Webinar

[00:00:00] Elli O'Quinn: The foundation of a really great guest experience starts with the basics working, like things like having hot water, having clean towels, being able to get to your room. It's just a basic expectation that when you check into your hotel that the elevator's going to work. When they work, things like the hot water working, the having your towels, the elevator working, those things often go unnoticed.

But when they don't work, it's a huge nightmare. So when the elevator's shut down and you check in and you have to wait 20 minutes to get to your room, it's really detrimental to the overall impression of your stay. It's also a huge bottleneck to the operations of the hotel. It affects housekeeping.

It affects room service. It really just compounds all the operational issues when you're down an elevator or have multiple down. It also really affects brand perception. When an elevator's down, it may signal to the guest that the rest of the property's not well-maintained, especially if you are in a luxury environment.

And lastly, it's very impactful to the revenue of the property. Of course, it's costly just for that one incident. Likely just getting the elevator up and running will be impactful to the overall revenue, but then also having to refund rooms, dealing with negative reviews online, all of that just adds up.

One elevator shut down just is really detrimental to the operation of the property. So moving on to the next slide looking at the reality of aging infrastructure. In the hospitality market, over 50% of elevators are 20 years or older. And when an elevator reaches that 20-year mark, that's typically when you start to see major issues start with the mechanics of the elevator.

You start to have more shutdowns, more service calls. You may have more issues with obsolescence. Being able to get parts can be challenging. We are seeing parts become obsolete much quicker than we used to. Just to give you an example with drives. Drives used to have a much longer life cycle, and now we're starting to see those have about a 10 to 15-year life cycle.

So parts are becoming more obsolete a lot more quickly. Of course, with old elevators, you're going to have a higher likelihood of shutdowns and just overall issues. They're very similar to cars. The older cars get, the more issues you have. Same thing with elevators. And then getting into that reactive trap.

When ... If you have a 20-year-old elevator, there's a good chance that it's run pretty well over those 20 years, and, when it runs well, it can be a little out of sight, out of mind. You may not think that you have to do any major planning, but when you... if you have a elevator that's that age or older and you haven't planned, you're likely going to have a lot higher cost having to deal with patching that elevator, doing repairs to that elevator, that are likely going to be about three times more than if you had a proactive plan.

So again, if you have an elevator that's approaching that 20-year mark or older, it is really critical that you have a plan in place. And again, we'll go through that a little bit later in the presentation. So a couple warning signs that your elevator's approaching the end of life. You'll likely start seeing an increase in callbacks.

If you have four or more service calls per elevator per year, that's a good signal that your elevator's starting to wear due to age. You may also see more issues getting parts. So you maybe ... If you had parts issues previously, it could have, maybe you could get those parts in a couple days, but now you're seeing those lead times extend into couple weeks or even a couple months.

That's also a very good indicator that your system is approaching the end of its life. Again, you'll also start seeing higher repair costs. So again, maybe over those first 20, 15 years, 10 years, you haven't had many repair costs, or if they were pretty minor. But if you start seeing major repairs come in, proposals come in, it's a very good sign that your equipment is ready to start being planned for an upgrade.

And same with downtime. If you have more downtime or repairs that take longer, those are likely major components that have had a long life cycle that are now reaching the end of their life that need to get repaired. That could result in a couple day shutdown, again, versus just a couple hour repair.

And of course, as I said, when your elevator is at that 20-year mark, that's critical. And then lastly, you might start seeing more violations related to code items when your elevator's reaching that end of life.

Alright now lastly, getting into the high cost of unplanned downtime. When you have an elevator shut down, of course you're going to have the room refunds, you're going to have the service recovery costs. But one of the components that is extremely impactful is the negative guest ratings. I actually worked with a major hotel brand, and they pooled all of their negative guest comments for an entire year, and it was pretty eye-opening to see, but the highest amount of negative guest comments, the issue came was elevator related.

There were tens of thousands of negative elevator comments but it was really eye-opening to see the amount. It was amazing. It was wild to see how much elevators impacted the overall score of the property, which again, does affect the overall profitability. So elevators are really critical, again, not only from a short-term standpoint with shutdowns having to give the refunds, but also long-term because those comments don't go away.

Of course, when it comes to repairs, you're likely going to have to pay a premium for after hours, potentially expediting parts. So those unplanned capital amounts can add up quickly. You may have to add labor to deal with some of the inefficiencies and operational issues that shutdown elevator causes, especially with housekeeping and room service.

