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Oil and Grease Elevator Contract

If you work with an elevator company you likely have a full maintenance agreement. But one day your account manager may offer you an oil and grease contract.  These contracts go by many different names, but they are the cheapest contract and cover the least amount.

What does an oil and grease (OG) contract cover?

Oil and grease contracts will vary but typically they offer very limited preventive maintenance. Most contracts will reference some light lubrication as the preventative maintenance. One large company actually limits these visits to 15 minutes maximum. This is much different than what is contractually in a full maintenance contract. However, in today’s age you probably are not getting full preventive maintenance. It is probably closer to the preventive maintenance of an oil and grease contract.

An OG contract will not cover any parts, or service calls. Here is the major difference between the full maintenance contract and oil and grease contract. That means any service call will be billed at those high elevator billing rates! Furthermore, if a part is broken you will be stuck bearing the full cost. That means you can expect major markup from your elevator company on the parts and service (200%+ in many cases).

Finally, many oil and grease contracts will not cover inspections, but this may vary. Inspections are typically required in most jurisdictions so expect to receive an invoice for this work.

Do you want an oil and grease contract?

Oil and grease contracts are about 1/3 as expensive as a full maintenance contract. If you receive an OG proposal that is close to price to a full maintenance agreement, run!

You could have significant savings from an oil and grease contract. If you have a new elevator that is rarely used this may be the kind of contract you want. Let’s do some math on a building with one hydraulic elevator!

O&G Contract: $75/month or $900/year + a  $300 bill for the annual inspection = $1200/year

Full maintenance contract: $200/month or $2400/year

With no callbacks that is savings of $1200! For simplicities sake you, we can say that each callback is $300-$600. So if you have a couple callbacks, well then you are out luck, and will owe more than a full maintenance contract, especially if you need a part replaced. My recommendation would only be to have an oil and grease contract if cash flow is important, you can accept some risk, and your elevator is relatively new.

Oil and Grease Elevator Maintenance Contract

Also, if you are negotiating an oil and grease contract make sure to include your elevator inspection in the price. Since you will have to pay that cost anyways it makes sense to include it in your contract. Also, that way if an inspection goes over you will not be hit with a larger bill than you expected.

One additional thought I have is that if you have a very old elevator, and your elevator company is billing you anyways for all your calls because of your obsolescence clause then it may make sense to have an oil and grease contract, but I would suggest talking to a consultant first or more importantly thinking about modernizing your elevator.

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Elevator Vandalism

What happens if someone vandalizes your elevator?  As you know, no elevator contract covers elevator vandalism.  What do elevator even consider vandalism and what can you do to prevent it?

What do elevator companies consider “elevator vandalism”?

Typically, anything that an elevator company can prove is elevator vandalism they will bill for. The most common types of vandalism or misuse and abuse as it is sometimes referred that your elevator company could bill you for are:

  • Someone left the elevator in independent service (typically the cleaners)
  • Trash or debris in the door sill from your tenants
  • Construction work being done or cleaners sweep debris into
  • People (typically kids) jumping in the elevator

Independent service

Typically, buildings will put the elevator in independent service (which I recommend for move-in’s), so the elevator won’t time out.  Also, cleaners will usually put the elevator in independent service. I have seen cleaners forget to turn it off.  The next day a tenant comes in and thinks the elevator is malfunctioning.

Tip: Always send your building engineer or building employee to verify that the elevator is not in independent service.

Tenant trash

People have a tendency to think that if they throw their trash down the elevator pit it goes to an endless void. Well thats not the case and sometimes that trash goes into the sills and can cause a shutdown.

Tip: Send your building engineer to inspect if there is any trash or debris in the elevator sills

Construction Debris

When tenants do build outs of their floors lots of dirt and construction debris is created. The construction works create debris which can block the door sill similar to tenant trash.

Tip: When doing a buildout make sure every elevator that can be, is sealed so debris does not fall down. Also, have the contractor or tenant cover the cost of a full clean down by your elevator company once it is completed.

Jumping on the elevator

When people jump in the elevator it can cause the safeties to trip, shutting down the elevator.

Tip: Sorry, there is nothing you can really do here. Kids will be kids. But luckily this is hard for the elevator company to prove so you likely won’t be billed for it.

