If you’ve shopped for elevator maintenance, you know that contracts come in two flavors. Before we sample both of them, you should understand that regardless of the contract flavor, the work that is actually done on your elevator should be the same. The contract type only governs how the work is paid for.
So what work should be done when you have a maintenance contract? In a nutshell:
- Show up on a defined frequency and inspect the equipment for existing or impending problems.
- Address anything found during the inspection. This includes lubricating parts, making adjustments, cleaning, and replacing worn or broken parts.
- Respond to any trouble calls when the elevator isn’t working properly.
- Keep your elevator in compliance with required inspections and other regulations.
There are several ways to pay for this. Think of them as “fee for service” vs. “fully insured.”
The fee-for-service model is called “Exam and Lube” or sometimes “Oil and Grease” though we think the former is more accurate. You pay a small monthly fee for the mechanic to look at your elevator (#1 on the list above), and pay time and materials for any repair work that needs to be done. If you have your air conditioner serviced every spring, this is a similar model: you pay $65 for the technician to do a basic cleaning and inspection, and if he has to add freon or replace a part, that adds to the bill.
The fully insured model is called “Full Maintenance.” Your monthly fee is larger, because it covers anything that happens to your elevator (#1-3 above). It’s kind of like health insurance for your elevator with a hefty premium but zero deductible.
There are some typical exclusions in a full maintenance contract. We’ll cover those in a later post. There are also some variations on the above. Standard full maintenance only covers trouble calls that happen during normal business hours, and charge a fee for responding after hours or on weekends. But some full maintenance contracts include 24/7 trouble call response. Not surprisingly, they’re even more expensive.
Which flavor should you choose? It depends. Some companies only offer exam & lube contracts, so you may have no choice. If your equipment is very old, or in an industrial setting with lots of environmental factors that can cause downtime, the contractor may not be willing to take on the risk of full maintenance.
If you do have a choice, then here are some things to consider:
Of course full maintenance sounds great. We’d all love unlimited care, wouldn’t we? Well, as you might expect, just like with health insurance, full maintenance comes with a higher premium.
So you’re trading up-front costs for expected out-of-pocket costs. Which one will cost you less over the life of the contract? It depends on how often your elevator gets “sick.” The more it is used, the amount of abuse it is subject to, the age of the equipment and how well it has been maintained in the past, all contribute to its expected breakdown frequency.
Of course, the elevator contractor will take the above factors into account when bidding full maintenance. So over time you can expect that the costs will even out. If your elevator is old and cranky and used so much it wears out a lot of parts, then your rates will go up.
If you want to be a math geek on this analysis, then pull out your work tickets and bills for the past year (multiple years if you can, since it will vary year to year). If you’ve had an Exam & Lube contract, take your total annual cost and divide by 12. If full maintenance is less than this, then it’s probably a good deal. If you’ve had a Full Maintenance contract, then add up the hours a mechanic has worked on your elevator and calculate what it would have cost you out of pocket if you had paid T&M.
What are the elevator contractor’s incentives with exam & lube? They’re incentivized to find stuff to fix (good, keeps elevator from breaking down) but might rack up more hours than necessary to fix it (bad), or tell you stuff needs to be fixed that doesn’t (bad). They might also skip on the preventive maintenance to save money, with “touch and go” visits, and wait until there’s a breakdown, because you’re paying for it (bad).
What are the elevator contractor’s incentives with full maintenance? They are incentivized to avoid unplanned breakdowns (good) and thus do more preventive maintenance (good). But they also could roll the dice and skimp on the preventive work, betting that the breakdowns won’t happen until a few years down the road, when someone else has the contract (bad).
If you re-read these ways incentives can be mis-aligned, they really come down to whether the company is ethical. Neither type of contract will protect you from a company trying to maximize a buck by finding shortcuts. It’s not a lot different from wondering if a doctor is recommending surgery because you need it or because she needs to make her Lexus payment. It’s hard to second-guess the expert, so it’s best to find an expert you can trust.
That’s the bottom line: do your homework and hire an elevator company you can trust. Make sure they provide good, solid preventive maintenance programs. That’s the key. Then figure out which way you want to pay them, realizing that’s a less-important detail.
In case you’re still wavering and want some guidance, in general, elevator owners with infrequently used elevators more often pick exam & lube, and owners with more frequently used elevators gravitate towards full maintenance.