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Industrial and commercial facilities strive to service existing low-voltage distribution equipment in an effort to postpone costly replacement. As part of that effort, a maintenance contract can be critical to a facility’s life-extension program. Maintenance contracts are an advantageous choice for electrical and low-voltage contractors, not to mention the customers who own the systems. Maintenance income is becoming a staple where only installation once dominated.
Even with the slow-moving economic recovery, maintenance growth is expected to continue. In fact, 33.4 percent of revenue in the U.S. security systems integration market will come from service and maintenance contracts by 2014, according to a 2010 IMS Research study, “The Americas Market for Security Systems Integration.” Author Ewan Lamont, IMS Research market analyst at the time of the study, indicated that the recurring nature of maintenance-based earnings made it a reliable source for companies and a value-added service to its customers.
Employing company staff is expensive for facility managers, while depending on a multitude of independent maintenance for contracts on each device leaves too many gaps in the facility’s protection. For example, maintenance lessens the probability of an equipment failure resulting in downtime; however, individual product maintenance won’t guarantee overall power system reliability. There can be external circumstances, such as electrical grid problems and lightning strikes, or internal issues, such as the level of power quality that affects an electrical system, even though the equipment itself has been regularly maintained. That’s where the contractor steps in.
In a good position
As installers, electrical contractors are the most closely familiar with their systems and are uniquely poised to offer maintenance contracts.
Maintenance contracts are traditionally based on individual pieces of electrical equipment, said Melissa E. Golden, market segment manager, contractors, Schneider Electric.
“Contractors would be wise to note if specific testing is required when quoting and scheduling maintenance work,” she said. “They should consider all items in the electrical distribution system as maintenance is performed to ensure the equipment functions as intended and designed.”
For fire alarm servicing, local governments are adopting stringent codes based on standards developed by several independent agencies including the National Fire Protection Association (NFPA).
Contractors then must cultivate a staff that includes crossfunctional expertise to provide electrical workers with service know-how.
Emphasizing fire alarm maintenance services provides multiple benefits for the installer. For example, it ensures consistent customer retention and creates opportunities for future sales. It not only offers a more reliable income and legitimizes the business for creditors and investors, but it provides the contractor (and the customer) a chance to resolve false alarm issues, ingratiating the contractor with the customer and first responders.
Whether for security systems or fire alarms, by having a maintenance contract, contractors also can take advantage of regular visits to check the status of the customer’s system. In addition, many make a point to differentiate between certain standard service procedures and other more unique service. Some integration contractors develop a two-tier service contract that accounts for basic service to be covered. Problems or complaints could possibly be diagnosed during regular visits, and anything outside that basic coverage would be billed for labor and materials.
Another advantage to providing service contracts is the flexibility it allows electricians, enabling them to work maintenance calls into their day when, for example, a scheduled call finishes early. In that case, staff with time available can visit a client in the area and check on the system. The visit may act as a pre-emptive service call to troubleshoot before a customer has a major problem, possibly diagnosing a potential issue ahead of any system failures.
During the calls, contractors also can create relationships with the facility’s service people and staff working there. Electricians can use these visits to talk to maintenance, engineering and contract security officers as well as janitorial staff. Consequently, the contractor can gain a greater understanding of the customer and its system’s operation, by hearing directly from the system users. It also provides the electrician an early warning for any facility changes that could affect any other integrated system, including intrusion, fire, video surveillance or access control.
Some contractors and integrators also connect their maintenance staff with the sales department, so on-site personnel can bring potential new projects to sales people. In some cases, the electrical staff may earn commission for successful business leads.
But selling a maintenance contract can be most effective when done at the time of installation. Then, staff members don’t have to sell the plan separately but make the service contract part of the services being provided. This approach can save headaches for both contractor and customer.
Doing more with less
For facility managers and owners, contractor and integrator movement into maintenance work is an advantage that saves on payroll and extends the life of their systems. Not surprisingly, facility managers are being asked to do more with fewer personnel, and service contracts offer the necessary maintenance at a lower cost than a full-time dedicated staff member.
“As such, they are relying on strong contractor relationships to deliver more services to fill this gap,” Golden said. “There is also the value of reduced risk to the end-user because a maintenance contract can increase uptime and even assure response time in an adverse situation, if written that way.”
A savvy contractor can provide the value of a full-service offer—from maintenance and testing expertise to engineered solutions—by partnering with manufacturers, such as Schneider Electric, to offer a broader range of services than they might provide alone.
“In addition, qualified contractors with strong safety records will continue to be in demand as regulatory agencies have stringent compliance requirements,” Golden said.
There are plenty of examples regarding those agencies. OSHA requirements state that qualified personnel must perform electrical work. In addition, NFPA 70B requires routine maintenance for workplace safety and reliability.
For low-voltage installations, qualified electrical contractors who are familiar with the construction and operation of the specified equipment (or system) will be the most successful. Strong customer relationships help in this regard, as well. Typically, contractors who understand both the end-user’s installed systems and business write maintenance programs, so a strong relationship with the end-user is essential to developing these types of opportunities, Golden said.
Following several IMS Research studies, which found that maintenance contracts will be an increasingly large portion of business for contractors, a new study is expected out in October to look at worldwide predictions, said Niall Jenkins, manager of the video surveillance and security services group at IMS, who authored the 2010 study of maintenance contractors with Lamont. The studies result from interviews with equipment providers and with the integrators and installers to get a full picture of the market.
Still, the greatest advantage for electrical and low-voltage contractors is establishing relationships with clients that make them committed to the contractors’ companies. Maintenance and service contracts provide the opportunity to keep customers satisfied and engaged, while ensuring constant and reliable revenue.
SWEDBERG is a freelance writer based in western Washington. She can be reached at [email protected].