Elevator vandalism

My final secret that can help you save money from these charges. Be friends and treat your elevator mechanic with respect. After all, they can choose not to bill you. I have seen plenty of times where elevator mechanics responded to calls and could have billed for something in the elevator sills but didn’t. Another opportunity is to have your elevator mechanic respond to the call and ask if they can also do their elevator maintenance that day so they won’t bill you for travel time.

 

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What is a Full Service Elevator Maintenance Contract?

You hear a lot about the full service elevator maintenance contract.  But how “full” is it? Does it protect you against everything, or are their loopholes like that toaster oven warranty you thought was great but didn’t cover your son burning his GI Joe’s in it.

Frequency of visits

Full service contracts will typically have “systematic and preventative maintenance” as part of their contract.  Check out my blog post talking about what you are probably actually getting these days and how to negotiate with your elevator company.

Coverage of parts

When you hear full service elevator maintenance contract the first thought that probably comes to mind is that your parts are covered. Depending on the age of your equipment for the most part that is true! If you have older equipment beware of the obsolescence clause that may be in the contract.

Ignoring the obsolescence clause, for now, typically all door equipment, controller parts, ropes, machines and almost anything else you can think of is covered. Sounds great right? Most property managers prefer this contract because it is a form of buying insurance. You pay a monthly fee and in exchange for that if there is a major parts failure your elevator company covers it. That way you have steady cash flow and do not see any spikes.

What parts are not covered in a full maintenance agreement?

Here is where you need to be careful, because there are some items that are not covered:

  • The elevator cab walls and its shell
  • The elevator fronts and the cladding of the doors
  • The elevator ceilings, floor and handrails
  • Below ground hydraulic pistons
  • The machine room where the elevator controller is located

What other reason may I not be covered?

There are also a handful of reasons that may void your parts coverage:

Full Service Elevator Maintenance Contract

How much is the full service elevator maintenance contract?

The full maintenance contract is the most expensive of the options you will find. In most markets a good rule of thumb is $200/month for a hydraulic elevator and $400/month for a traction elevator. These exclude high rises and New York City. To figure out your market rates check out my blog post.

Cheaper options can be about 75% less of the total monthly cost of a full maintenance agreement. However, keep in mind you will be hit with costs that you can’t control.

Hopefully, you now understand what a full service elevator maintenance contract consists of!

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Elevator Interior: How Much and Who to Purchase From?

Does your elevator interior have scratches on it or look dated? Should you replace it?  Will it cost a lot of money? One way to make sure you successfully upgrade your elevator aesthetically, is to hire an elevator consultant. Consultants have years of experience working with companies to upgrade elevators, and ensure that all code requirements are being met.

Defining the elevator interior

When your elevator maintenance company talks about the elevator interior they could be referring to a number of parts of the elevator.  You need to make sure you are all on the same page.

The elevator wall panels are typically what an elevator company is referring to when they discuss elevator cab interiors upgrades. Keep in mind this won’t include the elevator ceiling, the control operating panel (where the buttons are), the front wall cladding, or the doors.

Who upgrades your elevator wall panels?

After your building lobby, the elevator is often the next part of your building a prospective tenant can see, so the aesthetics are important.  The rule of thumb is every 10 years the wall panels should be modernized, but in my experience it really depends on the building needs.  So who do you go to for new elevator wall panels?

Your current elevator provider:

Your current elevator provider can give you a quote for new wall panels and install them. Some of the big 4 companies have their own internal products. However, a lot use a third party vendors that a mom and pop elevator maintenance company would use as well.  One example would be SnapCabs. They produce the elevator wall panels that your elevator company will install. The largest benefit to using your existing maintenance company is that if something goes wrong a year down the line you can hold them accountable for it. Also, as you will see later in this post they will need to be involved for balancing and inspections.

A third party vendor:

There are third party vendors, especially in larger markets, who can actually do the entire quoting and installation of the elevator interiors.  Some examples include Eklund’s and EMCO. It may be worthwhile to check out one of these vendors to compare prices with your elevator company. The positives of going with a third party vendor is they are often cheaper than using your elevator maintenance company. However, once they have completed the project and been paid, if there is an issue a year down the line it may be much more challenging to get them to fix it.

