My elevator company keeps saying some of my parts are obsolete. I thought I had a full maintenance contract, but I keep having to pay for everything? What gives with elevator obsolescence?
History of elevators and their maintenance contracts
Remember when you used to be able to buy a washing machine or refrigerator and it would last 50+ years. Those were the good old days. Now like most products elevators are microprocessor based, incorporate more plastic in their design and are planned to become obsolete. This has been a major trend in American consumerism. We live in a throwaway culture. Elevators are now designed to last about 25 years before they require an elevator modernization.
On the maintenance contract side, margins have been decreasing for years. Elevator companies have had to make up the difference by decreasing elevator maintenance. Another way they do this is declare certain products obsolete. What does obsolete mean? To you and me it means that the part no longer exists, so it has to be replaced with an upgrade. However, if you look at your maintenance contract obsolescence can be defined as in the sole discretion of your elevator company! Maybe it says any parts over 20+ years aren’t included in your contract or that if the part is no longer manufactured (well there could still be thousands on the shelf) it is obsolete.
Sad stories of elevator companies “selling” obsolescence
I have seen door detection devices (what you wave your hand in front of so the elevator opens up), be declared obsolete on equipment that was installed less than 3 years ago. What changed with this product? Barely anything. But the elevator company still charged the client thousands of dollars to replace this item. Probably not fair.
How to fight elevator obsolescence
So you now know that elevators don’t last as long and elevator obsolescence is now part of the elevator industry. What do you do so you aren’t stuck with a $10,000 proposal for an obsolete part that your elevator company says you need to get your elevator back up and running?
First, use the smell test. If your elevator is less than 10 years old, the part is probobly not obsolete. It may not still be produced by the OEM, but I would be willing to bet a third party supplier still has it. Ask your elevator company the exact name of the part and it’s part number. Call a third party vendor like SEES and see if they have the part and for how much.
Also, ask what is better about the upgraded part or if it takes longer to install then a like for like part (which is covered under a full maintenance contract).
Second, if the part really does fall under the elevator obsolescence clause, play hardball. Threaten to bid out the proposal they gave you. Their reaction will be to tell you that the new part will not be covered by them. This is contractually accurate, but you will likely be frustrated that they are holding you over the flames for this. Ask for them to come down on price. They will likely say they will cover the “labor” if you cover the “parts”. Make sure to have this discussion after you have received the initial proposal. Otherwise, your elevator company could still charge you full price with you thinking your getting a deal. Sadly, I have seen this many times before.
Finally, the best way to avoid this is to negotiate it into the contract. Try and get rid of all mentions of obsolescence in your elevator contract. If you have a relatively new elevator this should be fine. However, down the road when your parts become “obsolete” striking that part of the contract could save you tens of thousands of dollars.
If your elevator is older or your elevator company will not strike the obsolescence clause try something else. Ask them to list all parts that are obsolete now and those will not be covered under the contract.
If that does not work, tell them to put into that contract that you need to receive a yearly capital planner so you know what is obsolete. Without the capital plan you can’t be held to pay for obsolete parts. This last clause should work. Not only is it fair that your elevator company should provide you with annual capital planners so you can budget appropriately, but unfortunetly 90% of the time it won’t be honored due to attrition amount account managers. That means you will not have to pay for obsolete parts!
While all the tactics you share above are effective, they place an unfair burden on the elevator companies. Is it fair that if something is antiquated and no longer obtainable, the elevator company should be obligated up upgrade the Owner’s elevator? Also with how many makes, models, variations of models, number of components & number of replacement components there are on an elevator after 25 years it is unrealistic to ask the elevator company for an annual report of obsolete parts on their elevator. It’s not as though the parts suppliers send out a courtesy email letting everyone know they are not supporting/manufacturing a part anymore. To ask the elevator to assume the cost beyond their control on your investment is unethical. If your intent is to pull one over on the elevator companies, the advise above is sound. If your intent is to build a mutual partnership based off trust and fair exposure to risk/cost than many of these strategies should be employed or advoided with that end in mind
I appreciate your comment Connor. I do agree that creating a mutual relationship with any vendor is important. However, in my experience elevator companies (mostly the big 4) have long ago abandoned the desire for a mutual relationship. Feel free to shoot me an email if you want to continue talking.
I totally agree with the last comment. I own and manage commercial and residential buildings and have done so for many years. In my opinion, elevator companies often fail in various degrees to fully service and maintain their clients’ equipment under maintenance agreements. Instead, it’s not unusual to see various levels of neglect and claims of obsolescence, followed by suggestion that the overall elevator systems need to be scheduled for upgrades and/or replacements. Instead, elevator companies are charging for extras over and above maintenance contracts, often suggesting that the equipment is “obsolete” to advance claims for extra expense. Then, if your account manager cannot demonstrate year-over-year increases on related accounts, the account manager’s business may be reassigned to a less expensive/experienced employee. And, he may even potentially be replaced with a younger, less expensive (experienced) employee. Naturally, this could be at the expense of your equipment being properly serviced and maintained. Nonetheless, the company will continue with their standard operations and billings, along with extra charges whenever possible, including claims for obsolete parts or systems.
