Security of Maintenance Contracts


Once an electrical contruction project is complete, some contractors and customers start a maintenance relationship that continues for the life of the system. This relationship is not only potentially lucrative for the contractor but benefits the customer as well.

Building owners have reported a correlation between the quality of a maintenance program and the reliability of a building’s low-voltage electrical system, such as the fire alarm, security or information technology system. Low-­voltage contractors can provide programs that include evaluation and regular maintenance of a facility’s low-voltage electrical infrastructure, identify risks in a poor maintenance system, and explain how they might affect a company’s operations.

Maintenance agreements are on the rise, partly due to the economy, as a source of revenue beyond construction and installations. These agreements also increase the value of the company in the event it should be sold with those contracts.

Such programs are still a fairly recent offering. In the past, contractors had a distinct, one-time construction mind-set when it came to low-voltage alarm or fire safety projects. This short-term approach sharply contrasted to that of alarm industry integrators, who benefitted financially from such contracts after installation. Viewing a project as a single installation, rather than a continuing service arrangement, the contractors tended to restrict themselves from a source of continuing revenue. In addition, those who venture into maintenance with that one-time construction mind-set may end up being liable if something goes wrong.

Contract attorney Ken Kirschenbaum, who helps write contracts for the alarm industry and contractors, said that’s a mistake contractors commonly make.

If they have an interest in maintenance work for alarm or fire systems they install, contractors should know several things. For instance, they need to understand the contracts they present to subscribers. Service-agreement providers even use the term “subscriber” to indicate the relationship between the provider and the customer, which differs from that of the traditional contractor and customer agreement.
Contractors are seeing more value in maintenance agreements than they have historically, Kirschenbaum said, and that trend means they must understand how to protect themselves legally.
“The recurring-revenue, long-term contract is still something foreign to most electrical contractors,” he said.

Often, maintenance contracts can be so lucrative to companies, such as alarm systems providers, that they sell the original solutions at a loss, with an advantageous maintenance contract provided along with the new product/system. These dealers, Kirschenbaum said, are aware that their contracts need to generate recurring revenue, while at the same time, insulate them from liability against a failed system.
Contractors need to protect themselves from liability that involves risk of fire or outages, and low-voltage systems include many more scenarios that could result in a customer seeking damages because the system failed to perform as they expected.

“Alarm guys can get sued because there is a different expectation between the alarm company and the subscriber. The contract needs to minimize that risk,” he said.

He added that you can contract away liability, but that might be a foreign concept. Even though Kirschenbaum offers his own contract-writing services, he urges contractors to refer to his website for regular newsletters and blogs that will help keep them up-to-date on contract law.

Several factors beyond liability risk need to be considered in a contract. A good maintenance contract is intended to reduce the risk of equipment malfunction, power outages or other interruptions to business operations. A comprehensive contract will include all electrical power distribution equipment for the low-voltage system, no matter which manufacturer provides it.

In addition, a variety of common problems can occur as a result of faulty contracts that can simply make life harder for the contractor. For example, one shortcoming is a lack of current and up-to-date diagrams of a low-­voltage system. A good diagram is expected to provide specific, comprehensible details about all the exact interconnections. It should encompass not just a few low-voltage systems, but of all the electrical equipment found in a facility’s entire power distribution system electrical infrastructure. When changes are made, the contract should indicate those additions or modifications to a building’s electrical system. The records used with contracted maintenance should also indicate the specific location of all the electrical distribution equipment based on room number, floor and the area or location within the building.

Another point to include in any contract: it’s the role of the facility’s management to ensure there is adequate temporary electrical power during any scheduled interruption of normal electrical service and that includes maintenance work. In some cases, this means providing standby generators.

Maintenance scheduling
Any ANSI-rated low-voltage switchgear needs maintenance—inspection, cleaning, tightening, lubrication and exercise—on a regular basis. Some manufacturers recommend inspections take place annually, while others may need more frequent checkups. Under the most ideal conditions, maintenance might be required much less often, say every two to ?ve years. The frequency of maintenance depends on the operating conditions, including the amount of moisture, heat, dirt, dust or other contaminates—­all of which will deteriorate the insulation, conductive materials and protective devices in the equipment.

Doug Hoeferly, senior product marketing manager for life safety product manufacturer System Sensor, St. Charles, Ill., reports seeing a variety of contractors who may or may not sell a service contract with their installation, both in commercial and residential projects. When it comes to residential installations, he said, the best opportunity for contractors is to work out a contract with a developer or builder and offer security or fire safety systems for upscale homes, specific to a homeowner’s needs. In addition, the contractor should offer a maintenance contract to go with that installation.

“If you get in early on [before another system is installed], you can offer the kind of system the homeowner wants and then add maintenance,” Hoeferly said.

With any installation, Hoeferly advised that savvy contractors keep maintenance in mind when creating a contract.

Gene Pecora, Honeywell Fire Systems’ marketing director, Northford, Conn., finds that the low-voltage industry’s trend of moving away from proprietary systems to those sold through distributors allows electrical contractors a greater opportunity in maintenance contracts. Fire alarms, he said, lend themselves most to maintenance contracts since there are local, state and federal mandates related to the maintenance of such systems. Maintenance is needed not only to ensure they will function and not cause a false alarm, but also that they will operate in a power outages, meaning standby power must be checked and replaced when necessary, a process that can be significant.

In addition, Pecora said, “The systems need to be tested, and that testing process is part of overall maintenance.”

Today, low-voltage contractors are taking the majority of the fire alarm maintenance work, he said.

Also, there may be a trend of greater enforcement of ordinances, which could mean a greater number of inspections, requiring users to be more diligent in their maintenance.

In the past three years, the economy has fueled a growth in maintenance contracts since new construction has declined. For that reason, Pecora said, “Maintenance is getting more attention [from contractors],” and may continue to do so until, or even after, construction rates rise.

SWEDBERG is a freelance writer based in western Washington. She can be reached at

About the Author

Claire Swedberg

Freelance Writer
Claire Swedberg is a freelance writer based in western Washington. She can be reached at .

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