Don’t forget about re-balancing the elevator cabs and inspections

Whenever you have the potential to change the weight of an elevator it can change the way the elevator operates. You must find out from the elevator interior installer if any weight is changing. If there is a weight change, you will need your elevator maintenance company to test the elevator and see if it needs re-balancing. If you had a third party install the elevator cab interiors do not have them re-balance if they offer.  This can void part of your maintenance agreement with your elevator service provider and make you subject to excessive invoices.

Elevator interiors

For hydraulic elevator a pressure test will need to be conducted. The vast majority of time unless a very significant amount of weight was added you will not need to change anything. If the pressure test fails you may have to replace the pump motor, which would now not be covered under your maintenance agreement. The cost will likely exceed $10,000.

For traction elevators a load test will be conducted. On traction elevators it is more likely that you will need to add weight to the counterweights.

Once the elevator has been tested or balanced if necessary an inspection by the governing jurisdiction may be necessary depending on the state. This is separate from an annual inspection and will be billed as additional work by your elevator maintenance company. Again this must be conducted by your normal elevator maintenance provider.

Total pricing for your new elevator interior

Elevator Cab Interior (Remember the 3 elevator wall panels): You should be able to find a low cost option for about $12,000-$15,000.  This quote includes labor. However, cab interiors can be tens of thousands of dollars depending on the material used. For example if you had diamond crested elevator walls these would be very costly.

Balancing: Your elevator company should be able to do this in about 2 hours of team labor per elevator.

Adding weight: This will very greatly depending on how much weight needs to be added, but I have seen proposals for as much as $20,000.

Inspections: For a hydraulic elevator this should 1-2 hours. For a traction elevator this can be 2-4 hours of team labor per elevator.

Send me a note if you would like a referral to a reputable company to help with your ca interiors.

 

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Elevator Contract Length

You are unhappy with your service. Maybe you think your paying too much. You go and ask your account manager for your elevator contract.  Come to find out you have 4 more years on the term of your contract!

The never ending elevator contract

Most elevator contracts are 5 years. On top of that most elevator contracts will roll for another period of 5 years unless terminated in a highly specific window. Typically, you can not just send a cancellation a year before hand.  It will have to fit in a specific 30 day window. As you can imagine the elevator companies make it pretty hard for you to cancel.

Elevator Contract

5 years probably seems like a long time  compared to your other vendors. If you ask your elevator company they will tell you that since a full maintenance contract covers  parts that they need multiple years to recoup lost costs on parts.  In the past this was likely true.  However, the way most of the large elevator companies are run they will try and replace parts (especially expensive ones) as little as possible.

The large elevator companies have operating costs like any other company, including the elevator maintenance they should be performing on your elevator.  Some elevator repairs that are covered by contract can cost a few thousand dollars. If elevator repairs can be bandaged or ignored by your elevator maintenance provider it will be.  The most common case is a leaking packing in a hydraulic elevator. Instead of replacing the packing many elevator companies will let it leak and have the mechanic add more oil to the tank instead.

Don’t get stuck in a 5 year elevator contract

Since many elevator maintenance companies no longer fix required repairs, or if they do it is not in a timely manner. Why should you be stuck with a 5 year contract that rolls? When negotiating your elevator contract do not accept a 5 year contract.  In the past decade elevator companies have been more willing to compromise on term.  However, beware, as some large elevator companies still incentivize their account managers to sell for length of contact.

Ideally you should get a 1 year contract.  It should be ok to let it roll every year, otherwise you will have to work on a new contract once a year which will be time consuming.  If your elevator company puts up a fight and your happy with your service, try a 2 year contract.  They will ask for 3 years, but within that time frame an elevator office can have an entire staff turnover, so you may suffer service degradation.

Cancellation without cause clause

It can be very difficult to get out of a contract if you are unhappy with your service.  Now that your contract is down to 1-2 years you should not have to wait long.  But what if service is abysmal? Ask for a cancellation without cause clause so you have the ability to cancel (typically 30 days notice will be required).  Your elevator company will be very reluctant to let you add this in.

Often times they will offer to put a cancellation with cause clause instead. This means that they will have to breach the contract and will be allowed 30 days to self-correct.  This clause still allows a fair amount of poor service before you could part ways with your company. This clause is better than nothing but if you can work in a cancellation without cause clause I highly recommend it. Account managers are typically incentivized to make the sales regardless of special conditions like cancellation clauses.  This should give you some leverage.

