Before you renew your Lift maintenance contract: what to check

The end of a Lift maintenance contract is the best chance you will get to fix what hasn't been working. The contractor wants to keep the work, and nothing is locked in yet, so this is when the Owner has the most say over the terms.

Most contracts don't get that attention. They roll over automatically, often for another three or five years, because nobody diarised the notice date, or they are renewed on price alone without anyone checking what the price buys.

This guide covers what to check before you renew or re-tender. It draws on more than a decade of reviewing Lift and Escalator contracts for Owners Corporations, Facilities Managers and Asset Managers, and it applies whether you manage one Lift or a portfolio of fifty buildings.

Start with a register of every Lift contract

Before you can manage your contracts, you need to see them all in one place. Many managers inherit contracts with several contractors, each on its own terms and with its own expiry date, and nobody has a full picture of what is in place.

Your register needs

• Building and number of units
• Contractor and contact
• Contract type
• Main exclusions
• Term and expiry
• Notice period and notice-due date
• Notice given?
• Visits per year and last visit

Keep a simple register with one row per building and these columns:

• Building address and the number of Lifts and escalators
• Contractor, with a contact name and phone number
• Type of contract: fully comprehensive, semi-comprehensive, or "do and charge" (see below)
• Main exclusions, such as motor fusion, obsolescence or after-hours callouts
• Term and expiry date
• Notice required to stop roll-over, and the date by which it must be given
• Whether notice has been given, with the date
• Maintenance visits per year and the date of the last visit

The register takes an afternoon to set up, and it prevents the most common and most expensive mistake, which is missing a notice date.

If you would like a hand setting up the register or working out your notice dates, contact us.

Check the roll-over clause first

Almost every standard lift maintenance contract has a roll-over clause, sometimes called a termination or renewal clause. If you don't give written notice within a set period before expiry, the contract renews automatically, usually for the same term as the original.

Give notice the week you sign

You can give notice to stop roll-over at any time. The contract still runs to the end of its term; the notice only stops it renewing itself. If you send it early and diarise the contractor's acknowledgement, the contract can't roll over because a date was missed.

An automatic renewal is manageable on a one-year contract. On a five- or ten-year contract it is a serious problem, and many buildings still have those older, longer agreements in place. If the contractor is performing poorly, you are locked in. If you want out of a contract that has already rolled over, many contracts charge a termination fee based on the remaining term.

How notice works:

• Notice is typically 30, 60 or 90 days before the expiry date, in writing. Check your clause for the exact period and method.
• You can give notice at any time, even the day after signing.
• Giving notice isn't a complaint, so say so in the letter. Notice keeps your options open, and a contractor that is performing well can still be reappointed.
• Ask for month-to-month cover in the same letter, in case your tender runs past the expiry date.

We cover the process step by step, with a sample letter, in How to stop your lift contract rolling over.

Know which type of contract you have

The label on the front of the contract tells you less than the clauses inside it, but it is a starting point:

• Fully comprehensive: routine maintenance, callouts and most parts and repairs, within the contract's exclusions.
• Semi-comprehensive: maintenance and some parts, with major components charged separately.
• Do and charge: scheduled maintenance only, with every repair and part billed as it happens.

"Fully comprehensive" rarely means everything. The exclusions decide what you end up paying for.

Whichever type you have, check how the price rises each year. Many contracts are tied to a price adjustment formula that runs well above CPI.

Search the contract for common exclusions

Open the contract and search for these words. Each is a common exclusion that can turn a "comprehensive" contract into a string of extra invoices.

• Motor fusion, the failure of the hoist motor windings. Some building insurance policies cover it, but often only for small motors under a set kilowatt rating, which may mean only the smallest machine-room-less lifts are covered.
• Lift car communication, meaning the emergency phone or intercom in the car. It is a safety device, yet contracts often exclude it.
• Lighting in the Lift car and in the liftwell. If car lighting is excluded, you may need both an electrician and the Lift contractor on site to change a light. Liftwell lighting is sometimes excluded too, even though nobody other than the Lift contractor should be entering the liftwell.
• After-hours callouts, which can be charged at premium rates.
• Obsolescence, the most expensive of these, covered in the next section.

Obsolescence: the clause that costs the most

An obsolescence clause lets the contractor charge for replacing a component it declares obsolete, meaning parts for it are no longer available. More and more components are being declared obsolete, and what counts as obsolete varies widely between contractors.

Why is everything suddenly obsolete?

Richie Lobert

$1,500 vs $15,000–$20,000

a VF drive repaired, against the manufacturer's quote to replace it

The most common big-ticket item is the variable frequency (VF) drive, which controls the speed of the Lift motor. Drives fail relatively often and are frequently excluded under obsolescence.

There are often alternatives to replacement:

• Repair: local drive specialists can repair many failed drives for a fraction of the cost. In one recent case the manufacturer recommended replacing the drive at $15,000 to $20,000; LML had it repaired for $1,500.
• A like-for-like upgrade: some contractors will fit the next version of the same drive instead of invoking the obsolescence clause.
• Bench repair: some contractors still test and repair electronic components in-house, while others replace them and pass on the cost. Ask yours which it does.

The simplest protection is to deal with obsolescence before you sign. Ask each tendering contractor to inspect the equipment and list every component it considers obsolete, or likely to become obsolete during the contract term, and agree that list in writing so there is nothing to argue about later.