And then lastly, with older elevators, you're likely going to have a higher risk of guest entrapments, which could lead to legal claims, insurance hikes, potential fines for non-compliance. Moral of the story is that an elevator outage can be extremely financially impactful, reputationally impactful, so it's really important that you have a proactive plan which we will get more into the details next slide.

Rob's going to talk through maintenance contracts

[00:07:19] Rob Campbell: Get myself on video. There we go. Excellent. So before I get into some of the contracts and why they're not equal, I think it's important, as Elli pointed out, to talk a little bit about preventative maintenance. Preventative maintenance is the single biggest lever that owners can pull to protect uptime, control cost, and extend equipment life.

And that contract is pivotal to preventative maintenance. And as in the hospitality industry, there's some unique things you have to deal with, and so the contract should be structured accordingly. This is a generic overview of some variances between what we call an OEM full maintenance agreement, which would be just one you'd get from a contractor, or something like we would put together for you.

Some common things for differences are for instance, parts coverage. The parts coverage is on like an OEM agreement. A lot of times they omit items saying they're not excluded. If you don't know what they omitted, you have no idea what's excluded. We were a lot more comprehensive on our parts coverage.

Obsolescence is another big item. Elli talked about it. In the old days, we were very cognizant of fixing things. You'd send stuff out for repair and get them fixed, but now there's more and more push from the OEMs to basically say that the part is not covered. You'll see in these agreements they'll have language like anything that's twenty years or older is automatically obsolete.

There's really no... I get into a lot more detail on that in a slide ahead, but essentially, it's a big issue in today's contract language for OEMs. And in legal terms, I always joke around, if you take a peek at a OEM maintenance contract versus ours, say the contract's twenty pages, nineteen of it is usually legal terms and conditions with leaving a whopping one page for like scope.

That's not the way that we write it. It's usually more scope and less legal language, 'cause a lot of times you guys have that covered as far as, having a front-end agreement that we tuck under. This is an exhibit. Basically that's a little overview of some of the items that make this difference.

You can go to the next slide.

Obsolescence, this is what I was talking about. This is a big hot button in today's elevator world, I should say. There's limited oversight and advance notice with obsolescence. So essentially what happens is that your elevator will go down, and then you're surprised that the part isn't covered, and now you get hit with, like a $40,000 bill, a 60...

could be, upwards of who knows. But it happens all too common nowadays. Nobody gives you any advance notice. The pictures on the right are bulletins that usually are released by different manufacturers when they announce an obsolescence, and it rarely trickles down to the grassroots level to people like yourselves, building owners and building managers.

The self-policing terms is what I alluded to before. The elevator companies have written their language as that they're the judge, jury, and executioner as to what is obsolescence. If you get one written for you by someone like ourselves, usually there's, defined, they have to prove that it's obsolete. There's a whole methodology, mythology, methodology, excuse me, from, that they have to go through to try to prove that it's obsolete. And then obviously the end result is you're going to have unpredictable downtime and unexpected costs because no one was planning to spend $40,000, and no one was planning to wait, while they order the part or fix the equipment and you're down the entire time since they don't stock the inventory.

So obsolescence is a huge issue nowadays. We try to keep on top of it. I'll tell you some ways to mitigate this in some following slides, but this is something you should all familiarize yourself with on the contract language. It's the biggest gotcha I face out of all the elevator companies' contractual terms now.

You can go to the next slide.

[00:10:55] Tommy Tusinac: Hey, Rob, just to hop in. Sure. We had a question from David Halley. He's asking if there's any one manufacturer or provider that has a better track record of reliability than others. Do you want to get to that now, or do you want to just wait till the end?

[00:11:07] Rob Campbell: The short answer is no. Like a lot of, like the drive issue isn't really the…they're buying those drives third party from like a Magnetek or, there's a bunch of different types, and it's a lot of semiconductors and stuff on it that get, that basically go obsolete.

So it, it's the supply chain issue, and I really wouldn't put it on one particular manufacturer. But they're all doing it, even down to third party manufacturers. Some of those notices were from third-party companies like MCE and they all have the same issue. They're using third-party equipment for some of those components.

