Category Archives: Contracts

Elevator Contracts – Shop All Exclusions

raquel-martinez-96648For some, shopping is about more than finding bargains, it is an obsession. They can’t quit comparing apples to apples and finding success in each penny saved. This is despite the fact that quite often going to store after store means burning more gas and time than actual savings generated.  Of course, the more costly the item, the more justification there is for doing a thorough job of looking around and comparing products.

When it comes to elevators, it seems like everything is expensive, especially when it comes to repairs that are outside of the warranty or maintenance contract. People feel trapped by the contract and elevator company, so, often the work is approved without considering other options. But shopping around can help lessen the overall cost of elevator ownership.

If, like most buildings owners, you have a standard oil and grease agreement, you may find that there is lots of (necessary) stuff left outside of the contract or that has been excluded.  For instance, service calls and parts are usually specifically not covered, and good luck getting any major repair to fall under the current maintenance agreement you have. Even full service agreements have their limits. Usually, for repairs outside of the agreement, you will be required to get a quote for the work contractually excluded and only after approval will the work begin. What your current provider may have failed to tell you is that in most circumstances you can ask a different elevator company for bids as well. You get to do some shopping.

Keep in mind, exclusions are reasonable in most cases; owners are just unaware of them until the elevator needs work that is outside of the contract. Here are some of the more common exclusions you need to keep in mind:

  • Vandalism or elevator misuse – This is not just graffiti in the elevator car but any intentional act that hurts the operation or aesthetic appeal of the elevator. An elevator door that has been hit one too many times with a cart can be an example. It is excluded because vandalism is difficult to predict and there’s no way to get a firm handle on the costs until after there’s a problem.
  • Obsolete parts – most elevator contractors and contracts charge a premium for the difference between the normal purchase cost of a regularly available part and the cost to custom manufacture it or find someone that will. Oftentimes, when you start hearing “modernization” mentioned by your technician, it is because parts are getting hard to find.
  • Modernization – It is rarely covered in most elevator contracts. Modernization is excluded because it is a major update to systems and can be quite costly. A modernization really requires a second opinion and an estimate.
  • Proprietary Parts – Proprietary parts are not always excluded directly, but having access to parts and tools that are limited to a specific company makes getting a different company to work on your elevator or bid for work extremely difficult. Never purchase an elevator with proprietary parts and/or control systems. Doing so will severely limit your options for choosing a maintenance service provider.
  • Damaged underground pipes (for hydraulic elevators) – Corrosion can cause real headaches, especially regarding old elevators. Fixing corrosion, otherwise known as replacing pipes, can be a huge cost and is excluded in most contracts.
  • Items outside of the control or scope of the elevator contractor – This can mean a lot of things including, but not limited to, major things like power surges, power failures, or lightening strikes or minor problems caused by debris in door tracks that are preventing doors from functioning. Sometimes, even keys left in the wrong position can generate a service call and can e excluded by maintenance contracts. We have all heard of the $1000 light bulb. If light bulbs are not covered in the service agreement, they can indeed cost you a precious amount.

Especially when it comes to modernization and pipe replacement it is more than just a simple apples to apples comparison for pennies on the dollar. These are very expensive jobs and multiple bids need to be obtained. Extensive upgrades to the elevator cab should be open for multiple bids, as well. Remember, almost any elevator tech can work on any other elevator regardless of the brand (only proprietary parts can be an issue). So, do some shopping and see what others have to offer.  The difference could be thousands of dollars.

If you are in Illinois, we can offer more specific information and estimates. Visit us here.

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Elevator U: The Myth of Maintenance Teamwork

pierre-etienne-vachon-116891 (1)
Photo by Pierre-Etienne Vachon on Unsplash

Long-term planning for elevator maintenance takes cooperation from several parties and often is equated to teamwork. However, the idea that a team is always the solution to the problem often misses the bigger point. At the recent Elevator U conference we learned a lot about the various people that make elevator maintenance systems work but, surprisingly, the word team was never mentioned.

This is may be because when you hear the word “team,” you think of a group of individuals all dressed in the same uniform striving for victory, all pulling in the same direction. Even though everyone’s in-game goals may be different, victory for the team is always the objective, so they cast self-wants aside for the win.

Baseball is a great example of this.  See how elevators equates to baseball by clicking here.

Elevator Technician – Mr. Friendly Says Hello

mrEveryone wants to see the friendly elevator guy with the big smile and the big handshake. After a merry greeting and traditional backslapping, he disappears down the hall and goes to work. Thirty minutes later, you hear the familiar sound of the tool belt jangling toward you and you know you are about to get a full report. But, after 40 minutes of discussing the weather, family, friends, fishing, the best BBQ in town, the nuances of abstract animation in the film noir era, oh and the elevator, he leaves. Both of you are the wiser for solving the world’s problems, but are you lighter in the pocketbook for the casual conversation.