What a good Maintenance Contract should include

A contract drafted by the contractor will naturally favour the contractor. Whoever drafts yours, check that it includes:

• Minimum maintenance visits and minimum hours for each Lift or Escalator, so you can check you are getting what you pay for.
• Agreed response times and rates for breakdowns and passenger entrapments, in and out of business hours.
• Penalties for maintenance that is not provided.
• Agreed servicing hours.
• A maximum number of callbacks in a 30-day period before the matter is escalated, and a maximum number of equipment-related callbacks per month.
• A maximum time to fix defects identified by an independent consultant.
• The scope of services and testing requirements, including safety-gear and emergency-lighting tests.
• A thermographic survey to find hot spots and failing components before they break down.
• Monthly and annual reporting on visits, breakdowns and repairs.
• The price adjustment formula, such as fixed annual increases or CPI, so annual increases are predictable.
• Remote monitoring terms. If the Lifts are connected to the contractor's monitoring system, check what it triggers and whether it creates extra charges, particularly outside business hours.
• No automatic roll-over. At the end of the term, the contract continues month to month until it is renegotiated or terminated.  

Together these form the basis of a performance-based Maintenance Agreement: one prepared for the Owner, with measurable service levels the contractor must meet. LML prepares these Agreements for Owners and Managing Agents, never for Lift companies. Learn more about maintenance agreements.

Check the work is being done

A good contract needs someone to check that it is being followed. A few simple habits make that possible:

• Ask Technicians to sign in and out of your premises. It should be a site safety requirement and shows you how many maintenance hours are delivered.
• Watch for repeat callouts and for callouts where the Lift was "running on arrival". Both can suggest the contractor is resetting faults without fixing the root cause.
• Ask for test results, including safety-gear tests, speed governor checks and emergency lighting tests. They should be recorded electronically or in the log book in the Machine Room or controller cabinet.
• Commission an independent audit, ideally every year. An audit shows what is happening behind the Lift doors, in the Machine Room, the liftwell and the Escalator truss. See How often should lifts be audited?

Beware the price that looks too good

When you re-tender, a price that looks too good to be true often means "inspection" visits or remote predictive maintenance in place of hands-on work. On an inspection visit a Technician looks at the equipment, ticks a box and leaves, and sometimes an inspection is tacked onto the end of a callout.

If the price appears to be too good to be true, then it likely is.

Richie Lobert

An inspection is only worth paying for if someone acts on what it finds. We regularly see sites where inspection visits continue while obvious problems, such as badly damaged Escalator handrails or visibly rusted hoisting ropes, go unaddressed.

Cheap maintenance that shortens the life of the equipment costs more in the end. Replacing a Lift five years early costs far more than the difference between two maintenance quotes.

How to choose a contractor at re-tender

Price is one criterion among many. When we recommend a contractor to a Client, we assess:

Score price last

Score Tenders on safety record, units per Technician, response times and how quickly they close out audit defects, and only then on price.

• Safety commitment and track record
• Overall value for money
• Expertise with your specific equipment, and how many similar units they already maintain
• Average number of units per route Technician
• Response times to breakdowns and entrapments
• Key personnel, experience and resources, including any subcontractors
• Current workload
• Past performance, communication and responsiveness
• How promptly they close out defects found in independent audits
• Quality assurance, workplace health and safety, and sustainability practices
• Spare parts and technical support
• Deviations to our specification
• Number of items identified as obsolete (this varies greatly between contractors on same site and equipment)

If you manage an owners corporation

For an Owners Corporation, the contract renewal usually needs a committee decision and sometimes a vote at the annual general meeting. Work back from the expiry date and allow time for a maintenance audit, the tender, for the committee to consider the recommendation, and for the notice period. Starting six months before expiry is sensible, and earlier still if a maintenance and condition audit is planned first, so that any defects it finds can be dealt with before the contract expires. See lift services for owners corporations.

What a performance-based Agreement adds

LML writes its performance-based maintenance agreements for the Owner and Tenders them to approved Maintenance Providers. Each one sets:

• Key performance indicators: frequency of servicing, response times to breakdowns and passenger entrapments, and the number of repeat callbacks allowed in a 12-month period
• Maintenance to the manufacturer's recommendations for each piece of equipment
• A price either fixed for the first 12 months, then adjusted each year by a fixed percentage or by CPI, so outgoings are predictable
• Obsolescence and exclusions agreed before the contract starts

Questions people ask

How much notice do I need to give to stop a Lift contract rolling over?

Usually 30, 60 or 90 days before expiry, in writing. The exact period is set out in the roll-over or termination clause of your contract.

Does "fully comprehensive" mean everything is covered?

No. Most comprehensive contracts exclude items such as motor fusion, car communication, lighting and obsolete components. Many also set a financial amount for repairs covered such as to a maximum of $5,000 per repair.  Check the exclusions list.

Can I change Lift contractors before my contract ends?

Sometimes, but many contracts charge a termination fee based on the remaining term. Giving notice to stop roll-over well before expiry avoids the problem.

Who should write the maintenance contract?

Ideally someone acting for the Owner. A contractor's standard agreement is written to protect the contractor, while an independently prepared, performance-based agreement protects the Owner and the equipment.

Next steps

A Lift maintenance contract runs for years and can cost tens of thousands of dollars a year. Left alone, it renews itself and the decision gets made for you.

LML Lift Consultants reviews existing contracts, prepares performance-based maintenance agreements and runs re-tenders for Owners, Owners Corporations and Managing Agents across Australia, New Zealand and Papua New Guinea. We work on every major brand of Lift and alongside every Lift company in the market, but we sell no equipment and take no commissions.

Call 1300 001 565 or send us your contract for a review.