So here's some common provisions that you need to take a peek and look out for not necessarily unique to hospitality industry, but it's something that you should all be aware of. For example, auto-renewal or evergreen clauses. They're illegal in New York, but in our world they're very much viable, and they're in the actual default elevator templates for these contracts for elevator companies, where basically if you don't catch this 30-day window, could be 90 to 120 days before the initial term it will roll over, and you're basically trapped into another term.

So you really got to get your arms around when you got to cancel and not renew, because the escalation alone could you get three or four of those rollovers, and you could be paying top dollar for not the greatest service. Number two, vague maintenance frequencies. We like to make sure that people come monthly, and they like to have set hours just because there's a way to track against this.

Elevator companies use terms like systematic and periodic, as needed, or they don't even reference when they're coming at all. Which as you're probably aware, it's hard to really to pin them down or hold them accountable 'cause maintenance should be measurable. You should be able to measure and see some gains, especially on the callbacks and some of the key KPIs based on the quality of the maintenance.

And number three, service call and repair response times. This is big for hospitality. Default in an elevator contractor's agreement is to not have any ser- response times. They won't commit to anything, and you're just basically, you'll either get the phone call at 1:00 when you call them, and they tell you, "We don't have anybody available till overtime."

Or the big one is when they have a repair, which is a two-man work by the, the union, and they have to schedule the repair. And essentially they'll tell you, the one we hear all the time is, "We can't get anyone there for two weeks, but we can get them there tomorrow for overtime if you want to pay for it."

Those are little areas that we tighten up on our agreements to try to make sure that they can't use those levers to try to get extra billing. That's basically what that is. And then the number four, poor parts coverage and storage. Elevator companies, a lot of them don't stock parts in the elevator room.

They basically, it's just-in-time delivery to the warehouse, or they stock it off third part somewhere, some warehouse somewhere off site. If, especially if you guys have single unit elevators or, critical elevators for a hotel you should have them stock inventory and keep it on site.

That way at least you'll have a fighting chance to get the equipment up and running on overtime, which I didn't allude to, but one of the fundamental things that I've found that is it was a reoccurring joke in the elevator business when I first started was you stay away from hotels, housing authorities, and hospitals.

And the reason is that you're open when elevator companies are typically closed. So your busiest periods are Saturdays, Sundays, and then an elevator company has, an on-call guy or two, one or two. It's a skeleton crew. So you really have to tighten up on or come up with ways that you can mitigate long downtimes, and parts storage is one of those.

Number five, uncapped escalation and billing rates. Usually an elevator company, it's pretty open-ended on the increases, especially now. And as I've seen where they don't use any of the indices anymore for metals or material index. And it's pretty open-ended. They could do fuel surcharges, charges on top of bills.

The billing rates aren't usually… they don't give you the billing rates when you start, and they just get... you get surprised with new ones every year. These are gaps that you can close when you get your own agreement. All right, you can go to the next slide

So additional steps to protect your investment. So let's say you have a maintenance program in place, you've done everything that we talked about, you've got a contract put together by a third party, someone like ourselves or another consultant. The best thing you could do to protect your investment is have audits.

We do a lot that in the Boston market where essentially your elevator is still in the 20-year period that Elli alluded to, so you want to keep it running as long as you possibly can. The best thing you could do is have someone like ourselves or another consulting firm come out and actually do an audit of the equipment.

They go out and we look at housekeeping, we look at how well the equipment's running. We could see if there's any deferred repairs. You could see if there's a bearing or we could tell a lot of things ahead of time. And we keep them on their toes. We see this often done too when the contract's coming up for renewal.

You can have us come in the nine-month mark, before the contract ends, and just keeps everybody on their toes. It also gets the equipment kind of put in better shape for the next if you're going to switch providers or if you're going to stay with them, it puts them on their toes.

There's a lot you could do with these independent audits. It's been very helpful. We also can catch those obsolescent items we're talking about and tell you to plan for them. We give you capital planning. Our capital planning is based off of doing probably, I don't know, 100, 150 bids here every couple years.

So we have good data as far as what the prices are and what elevator companies are charging, so we can give you very good capital planning support, and you can at least be proactive versus reactive. And so this, these audits, we call them QCs in our company but they're just independent audits.

And these, this is definitely worthwhile if you're concerned about your equipment making it to the 20-year mark. And I don't know. Do I have any other slides? I don't think so. Do I? No. On to Ron.