This may be happening more than you think. How often do you actually look at the contract or repair bill and compare it to actual time spent on the elevator itself?  Or do you know exactly what the contractual terms of your agreement are? Some may be billed a flat fee for certain maintenance regardless of time spent, but others may be paying for every five-minute increment. The terms are very important to know.

Each and every person who hires an elevator contractor understands that they will pay for time to repair and maintain elevators.  No shock there. This normally comes in the form of a flat monthly fee with some exceptions for work outside of the scope of the contract. Others choose more comprehensive contracts that cover nearly all costs other than vandalism, intentional destruction or “Acts of God.”  Also, hourly rates can vary widely depending on the geographic location and availability of technicians. Shopping the hourly rate may be a great place to start when looking at cutting the expense of maintenance, but actual time on the job may be hiding a bigger problem. Time actually spent on the job may not be matching what you are paying for.

Here are some things to be aware of that can increase costs.

  1. Forgotten tools – Have you had to pay for trips back to the shop or to the hardware store? Do you know if you have?
  2. Chitchat time – Are you forking over fees to find out what the weather is like in Bemidji or how the Bears did?
  3. Extra assistance – The elevator guys shows up with a team. Not sure if it is training or “bring your extended family to work day,” but you need to find out.
  4. The magic act – The incredible disappearing elevator mechanic. First you see him and then you don’t. Where was he for the past two hours? You checked the machine room and elevator and no one was to be found. Did he dematerialize into another dimension only to reappear suddenly just in time to go home?
  5. Lunch break, coffee break, smoke break – It is hard to swallow paying for all three of these in an hours time but it can happen.
  6. Whoops – The elevator professional drops his pliers from the top of the car and they end up in the pit. Oh well, one more unneeded trip to the dungeon.

These are just a few things that you maybe paying for that you are not even aware of. But, there are somethings you can do to alleviate the problem.

  1. Know your contract. If you are paying a monthly fee that is all inclusive and the elevator tech is a chatty Cathy and you like the banter..who cares. Enjoy the conversation. On the other hand, if you are being charged for every second that ticks off the clock, it’s time to reassess.
  2. Insist on a sign in and sign out every time they come and go. This will accomplish a couple of things. First, it will help alleviate the disappearing act.  It will keep you informed on progress, it will make the technician more responsible and you will have a chance to find out what is going on with the elevator.
  3. Always check the maintenance log! It is your right and if “routine maintenance” is all that is written and it took two hours, there is a problem. Also insist that a log is kept in the machine room. This should be added to your elevator plan.
  4. Open a dialog with the technician. When he seems to be working a long time, safely track him down and ask what is going on. Remember, this is your building and you are granting him and his company the privilege of working on it.
  5. Open a dialog with the dispatcher or supervisor. Do this before problems start if they ever do. You should be on a first name basis with the person that tracks the time and services of the technician. This may also get some of your basic questions answered for free.

Remember the vast majority of elevator technicians are hard-working, want to fix problems right and have integrity when it comes to the people they service. However, that does not mean that you shouldn’t check their work and build into your routine a time to do some follow up and re-reading of the contract.

The Stealth Bomber of Automatic Rate Increases

stealth-bomber-602733_1280The other day we quoted a full maintenance contract to a local school.  They called back and said “I really don’t want to keep using Bigg Elevator, but their rate is $20/month less than yours.” Rather than price match, I asked to see a copy of the contract with the names and rates redacted. Sure enough, as I expected, at the bottom of page 4 was this little stealth clause that is, unfortunately, quite common among the Bigg Elevators and their ilk: 

“The price in section 1.3 shall be adjusted annually on January 1 of each year of the Agreement.  100% of the current price will be increased or decreased by the percent increase or decrease in the labor cost.  The labor cost is the sum of the straight time hourly rate plus the cost of fringe benefits paid to elevator mechanics in the locality the equipment is maintained.”

English translation:  If their labor costs (including benefits) go up 5%, your contract rates go up 5%.  They don’t propose a rate increase that you can accept or reject.  You’ve agreed in advance that they can impose a new rate on you every year without your consent. Or input.

The school that we quoted checked their records and their actual monthly rates were now higher than what we were proposing. But even if they weren’t outrageously high, is that a fair provision?  Do you have contracts with your customers that are cost-plus?  You probably wish you did, because then you wouldn’t need to control your costs. And how do you know that the rate increase really does reflect their actual labor cost increases?  Do you really want to get in the business of auditing their payroll?  And do you really think they’ll allow you to?  Nope, you’ve just got to trust them.  Feeling like a sucker yet?

