Elevator Maintenance Contracts 101

There are many parts of elevator service contacts which can be confusing to those who are not familiar with them. Most of the following discussion will be around full maintenance elevator service contracts. These arrangements usually pay one price for the majority of the material and labour to keep an elevator running. These agreements are essentially a form of insurance where the elevator contractor receives a fixed price and covers the fluctuation costs of elevator service, maintenance and repairs. I will attempt to clarify some of the items which make comparing or understanding service agreements difficult.

Frequency of Visits

There have been many changes in this part of contracts in recent years. The number of preventative maintenance visits per year is not even specified in some contracts. Even though the billing frequency may be monthly, a service technician may only show up at the building every few months. Be sure to carefully read this portion of your agreement to make sure you know what level and frequency of preventative maintenance you should expect. Once you know what service level you should expect, make sure that you have a person on the site regularly check the log book in the elevator machine room to ensure that your actual service level is the same as the contract. A shocking number of elevator contractors, both large and small, are currently not providing the frequency of visits that they have contracted to provide. In Ontario, it is the building owner’s responsibility to ensure that the legislated level of service is being provided.

Contract Duration

Most current service contracts have a duration from 7 to 25 years. The advantages to the owner of having a longer term contract, is that pricing is usually tied in to labour rate changes, so the pricing should generally track with inflation. A longer term should ensure that the elevator contractor will do the proper preventative maintenance to maximize the life of the elevator equipment, since a premature breakdown will usually result in extra costs for the maintenance contractor. An obvious down side to a longer term contract is a situation where the elevator contractor is no longer doing adequate work and the contract provides no way to resolve the issues.

With buildings where the maintenance services are tendered every few years, many key preventative maintenance tasks keep getting pushed off past the end of the current agreement and eventually result in a costly breakdown with significant down time. These buildings almost always require the large capital expense of an elevator modernization much earlier than those buildings maintained by a quality elevator contractor for the longer term.

Automatic Renewals

Most current service contracts have an auto-renewal clause. One of the advantages of this clause, is that if both parties are not carefully tracking renewal dates, preventative maintenance coverage and liability insurance coverage will continue. All reputable elevator contractors carry very significant liability insurance, and if a service contract accidentally lapsed, and an insurable incident occurred, the insurance company may not cover the losses. An auto renewal clause prevents this situation.

If a building owner wants to make some changes to his elevator service provider, they can always give notice not to renew the contract well in advance of the renewal date. Most service contracts require a minimum of 3 to 4 months notice, but there is nothing to prevent giving even a few years notice if an owner wants to keep his options open at renewal time.

Covered Parts

Most current service contracts contain a long list of covered parts. It can be difficult to notice if some key, expensive parts are missing from the list. Some specific items to look for, which are sometimes omitted are: hosting ropes or cables, travelling cables, drive machines, drive motors and controllers.

Common Exclusions

Most current service contracts have some reasonable exclusions which would often be cost prohibitive to include since the costs can be very unpredictable. Some of the most common excluded items are as follows:

• Vandalism or elevator misuse. It is obviously very difficult to predict and price in this type of coverage
• Obsolete parts – most contracts allow for an extra charge for the difference between the normal purchase cost of a similar regularly available part and the cost to custom manufacture and/or source a replacement. Keeping your elevator equipment current by Modernizing it will minimize or eliminate these surprise costs and downtime.
• Proprietary Parts – purchasing an elevator with proprietary parts and/or control systems will severely limit your options for choosing a maintenance service provider. For more information see: How to Choose an Elevator Maintenance Company
• Buried piping or cylinders (on hydraulic elevators) – Corrosion failures of these components happen rarely in newer elevators, but most older units have little or no corrosion protection and will eventually fail if there is groundwater present. This is a big ticket item costing tens of thousands of dollars. Many jurisdictions have mandated the replacement of the oldest, least safe designs.
• Items outside of the control or scope of the elevator contractor. Typical items in this category are, problems caused by power failures, problems caused by debris in door tracks that are not kept clear, elevator service, or fire operation keys left in the wrong position etc.

Warning

Despite the fact, that a building owner has contracted with an elevator contractor to maintain their elevator, the owner, or their agent cannot be totally hands off when it comes to elevators. In Ontario, TSSA still holds the building owner responsible for many elevator items.

Summary

When looking at or comparing elevator maintenance contracts, there is often more to them than what is initially apparent. It can be helpful to have a trusted individual, who is familiar with the elevator industry, review them with you so that you know what you are contracting to do and what you are not.