[00:17:06] Ron Welts: Welcome everyone. So moving on to modernization. The first question we always get is, "Why bother having an elevator consultant help you with your modernization? Can't an owner handle it by yourself?" Obviously you can. And if it's a small project sure there is some savings there, some value there.

However, generally an elevator modernization is very complex and it's high risk. You're looking at multiple hundreds of thousands of dollars per elevator. You're looking at downtimes from a hydraulic elevator, which average between four and six weeks per elevator, to a traction elevator that often are 14 weeks to 20 weeks, depending on rise, complexity of that.

So having someone assist you in managing that is really a, overall a smart way to go. One of the areas is that if you just go out and ask five elevator companies for a proposal to modernize your equipment, you're going to get five different proposals. The scope is going to be different.

That often depends on the manufacturer and the equipment they want to push to you. They want to push their controller, their machines. Maybe they don't have a perfect solution for your particular product but they're pushing their agenda. Which takes you to the contractor's interest. The contractor, never forget, they are looking to sell you their equipment, to sell you their long-term maintenance agreement, to tie you to them for life.

We see that often in the large OEMs push for destination dispatching in every hospitality project we talk about. It's not appropriate for every project. There are projects it is appropriate for but their view of it is if you sign up with Otis or Schindler using their destination dispatching system they think they have a customer for life.

This equipment is far more proprietary. We are not here to tell you proprietary equipment is bad but there are times where it may not suit your interest, and we will sit with you and go through what is in your best interest and manage that project with you. Go ahead, Tommy.

Next. So For you, a modernization is a strategic investment. Instead of representing the elevator companies or the way I put this to customers is we're here to tell you two things. The first thing is what's right for your equipment, and the second thing is how do we work that in your interest.

So we represent the property's best interest and the owner's best interest. That's both financial, that's schedule, and most important, that's the impact on your property operation. There are some elevators that having that elevator out of service for an extended period of time is a much larger burden on the hotel.

So there are things that can be done to limit the downtime to accelerate to choose when a specific elevator is out of service. What does your schedule of guests look like, do you have any large conventions coming? Do you have any large sellouts that you know about well enough in advance that we can work the schedule that best suits the hotel?

The specifications we write are performance-based, meaning we do not tell the elevator companies, "This is the specific piece of controller we want. This is the specific machine we want." We tell them that we expect a controller to do these things. We expect a machine of… we might give them four or five options for a machine. And then they have to put a bid together to meet that. We can go back to that proprietary, non-proprietary conversation and specifically specify that we want third-party control systems, third-party door operators. That is a conversation to have with the owner of what's in your interest how do you feel about using OEM equipment?

What are the advantages and disadvantages of that? And then the third element of that is competitive bidding. What I said earlier if you go out and just ask for five bids from five companies, you're going to get five different bids. When we put out an RFP package that is performance-based, all the bidders are required to bid to that spec and then if they have what we call value engineering alternates if they have something that they'd like to put forward, be it their own equipment or maybe they see a way to save a machine that we're recommending to be replaced they are able to present that as an alternate.

And we will discuss the advantages and disadvantages of that in a competitive bid review for you, because it should not be as simple as “what is the lowest price.” We recognize price is the key driver- most of the time. But we compare that with the schedule. Has the company given us a schedule that looks reasonable?

When can they get equipment? When do they see crews? How many crews can they give you? All of this goes into a true competitive analysis report that we give you as to who we recommend you move forward with. Tommy? So the way our services work is we generally start with the RFP development, but that starts with what Rob was talking about a minute ago of an equipment evaluation.

That equipment evaluation is how we start our engagement with almost all of our customers. We start with either a maintenance audit or a due diligence audit or in this case we come out and do a specific evaluation of the equipment with the intent to determine where it is in its life cycle and what the recommendations are for a modernization.

We will give you a report that says, "These are our recommendations," before we write the specification. We develop a full specification package. This often includes a maintenance specification and the modernization specification. It also involves the determination of the related work for the building.

So every modernization will have some related work. At a minimum, you're going to have some electrical upgrades that have to happen, some electrical work in the machine room that has to happen. More often than not, we have lighting upgrades in the pit lighting upgrades in the machine room. If the equipment is more than twenty years old at this point there is also life safety upgrades that have to occur.