Should a business be able to analyze its costs and tell their customer, “sorry, we need to raise our prices to you?”  Absolutely.  But you should also be able to answer with, “sorry, we’re going elsewhere.”  This is America, after all.

Lessons for you:

1.  Don’t agree to automatic rate increases.  If they give you a sob story about their hard-to-control cost increases, then remind them that since you’re only signing a one-year contract, they’re only locked into the rate for a year.  After that, they can propose a higher rate for the subsequent year.  But you will have to agree to it.  So chances are they’ll be much more reasonable about it.

2. Shop around. The problem of overpaying for elevator maintenance comes from the idea that you cannot shop for the best deal and that you are automatically locked in with service from the initial installer.

3. Nip it in the bud. Before you forget, take control of your elevator expenses by drafting a cancellation of service letter and send it registered mail to your current elevator service provider. This will not stop your elevator maintenance service, but will let your current provider know you are willing to shop for a better deal.

4. Don’t be afraid to ask for changes. Before you sign any agreement make sure you understand the contract completely and if there is something you don’t like about it, ask for changes in writing.

If you have experience regarding elevator service providers share your thoughts, success stories and horror stories with comments or questions.

Smart Customer Beats Bigg Elevator

hand-819279_1920If you are old enough, you can remember the days of the handshake. The handshake was the unmistakable consummation of an agreement; no deal was made without a handshake and breaking your word once hands were clasped was unthinkable. Those days have passed and now, a pitchman can say anything to close a sale and then offer up a standard contract that doesn’t back up the verbal promises made.

In the elevator world, we hear about this all the time. The following is an example of one customer and her journey to ensure Bigg Elevator delivered on services promised. It involves the usual players: the customer, a disingenuous sales rep, and an unfair, one-sided contract. Fortunately, thanks to some smart, up-front negotiating, intelligent monitoring and willingness to play hardball when faced with threats of legal action, the customer prevailed.

The elevator company in question is real, but we’ll call them Bigg Elevator.  Like other large elevator companies, their proposed, standard contract offers “periodic” maintenance. However, it was important to the customer that periodic was defined as monthly to ensure a safe, smooth-functioning elevator.  The salesman changed the wording to “monthly” maintenance. All parties were happy with the result and willingly signed the contract.

The Bigg Elevator mechanic never came monthly.  When the customer didn’t remember seeing them for a while, she decided to monitor them more closely.  Wary that if she complained she’d be fed the line that “they came when you weren’t there,” to make sure, she changed the locks on the machine room door. She then left a message via Bigg’s answering service for the technician to see her for the new keys when he was next there. Six months later, no one had contacted her for keys, so she knew no maintenance had been performed.

After the technician finally did get the keys, she continued to monitor the frequency of the visits by examining the log sheets he left in the machine room. A pattern had developed. Over the life of the contract, he was only coming once or twice a year.

When the five year anniversary of the contract approached, the customer sent a notice of termination, only to be told she had missed the window and had automatically been renewed for another five years.  Ready for this response and armed with detailed records, she was able to demonstrate that Bigg Elevator hadn’t held up its part of the bargain.

While there was no provision in the contract for the customer to terminate for breach, she threatened to report them to state regulators if they didn’t agree to do so. After many  excuses and legal threats back and forth, they did allow the customer to terminate. But she didn’t stop there. She asked for a refund of payments made for which she received no service in return.  Bigg Elevator squawked, but faced with irrefutable evidence, they eventually relented and wrote her a check for over $10,000.

Lessons learned? Everyone reading this should take the following steps:

  1. Terminate your contract now, even if the renewal date is a couple years off. Send a certified letter of cancellation to your maintenance provider before you forget and the contract is auto renewed. Keep a copy for your records.
  2. Read your current contract so you know what they promised to do.  If the language lets them wiggle out of regular visits, ask for language to be added, or make a note for the next renewal to include it.
  3. Comparatively shop other maintenance providers. Find out who is out there and what their terms are.  Use competition as leverage to get a fair deal.
  4. Check current logs and see how often your elevator is getting maintained.
  5. Don’t be afraid to fight back.  If you have good documentation that they failed to perform, use it to get what you are due and don’t let their legal threats scare you off.

It is a shame the customer had to go to these lengths, but Bigg Elevator forced her hand. However, it doesn’t have to be this way.  You can stand up to Bigg Elevator.  And you can find an elevator maintenance company (usually a smaller, local one) with fair contracts and an understanding of the meaning behind a handshake.