Elevator Contracts

More on Elevator Contracts

Continuing my last comments about servicing contracts. It’s always best to call in a knowledgeable consultant to write your contract. Elevators aren’t like cars where you have millions that are alike. Each conveyance unit is a unique stand alone piece of equipment. Each was built on site, each has its own peculiarities due to usage, construction, environment etc.  A consultant can perform an initial survey and derive a specific maintenance plan, along with a pre-maintenance plan to get everything up to a high standard.  When that’s accomplished bring in the consultant yearly for audits to assure that the contractor is keeping it at that standard.

Make sure that the consultant includes certain provisions in the contract. Such as:

Cancellation terms. Most contractors want a long term (5 year) contract. You can give it to them but provide a series of one year renewals based upon the results of the yearly audits. If the service drops off so does your contractor. Extend the contract for five years only. Then it should be time to re-evaluate the scope of work in your document  as well as obtain bids to stay within market rates.

Fixed prices and capped increases. Make your contractor include fixed pricing with capped increases. Fixed pricing should be for the hourly rate fees.  Have them state regular working hours rates, overtime rates, weekend rates, holiday rates, and team repair/upgrade rates. Increases should be allowed yearly corresponding to inflation/deflation rates and wage rates based on the union wage.  I recommend 80% of the increase tied to the metals index and 20% tied to the union wage increase. Caps should be reasonable, normally 5% is a fair figure for all parties.

Exclusive rights. Most elevator contractors demand exclusive rights to work on the equipment that they service. This makes sense in that an outside contractor can perform work that could affect a function of the equipment. The incumbent contractor should not be responsible for the side effects of others work. With all of that said, however you have to be able to control excessive charges for needed upgrades or repairs.  With any project that will cost more than $3500 go out for bids. In the bids ask the proposal writer to break it down into time and material costs. Then you can compare to see if your service company is ripping you off. I recommend 4 bids. They should be close. If your service contractor falls between the high and low bid then he should be awarded the contract. Let him know whgat you’re doing to keep him from being tempted.  For anything over $5000 have the consultant write a scope of work and review the bids.

Next time I’ll discuss:

Obsolete parts

Downtime

Safety tests

What should be covered

Yearly audits with supervisory personnel

For now I will leave you with a quote from

I didn’t attend the funeral, but I sent a nice letter saying I approved of it.
– Mark Twain

Thank you for sending me a copy of your book; I’ll waste no time reading it.
– Moses Hadas

Choose the one you like the best.

Don’t forget to email me if you have questions or comments (elevatorernie@hotmail.com). Your suggestions are always welcome.

Thank you,

Ernie