The rules have changed over the years, and older machine rooms that have hardly any ventilation and get excessively hot, computers don't necessarily like that. So the microprocessor controllers have some code changes that require some cooling. It doesn't have to be a full HVAC system.

Sometimes it's as simple as putting in some exhaust fans. But we need to look at that machine room, make some recommendations, put in the specifications exactly what that related work is. Something for some hotels to think about is special barricades. Where the elevator work is going to happen is in, in the lobby typically at a top floor, typically at the bottom floor, but how do we separate the workers and the work they're doing on a specific elevator from your guests?

Do you want to put up taller walls so that it's really not visible to the guests of what's happening? Are there special safety needs for your specific site? So all of that goes into the specification. All of that goes into the RFP. As I said a little bit ago, once all of those bids come in, we will do a comprehensive bid analysis comparing all of the bids.

We're 100% transparent. We're going to show them to you what the bids are and what the clarifications are as well. Once you select a successful bidder we'll help you through the contract process. Once that occurs then the elevator company starts their phase, which they have to do an evaluation and engineering assessment to get their engineering done.

Then we provide submittals shop drawings. We review them with you. We help you with selection of buttons, of fixtures, of all the visual things, of the car interior if that's part of the work you want to do. So we'll go through all of that with you and then approve those shop drawing reviews or shop drawings from the elevator company and move forward.

Tommy, next. One of the more important phases of a modernization is actually that time between the shop drawings and starting the field work in the property. All of what happens in there is the ordering of equipment. And then we need to do a pre-start meeting with you. Sometimes it's as easy as a WebEx kind of event.

Sometimes it's a little more complicated, so we need to be on site. We need to talk about when is the equipment coming? How much of the equipment is coming? Are we doing a phased delivery, meaning maybe two elevator's worth of equipment being delivered upfront, and then phasing the rest of the equipment if you're doing a larger number of elevators.

Because where is it going to be stored? How is it going to be protected? That conversation should happen and make sure everybody is clear exactly where the equipment's going to go, exactly who's responsible for the protection of it the safety, security of it. What kind...again, what kind of barricades, what kind of guest impacts.

All of that should be talked about. Noise should be talked about. What are the noise work hours is critical for hotels. And it is a conversation. Elevator companies want to have their crews there at 6:00 AM but I'm not going to tell you that it's okay for them to make a bunch of noise at 6:00 AM. So it's something we all need to talk about moving forward.

Once the elevator company is on site, VDA, any elevator consultant, but I'm here to talk about VDA. So construction administration. So this is our management with you of the modernization project itself during the construction phase. And this can range from periodic visits at every, the midpoint of each elevator or the completion of each elevator to monthly meetings with you to, in some larger projects at the beginning of the projects especially, even weekly meetings.

That is something that we would talk you through is what suits your budget, what suits your desire for how much input, how much control you need to have and how much you need an advisor with you to help you through the process. As elevators get completed a consultant will come out and do a final punch list comparing the quality of the work and the completeness of the work to the specification and to our quality standards make sure that it's reliable, it is what was specified and what they owe you in the contract.

Once we create that deficiency list, and truthfully, there's always a deficiency list we'll give the elevator company maybe 30 days to correct those items, come back and do a follow-up. And then at the end of the project we're there to make sure that you're given all your drawings, you're given all the manuals that they owe you.

They do a little training session for how to operate the new elevators and any computer device. Maybe we've gone with some new security systems. So there's that training that the elevator company owes you. And also your closeout documents. The warranty document.

When does the warranty begin? When does it end? And how does the maintenance transition in the phases of the modernization? Because there is different equipment at the beginning than at the end. And often there's a transition of maintenance companies and a little bit of transition of maintenance scope as you go from older equipment to new equipment.

Tommy?

In our opinion there's four pillars of proactive elevator management, and that's the first one Elli and Rob have talked about great contract optimization. Making sure that your contract, not just your modernization contract, but your maintenance contract is optimized for you specifically and your equipment specifically.

One of the things we've talked about a lot is capping the escalation. Three to five percent is very typical in the industry. Whereas the elevator companies will give you an escalation language that is very broad and gives them the ability to add quite a bit year over year as they see fit.

Maintenance verification. This is again, coming out periodically verifying that the maintenance is being done and that they're taking care of your assets. Because the elevators are a very high dollar asset to the property, and you want it to last as, as long as it can.

