Most property managers think they have full coverage on their elevators. They see the monthly invoices. They watch the service van show up twice a year. When something breaks, they call the company and someone shows up.
Then the parts bill comes. $4,200. For a component you were certain was included.
Here's what happened: you have an examination contract. You thought you had full maintenance. And you just found out the difference the hard way.
The Two Contract Types
Full Maintenance (FM) covers parts and labor. When a component fails, the contractor replaces it at no additional cost. The monthly premium is higher - typically $3,500 to $9,000 per unit for commercial elevators - because the contractor absorbs parts risk. This includes callback coverage for most service calls, meaning you don't pay per-incident when something breaks.
In theory, this aligns incentives. Your contractor has a financial reason to maintain the equipment properly because every breakdown they prevent saves them money on parts.
Examination (Exam) contracts - also called Oil & Grease (O&G), Limited Coverage, Lube, or Maintenance Only - cover labor only. Repairs are excluded. Your contractor inspects and lubricates components on schedule and responds to service calls. When something actually breaks - a controller board, a door operator, a landing door mechanism - you get a separate parts invoice.
Exam contracts carry lower monthly premiums - typically $2,000 to $4,000 per unit - which is why they're common in cost-sensitive portfolios. Full Maintenance contracts cost roughly double (FM could be about twice the cost of a limited agreement in most cases). But the total cost of ownership over 3-5 years on exam frequently exceeds what FM would have cost, because parts failures are unpredictable and the bills arrive when you least expect them.
Here's the trap: Examination contracts are the industry default. Unless your contract explicitly states that parts are included, assume you're on exam. The elevator industry doesn't label it "examination contract" - they describe what's covered and hope you don't notice what's absent.
Why This Confusion Is Profitable
The elevator service industry is built on information asymmetry. Your contractor knows what your contract covers. You may not.
Major manufacturers - Otis, KONE, Schindler, TKE - maintain proprietary parts for their equipment. Third-party independents can't easily source certain components. This limits your ability to shop around when a parts bill arrives. You're effectively captive to whoever holds your service contract.
The industry profits from the confusion at two levels:
- Exam contracts sold as comprehensive coverage. The manager thinks they're covered. Parts bills arrive as surprises.
- FM contracts with strategic exclusions. Technically "full maintenance," but the items most likely to fail are carved out in the exclusions list.
The Five Clauses to Find in Your Contract
You don't need to read the whole thing tonight. Find these five:
1. Parts Coverage Definition. Look for explicit categories of covered parts. If it uses "routine maintenance parts" without defining what qualifies - that's a red flag. The contractor defines "routine" however they want at billing time.
2. Exclusions List. Every contract has one. Common surprises: cab lighting, flooring, door restrictors, hydraulic fluid, cosmetic panels, telephone equipment, and anything defined as "major."
3. Evergreen Clause. Look for: "This agreement shall automatically renew unless written notice is provided no fewer than [60/90/120] days prior to expiration." Miss your window by a week, you're locked in for another term.
4. Response Time Guarantee. "24-hour response" sounds reasonable. But 24 hours for a trapped passenger is different than 24 hours for a door issue. Clarify what triggers emergency vs. standard response.
5. Rate Escalation Clause. Most contracts include 3-5% annual increases, often tied to CPI. A reasonable contract in year one becomes expensive by year three.
The Real Financial Exposure
On equipment approaching 15-20 years, parts failures aren't hypothetical - they're scheduled.
Controller boards - one of the most common failure points on aging equipment - run $8,000 to $12,000 plus labor. Full door operator upgrades run $20,000 to $23,000 (smaller components may be replaced or repaired for less; they are typically modular). On hydraulic systems, hydraulic power units cost $30,000 to $50,000. On traction systems, machine replacements run $60,000 to $80,000.
On an FM contract, these costs are your contractor's problem. On exam, they're yours.
If you manage a building with a 20-year-old elevator on an exam contract, you're carrying unquantified capital exposure. The question isn't whether you'll have parts bills - it's when, and how large.
What to Do About It
At renewal, you have three options:
Option 1: Renegotiate to FM. Possible if your equipment has been well-maintained and the contractor wants to retain the account. Expect a premium increase. On aging equipment, usually worth it.
Option 2: Accept exam and budget explicitly for parts. This can work - but only if you've budgeted for the actuarial reality of older equipment, not the wishful thinking version.
Option 3: Use renewal as a competitive bid opportunity. Get bids from 2-3 contractors. Specify in your RFP that you want FM terms with defined parts coverage. Compare what you receive.
There's a fourth option most managers don't consider: run the contract through our free Contract Scanner before you sign anything. The renewal package your current contractor presents is not take-it-or-leave-it. Everything in it is negotiable. You get what you pay for, but you also need to know what to negotiate before you sit down. The scanner identifies red flags, coverage gaps, and unfavorable terms in 60 seconds.
Understanding contract types starts with reading your contract carefully. It's the first step toward knowing what you're actually paying for.
And beware of FM contracts priced below market. A $200/month "Full Maintenance" contract is almost certainly a loss leader trap designed to recover margin through inflated repair bills.
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