Hopefully, you can negotiate a shorter term contract with an out clause to protect yourself from poor service!

Another option would be to hire an elevator consultant who has an already written elevator contract you can use.

 

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Elevator Warranty Period

My building is finished, what do I do now with my elevators?

Elevator Warranty

The vast majority of times your general contractor purchased a one year warranty from the elevator installed that include elevator maintenance (sometimes two years ). You should call your elevator installer immediately and clarify what the warranty covers.  This is a major source of confusion for building owners and property managers.  Does the elevator warranty cover overtime calls?  Does it cover acts of Gods, or cases of misuse and abuse?  The answer is critical because you can easily end up with thousands of dollars of extra expenses during your first year that you thought were covered during the elevator warranty period!

More than likely, you are going to be hit with extra invoices in your first year.  Many times the general contractor is still working on the building, or floor build outs begin during the elevator warranty period.  The contractor work will often create dirt and debris which will go down the elevator shaft and cause excessive shutdowns. Almost all warranty periods will not cover these calls as they are considered misuse and abuse.

You will need to make sure you pass these invoices back to your general contractor so they cover the cost and you do not get stuck with them.  Make sure that your elevator company has the correct address to invoice.  Many times the elevator company will have the general contractor or developers address and you will not receive the invoice until after you have paid the general contractor and you will be caught holding the bill!

Why do I have callbacks and shutdowns with a brand new elevator?

You should expect callbacks and shutdowns during the warranty period.  Often times there are kinks that the elevator companies adjustors need to fix, or the building is still settling.  This is typical and expected.  Other times you will have a new version of an elevator installed and there may be software bugs, that the installer of the elevator is still figuring out.  If this is the case, you will have shutdowns that are primarily controller related.  You can ask your elevator company for a callback report to take a look, or they may even tell you.

If this is the case you may be in store for a rough ride. Unfortunately, the installer of the elevator will be the best to fix the problem. Even an experienced elevator consultant won’t be able to help as they will rely on what they hear from the company who built the elevator!  Instead, hound your elevator company to get the local adjustor on site as soon as possible.

Time to choose an elevator maintenance company: Should I go with the OEM?

You (or your general contractor) chose an elevator contractor to install your elevator, shouldn’t you just go with the installer for your maintenance contract?  If you had one of the big 4 companies install their elevator on your property you should go with them. New versions of elevators often have proprietary software that competitors of the OEM have not reverse engineered. Keep in mind, elevator companies will tell you that they can take care of their new competitors equipment. The elevator manufacturer themselves will even claim that their equipment is non-proprietary. Legally, this is true.

However, if you do switch to another elevator company you may need to purchase a diagnostic tool from the OEM.  I have seen these tools sold for as much as $10,000! 

Furthermore, if you hire a non-OEM they will have very limited support for any controller related issues. Most likely they will call their friends who work for the OEM. I have seen elevator mechanics have trouble on new equipment that their own company installed! Now imagine an elevator mechanic who can’t call the factory that produced the equipment.

Elevator Warranty

Now just because I recommend staying with your installer, doesn’t mean you should accept the first contract your elevator company gives you! Most elevator companies actually charge a 30%+ premium on their new elevator maintenance contracts.  If they are brand new and therefore require less parts and service why would they do this? Because the vast majority of new building owners go with the OEM and the elevators still have proprietary aspects. Many elevator companies even incentivize their account managers to sell these contracts at higher margins.

Getting a successful first elevator maintenance contract

So, what can you do to get a good price? Negotiate. This will be a more challenging contract to negotiate as you have less leverage. Threaten to bid out your contract. Hire an elevator consultant.  Offer to have a longer term contract for a price decrease. Typically I do not recommend long term contracts but with new equipment you should stay with the OEM for the first 5 years. Find out from another property what they pay for a similar elevator (traction vs. hydraulic and number of stops), and ask why there is such a discrepancy in price to your account manager.

Ask questions, like if this elevator is brand new and you will have to spend less on parts, why is this contract more expensive?

Hopefully, your elevator warranty period is successful and you can successfully negotiate a first maintenance contract for your building.

 

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Why is everything in my elevator obsolete these days?

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.

Elevator Obsolescence

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!