The third pillar is capital planning, which is that periodic assessment every five to 10 years of where are you in the life cycle what's it going to cost, what's the next major phase to keep your property up and running. And then what we've been talking about is that modernization oversight, making sure that you get your elevators through the modernization process and completed it with both a financial goal in mind on budget and on schedule.

So what VDA has for hospitality customers, we have three large buckets. One of them is maintenance management. That's what Rob and Elli talked about. Not just a good contract, but we can help you manage your maintenance program for the life of the building and we can be there as much or as little as needed.

We have clients that we meet with the maintenance provider and the owner every month, and we review where we are at maintenance. Those are typically larger customers. Smaller hotels, it could be quarterly, it could be semi-annually, it could be once a year coming in. Doing periodic evaluations of the maintenance, periodic evaluations of the life cycle, which I've talked about and then modernization, capital planning.

Call us before you know you have no choice but to do modernizations. Let us work with you and schedule that capital expenditure. Maybe parts of it can be done over a period of time. Maybe it is in your best interest to do it all within a short period of time. Every property is unique.

Every hotel has different needs for what the guests see when elevators can be down. We have a few large modernization projects going on where they tried to time an elevator modernization with a full room renovation. Sometimes that works. Often it doesn't because the time durations of the two tend to conflict and the room renovation often needs the elevators all the elevators running so they can get through the room renovation. But that's part of the CapEx planning is when is the right time for the hotel to do the modernization? Tommy next.

And next steps with VDA- you can schedule a call with any of our consultants through the web or email. Tommy gets those emails and forwards them to the team in the local area.

And then we'll work with you. After we talk to you, we'll work with you on a tailored proposal for your property. And then we begin our assessments and our assistance for you as the client.

[00:32:35] Tommy Tusinac: Thank you, Ron. I'm going to step in. I just wanted to say thanks everybody for attending, and please feel free to ask questions.

There's the Q&A panel. We're going to spend the next 15 minutes or so answering questions. If you have to jump, you can also click into that resources tab. There is a link to our landing page. All the way at the bottom there, there's a little form you can submit if you want to get a one-on-one conversation with the VDA expert if you don't want to ask your question now.

They'll reach out to you. They'll sit down and talk to you about any hospitality or modernization, maintenance needs that you may have. But once again, feel free to ask questions. We're here for the next 15 minutes and we're eager to answer any questions you may have

And once again, there will be an email coming your way with the slides and the recorded presentation. So if you missed a section, you can look back on it. So you'll receive that email within the next two to three business days. And when you do submit a question on that form, just expect a response similar timeframe, about two to three business days

[00:33:52] Ron Welts: No questions?

[00:33:53] Rob Campbell: We stumped them.

[00:33:55] Tommy Tusinac: I'm surprised there aren't any

[00:34:00] Rob Campbell: When do you know it's time to separate from your elevator contractor and start bidding for a new one? Boy.

[00:34:06] Ron Welts: How's your relationship with them?

[00:34:08] Rob Campbell: Yeah, I mean- That's where I- yeah, it's kind of like a marriage. You've basically told them 100 times, to straighten their act out. They don't. Usually you see it happen when you've had all sorts of downtime and, issues with callbacks and you feel like you're just getting the runaround. And then if actually, most of the time too, is if you start getting bad feedback from like one of your clients, and it starts to negatively affect you, usually that's when people say “I'm done with this. I can't defend this behavior anymore." And then that's when they want to switch. That's at least what I've experienced.

[00:34:45] Ron Welts: I agree. More often than not the relationship is totally broken down. They're not keeping your equipment operating, and they're not doing good maintenance and the communication has failed. At that point it's difficult to repair that relationship and keep moving forward.

[00:35:05] Elli O'Quinn: And we've got consultants all over the country, and they pretty well know which vendors are the best vendors in each market. So if you need assistance changing or just want to talk through other vendors that might be good in your area, please reach out and we can help you with that. Just a couple-

[00:35:18] Ron Welts: Steven- Couple just came in ... I love... Yeah, I love Steven's question of who do we typically recommend on either the larger elevator companies or smaller local ones?

I think it's market driven. The answer is it's very market driven, very project-driven. There are times where it just suits the small independents much better. And sometimes if it's a very large project, you have to be a little concerned that some of the smaller local independents 'cause there are some national independents, but the small local independents do they have the financial backing to take on a $6 to $10 million modernization?