Arguably, if elevator companies are performing their duties and are planning for proper and timely servicing, including replacement parts, the elevator equipment should operate reliably and relatively trouble free. Instead, it’s not unusual for elevator inspectors to cite maintenance companies for a lack of proper record keeping and failures to response timely to inspected and noted corrections, in addition to repairs and maintenance deficiencies along with housekeeping concerns pertaining to equipment rooms. Naturally, neglect can result in equipment failures and breakdowns which can result in expensive and untimely repairs for building owners and their tenants. Arguably, some of these failures and expenses will be due to how the equipment was maintained. Sooner or later, after too many failures or repairs, resulting in down time and/or extra expense, dissatisfied building owners will take their business to another elevator company, in hopes of finding a better service provider to then discover that the industry in general shares in common business practices, good and bad.
Naturally, it’s more profitable for the elevator companies to convince building owners to purchase brand new equipment, rather than continuing with maintaining their current systems – which properly maintained should continue to operate dependably. This is often referred to as a modernization package but it begs the question: If the equipment is being properly maintained and parts, OEM or other are available, what specifically makes the equipment “obsolete”?
When you see a classic car being driven on a Sunday afternoon by its proud owner, do you think or say “hey look there goes an obsolete vehicle”? Probably not. And, chances are you’ve even had regrets for selling a vehicle you once had, thinking at some point afterwards that perhaps you should have keep it….”if only I knew then…” Now, instead, you likely own a vehicle that you can’t service yourself, given motherboards the computerized systems that similarly required computers to preform diagnostics to confirm exactly what is and isn’t working.
So, regarding your elevator equipment that your service company refers to as being or becoming obsolete, if the company is faithfully performing its duties, the equipment should be kept in good running condition and replacement parts should be planned for on a timely basis, rather than taking a wait for failures to occur approach, where failures are quite often a natural consequence of improper and inadequate servicing. Naturally, some of these failures will result in significant impacts to owners and tenants, not to mention extra expense which arguably, if the equipment is properly serviced and maintained, should not be the case.
None the less, don’t be surprised when the elevator company suggests that equipment failure is not due to untimely or inadequate maintenance but rather is due to the equipment being “obsolete” – with little to no specifics.
Not surprising service companies may take the position that the equipment has become “obsolete” to justifying up-charging their customers for extras or to entice them into all new system replacements, when the same was not requested nor seemingly warranted prior to a repair or break down.
Yes there will be times when OEM parts may not be readily available, but that does not mean that like kind and quality replacement parts are not available and/or acceptable.
Be mindful of companies that may not be as interested in maintaining your equipment as much as they are interested in bettering their bottom line. Naturally, this will all be at added expense to building owners.
This looked to be the case recently, when I learned of long time elevator company employees being demoted for not successfully up charging customers to increase the company’s year-over-year income, pertaining to their assigned maintenance contracts. Such circumstances might also explain why the term “obsolete” is being advanced as often as it is on fixed price maintenance contracts, when it should not be in many (if not most) cases, as making such claims will certainly be done to increase the elevator company’s income and/or incentivize building owners to modernize their entire elevator systems at some point during the contract.
Though highly paid, elevator technicians need only to pass a basic aptitude test to enter into the trade. The related test can be taken and retaken as many times as necessary to pass, with little technical training thereafter to become an elevator technician. This, in my opinion, doesn’t square up with the industry billing rates charges to their customers, where such rates are often at the very top of the scale for all professional service providers – seriously!
Given the practices within the elevator industry, independent elevator consultants such as LERCH BATES for example should be relied upon to provide professional consulting services and evaluations, rather than depending solely on your elevator maintenance company as they may have other objectives in mind over and above simply maintaining your elevators at the fixed price amounts detailed in your maintenance agreements.
Additionally, ensure that your elevator equipment is covered for mechanical breakdown as a part of your building’s insurance and that your elevator company provides you with evidence of insurance for their completed operations. This is very important, in the event that a breakdown is due to their workmanship or improper maintenance. If you are concerned that a potentially serious failure is due to improper maintenance, be sure to contact your insurance company immediately to give them an opportunity to inspection the equipment, along with all related maintenance records. And, in regards to insurance coverage, do maintain coverage specifically for Equipment Breakdown. In addition, insure that your elevator maintenance company routinely, upon renewals, provides you with evidence of Primary and Noncontributory Liability Insurance, including coverage for Completed Operations. Look for adequate and noncontributory coverage as well as limits, where $10,000,000 is likely the least coverage limit acceptable on a per occurrence basis.
PS: My car is older than my building’s elevators and I drive it up and down the freeway everyday while driving as fast as I can get away with. But to date, no auto mechanic that has serviced my car has ever suggested I should stop driving the car and get a modern new vehicle…… other than a salesman. So for now, I’m happy to keep my classic elevators along with my elevator mechanics which by the way, given their age, are arguably obsolete.