly the role of comprehensive property management.

Mistake 7: Reactive Budget Management Instead of Planned

When there is no pre-budgeted maintenance plan, every expense looks like a "surprise" and every vendor looks expensive. A building owner who manages a reactive budget pays for breakdown faults — which are always more expensive than prevention — and struggles to plan or compare between vendors, because they have no basis for comparison.

Planned maintenance turns the expense into something predictable: you know what is needed, when, and for how much — and therefore you can negotiate from a position of knowledge rather than pressure. When a vendor calls and says "the boiler must be replaced this week," and you don't know the boiler's age and when it is supposed to be replaced according to a maintenance schedule — you pay the price they ask.

This is also where proper vendor management saves the most money — not by squeezing a lower price, but by preventing expensive faults, extending the life of the systems and eliminating duplicate work.

How to prevent it: build an annual budgeted maintenance plan for all the systems. When the budget is known in advance, you manage the vendors — not chase after them.

Mistake 8: No Exit Mechanism — Held Captive by a Vendor

A vendor who knows you are completely dependent on them loses the incentive to improve. This happens especially when the vendor exclusively holds the documentation, the access codes to the control system (BMS), or the operational history — and then replacing them becomes a nightmare. A building owner who does not hold an independent copy of their own information is, in practice, a hostage.

I encountered a building where the BMS was programmed by one vendor, and there was no documentation accessible to the building itself. When the building wanted to replace the vendor, it emerged that there was no way to access the system without the passwords the vendor held — and the "release" attempt cost more than several years of contract. This is not an accident; it is a method.

The same principle applies to any system that requires unique knowledge — elevators, generators, access-control systems. Documentation continuity is critical, and ownership of it is yours — not the vendor's.

How to prevent it: demand in the contract that all the documentation, access codes and operational history are your property and available to you at any time. An orderly exit mechanism with an overlap period is a contractual condition, not a polite request.

The Link Between Vendor Management, Safety and Personal Liability

It is important to understand that these mistakes are not just a financial matter. When an unqualified vendor performs electrical work, when a fire-suppression system is not properly maintained, or when a licensed-inspector elevator inspection expires — these are life-safety risks and an exposure to personal liability of the building owner and their manager.

Israeli law — including the Civil Wrongs Ordinance, the Business Licensing Law, the occupational safety regulations and the requirements of the National Fire and Rescue Authority — places the responsibility for proper maintenance and safety on whoever holds and manages the property, not on the contractor alone. "I hired a vendor who was supposed to handle it" is not a sufficient defense when an investigation arrives.

In other words: you can delegate the execution, but not the responsibility. And therefore rigorous vendor management — contract, approvals, documentation and oversight — is not bureaucracy; it is your practical protection.

A Quick Checklist for Proper Vendor Management

• Before engagement: a uniform specification for comparison, verification of license and certification, a valid certificate of insurance, references from similar buildings.
• In the contract: an exact scope, response times (SLA), responsibility for parts, a commitment to documentation and to renewing approvals, an exit mechanism and ownership of the information.
• On an ongoing basis: a written report as a condition for payment, a monthly review of performance and expiries, a sample physical inspection.
• In the overall view: a single party that centralizes all the vendors and holds the schedule, the approvals and the documentation in one place.

None of these items is complicated in itself. What makes it complicated is doing all of them, for all the vendors, over years, without a single detail falling. That is exactly the difference between management that responds and management that prevents — and it is the heart of our work.

At Domera we manage the entire web of the building's vendors and contractors in one place — contracts, approvals, reports and a centralized schedule — so that no approval falls and no cost goes out for nothing. To schedule an initial review, get a quote.