Sometimes you have to be a little cautious there. So it's very customer and market-dependent.

[00:36:01] Rob Campbell: Definitely. Like one elevator company could be really good in your market and really bad in another market. It really comes down to who's on their team, what kind of mechanic, who the mechanics are and the office personnel and all that.

[00:36:13] Tommy Tusinac: We also had a question from Linda. She asked how long between receiving a tailored proposal to getting bids and then having the work getting going.

[00:36:26] Rob Campbell: As long as it's a- go ahead ... maintenance bid or a mod bid, a modernization. Modernization's longer. That's a Ron Weltz question. They take a while. But the maintenance one, you could probably do in a couple months’ notice. You need about a month to bid it once it goes out in the street, 'cause you give them two weeks to come out and look at it, and about another two weeks to get your prices. So the front end piece is just how busy, we are to put together for you, but it's usually a month after it's done on a maintenance

[00:36:51] Ron Welts: And on a modernization project you're typically looking at after we put the RFP out on the street, which goes call it three weeks, four weeks depending on the scope. And there's a lot of communication that has to happen with the client about what your needs are.

Once we get that RFP on the street it's anywhere from three to five weeks before we get bids back. If it's a small one hydraulic elevator project in most markets, we can do something around three weeks. The larger it gets, the more time the elevator companies need to do their estimating.

And the more complex, obviously, it sometimes goes even past five weeks. Once we get that and you select a vendor for small hydraulic projects right now, the average is 12 weeks from ordering of equipment to having equipment on site. Traction equipment is running somewhere close to 20 weeks.

Now there are some vendors Mitsubishi on the West Coast is a very strong competitor. But right now if we wanted to order their equipment, it's going to be 18 months before they can actually have equipment on site. That can stretch out your project out. So it's a great question.

Sorry for it's a little complicated. And the duration between when you select a elevator partner to do this with and you, when you get the contract signed and the submittals in that... My experience, that's about three months in most cases.

[00:38:20] Rob Campbell: The maintenance renewals, does VDA write the actual contract that can be si-... Yes. Does VDA just give recommendations for what? No, we write the whole contract. Yeah, everything. The maintenance one has signatures. It's a full-fledged contract. Our modernization one is more of a scope that needs to be tucked into a project manual or a front-end agreement, but the maintenance contract's a standalone contract.

[00:38:47] Ron Welts: Rob, you want to take the one above that?

[00:38:49] Tommy Tusinac: Yeah.

[00:38:49] Rob Campbell: I can't see it. What's it say?

[00:38:50] Tommy Tusinac: Evan's asking, he says, "Can you require on a service contract to have a certain service technician be part of the agreement if you find they have history of past challenges?"

[00:39:00] Rob Campbell: Yes. I've actually seen it where when you bid it, you actually write in the person that you're planning on using, and then you have a clause that says if you change personnel without, you basically can cancel them if they change the person on you.

Yeah, I've seen that done. Especially if you have a good, really good route mechanic and you're worried about them yanking him from your contract. I've seen that.

[00:39:22] Ron Welts: I would just add be cautious of making sure that it's a current employee of the company that you're signing a contract with.

It does get messy if you have, let's say, a company A mechanic doing the work today, and you're requiring company B to hire that person. That gets messy for a lot of different reasons.

[00:39:43] Rob Campbell: Yeah.

[00:39:45] Ron Welts: It's obviously a request we get

[00:39:51] Rob Campbell: The maintenance room

[00:39:51] Tommy Tusinac: and we touched on Kevin's question for the maintenance renewals?

[00:39:55] Ron Welts: Yeah.

[00:39:56] Tommy Tusinac: Okay

[00:40:01] Rob Campbell: Basically the gist of, if you have to take anything away from this is that do not sign an elevator company's contract unless you have to. Just not worth it.

[00:40:17] Tommy Tusinac: That looks like that's about all the questions we got. So if anybody has any further questions, ask away. We'll give about, a minute or so for the last remaining questions to come in, and if not, we'll just wrap it up. And once again, we appreciate you joining

Thanks for joining us today ... all right. I think that's it. So thank you, guys. Thanks, everybody. Have a great rest of your day.

[00:40:55] Rob Campbell: Oh, hold on. Someone's saying something Nope. Scrap that. See ya.

[00:41:02] Tommy Tusinac: All right. See you guys