Commercial Maintenance: A 180 View

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September 9, 2014

Commercial maintenance contractors are tired of dealing with property and procurement managers who seek rock-bottom prices and lack the trade-specific knowledge required to determine the best bid.

“Our clients are losing control,” insists Garry Floeter, managing general partner, Cookeville Heating and Cooling Services in Cookeville, TN. “The commercial maintenance market seems to be more price-driven. Decisions are being taken out of the local manager’s hands by the upper level of a corporate chain and outsourced to property managers, who are just looking for somebody to show up and change a filter, fill out a report, and send it in. More and more people are getting involved in commercial service who really aren’t in commercial service. They’re just brokers.”

This trend hasn’t gone unnoticed by Thomas Winstel, president and CEO, Enervise, LLC in Cincinnati, OH, whose customers include restaurants, office buildings, nonprofits, retail, healthcare, education, and industrial facilities.

“In recent years, we’ve seen a lot of building owners and large management companies adopt an approach to sourcing and securing maintenance that is simply a bidding exercise,” Winstel says. “The procurement department, not the facilities manager, is making decisions. You’ve got uneducated buyers making decisions about a service. Rather than interpreting guidelines like you might see in Standard 180, they might expect a much lesser spec to reduce the cost. They think they are saving the building owner money in operating costs. In reality, they’re increasing the potential lifecycle costs of that building through premature equipment replacement and higher energy costs.”

In fact, if a property manager is involved, Air-Tro in Monrovia, CA, doesn’t bother bidding, reports Bob Helbing, president and owner.

“A property manager’s main focus is finding high levels of service for low prices,” he explains. “They take every recommendation and bid it out, delay things, point fingers, and expect you to shoulder insurance claims for damage done by somebody else. They don’t really see specialty contractors as partners. That’s not an attractive opportunity for us. We like to deal with decision makers in the building who care about the systems.”

Air-Tro got involved in commercial maintenance in 1970 when Los Angeles was still a pretty big player in the aerospace field. “We had a lot of third-tier aerospace companies or machine shops,” Helbing says. “They understood the importance of maintaining their equipment. It was a natural fit for us.”

Today, the company is split 50/50 between commercial and residential and averages $10 million annually. Helbing estimates about 60 to 70 percent of the company’s commercial business is maintenance and repair.

What Owners Want
When building owners hire HVAC commercial maintenance contractors, “they are looking for dependability, for people they can rely on who are safety-minded and have the client’s interests at heart,” Floeter says. Strictly commercial, Cookeville Heating and Cooling Services employs 12 full-time service techs and averages about $2.5 million in annual revenue.

“With our clients, we are able to build a relationship,” Floeter says. “We take care of their installations as if they are our own. We’re able to give them the lowest operating cost and maximum efficiency in their equipment at a low expense to their bottom lines.”

Winstel, who was a member of the committee that developed recommendations for ANSI/ASHRAE/ACCA Standard 180, believes owners and operators are looking for a systematic program to manage the maintenance-related tasks that are required to properly operate the mechanical equipment in their buildings.

“We verify that the equipment is operating as the original equipment manufacturer recommends. We make sure the equipment is operating efficiently for potential energy savings and operating safely so there are no potential hazards that could cause harm to building occupants. We look at indoor quality, ensuring the boilers and combustion-related equipment are operating properly. We also make sure the equipment is operating reliably so occupants are comfortable and no work time is lost.”

He believes Standard 180 is an excellent guideline that helps building owners establish specifications for maintenance. Although he recommends these standards, owners may—or may not—choose to follow them. “Different owners have different objectives,” he says. “They might be short term in their thinking or they might have a longer-term perspective, which may dictate what level of care we provide on their equipment. Ultimately, the building owner decides.”

The local electric utility in Los Angeles, a big proponent of Standard 180, offers a quality maintenance program based on its recommendations, Helbing says. However, he admits to finding it difficult to incorporate the standard’s requirements into a winning bid. “Standard 180 maintenance involves a pretty thorough regime, and it’s difficult in a competitive environment to put that on the table and say, ‘This is what you should be doing’ when five other contractors are bidding on the same maintenance plan and not offering anywhere near that level of equipment maintenance.”

Advice From the Pros
Based on their many years of service, commercial maintenance contractors offer several tips:

Provide technicians the time they need. “We do a disservice to our technicians if we don’t give them adequate time to perform the tasks that are scheduled on maintenance,” Winstel says. “If a task has been time studied to take an hour, but we’ve only sold half an hour’s worth of time, what are we really saying? It’s a question of integrity at that point.” He has adopted his own description for this service: delusional maintenance. “There are building owners who buy delusional building maintenance, and there are service contractors who sell delusional maintenance.” His advice: Don’t be one of them.

Keep in touch. You can’t take your customers for granted, Helbing cautions. “One of the challenges with commercial maintenance is your technicians onsite are generally not dealing with the decision maker,” he explains. “The decision maker is running the operation or purchasing, and they don’t see their job as dealing with the air conditioning equipment, which means you’re easy to forget. You have to figure out ways for them to know ‘Hey, we’re your go-to people.’”

Remember who’s boss. Helbing reminds commercial contractors to stay respectful of a customer’s decision, even if you disagree with it. “You may have more knowledge about your trade, but they will always have more knowledge about their business, and you have to respect that. It’s their building, their money, their people, and their decision.”

SIDEBAR: Mistakes Made by Owners & Operators
Paying too little for maintenance can be costly, emphasizes Thomas Winstel, president and CEO, Enervise, LLC in Cincinnati, OH. “Not having comprehensive maintenance increases the long-term owning and operating costs of a building,” he says.

Here are three owner/operator mistakes that end up costing money:

Determining the winning contract by simply looking at the hourly rate. “We have probably the highest hourly rate in the area, but we provide service using one technician,” says Garry Floeter, managing general partner, Cookeville Heating and Cooling Services in Cookeville, TN. “A major competitor of ours, for a lower rate, has two technicians making a call. Unless we point that out to clients, it never dawns on them. The only thing they are looking at is the price per hour.”

Making utility decisions in a silo. According to Winstel, a CFO might be responsible for capital investments, an energy manager might be involved with energy and utility cost decisions, and an operating engineer or facilities manager might be responsible for the operating budget. “To reduce the owning and operating costs of the building, all of these individuals need to talk to one another about a good energy plan,” he says.

Trying to breathe life into dead equipment. One of the problems Floeter encounters on the job is being asked to continue to repair equipment that’s at the end of its life cycle. “While a repair is an operating cost item, a replacement comes out of the capital budget of a building owner’s budget,” he says. “Sometimes it’s in the best interest of the client to replace the equipment, but the accounting principles won’t allow it.”

It’s critical to work with your customers on their capital budgets. If they have a realistic idea of how long their equipment can be expected to last, they can better plan for its replacement and you will have less trouble convincing them to replace it when the time comes.