Locksmith Contract? Help!!!

[valentin_84]

Hi fellas,

I do a lot of work for a local nursing home and was asked if I would enter a contract with them since I'm the guy they always call anyway. The place is about 10 years old and most of the work is focused on maintaining about 50 (non electronic) exit push bar devices such as Dorma, Vonduprin, and Monarch, vertical and regular. They figure they would rather pay me a monthly fee (which has not been negotiated) to take care of everything instead of having to replace and fix a huge problem once things break. This would be a set labor fee that they pay and the only additional fee's would be for parts.

Now, I'm fairly new to the locksmith business and have always worked just job by job and call by call, so a "contract" is new territory to me. I really don't know how to negotiate something like this and am not sure what I need to know and what I need to keep in mind.

My goal is and has always been to give my customer the best service I can and to be fair in what I charge, so I would really appreciate any advice you guys can give me. I'm wondering what I should base my monthly fee on and what needs to be considered when I negotiate it? And also, how much time and work is appropriate to dedicate to the customer per week or per month?


Anything would be helpful, thanks!

[nostromo]

Hmmmm. Do you have a feel for why they are looking for a contract? Hopefully it is only to even out their cash flow. Are they looking to compete the contract?

Some things to possibly factor into the pricing equation might be the life cycle cost of the hardware, tools and supplies needed for repair and maintenance. And of course, the time spent. Go with two models- either on a 'repair only' mode or practicing preventive maintenance and repair. One will take little time at first - until things start to break down and need replacement. That's when things get expensive.

You might want to do a complete inventory of what you will be responsible for, and roughly plan and schedule for what will need repair or replacement during the life of the contract to get a feel for the cost. Any alarm system or automatic door closure systems in case of fire?

And whatever you estimate, double it and add thirty percent. CLients always try to get the price down and then immediately forget what had to be skipped on to meet that new price - but they will still want it.

Are any potential changes to those doors or frames wanted or needed in future? If so, what will the cost of maintaining the certifications or standards be? What if someone ELSE does something that requires your work, and was unplanned? Like facilities modifications that expand rooms, etc? What if there is accidental damage like a fire? If it's not costed into your pricing model you shold have some exclusionary language in the contract. Or at least precisely describe what you will do and the limits.

Passing everything over to you may also shift some of the liability burden, too. I'd check with my insurance agent and get their opinion.

Just some thoughts and best wishes for what might be a good deal. . .

[EmCee]

Excellent points from Nostromo.

Until now your work has been on the basis of call-outs and emergency fixes. Slightly different criteria apply when calculating the amount of time needed for a contract because you will be making a commitment to visit regularly to maintain and carry out minor repairs and will obviously be unavailable for other work during those times.

It will be important to specify what services you will provide under the contract and what services are not covered (ie the cost of parts won't be covered but you might agree to supply parts at cost in exchange for the regular income). However, with the exception of parts I would recommend that you try to allocate enough time to cover everything - clients tend not to like exclusion clauses and having to pay extra when they think everything should be covered by the contract.

An obvious starting point is to add up the hours you've worked there so far - not forgetting travel time to and from the site. Divide that by, say 6 (working on the basis of a 6-hour day accounts for lunch times and breaks and gives a bit of leeway for things you probably don't charge for now such as research, sourcing and obtaining materials, phone calls, meetings etc). Divide the number of 'days' by the number of months you've worked for them and you have a rough estimate of days per month.

From your experience with the client you should know the state of the various devices you are responsible for and how much maintenance they need and/or how soon they might need to be replaced. Suppose the time you've worked there so far equates to 2 days a month. You might think that in order to check and service everything on the basis of preventative maintenance you'd need to visit 3 days a month, or 4 days. Those would be scheduled days when you would visit. There will also be callouts for emergency work in addition to the scheduled days, so add another day or so to the total to cover that (under a contract there has to be some 'swings and roundabouts' - some months no emergency will crop up and you'll gain a day's pay for nothing; other months you might be called out a few times in addition to your scheduled maintenance days and end up with a lower daily rate equivalent).

Only you know the client and how much they are likely to be willing to pay for the peace of mind and budget benefits of a regular contract - and whether they are honestly seeking a firmer footing for your relationship or whether they'll put the contract to tender. But as Nostromo said, whatever total you end up with, add a bit more for negotiation purposes so they can 'knock you down'.

Finally, offer to run the contract for, say, three or six months and then review it to make sure both you and the client are happy with the value - and be prepared to renegotiate downwards as well as upwards if the amount of time you have allocated does not match the amount of work.

Cheers...

[Evan]

valentin_84:

This might have more to do with the way the nursing home deals with accounts payable and receivable and the way invoices for vendors with which they do not have a contract/open account are approved...

Some things you will want to consider are:

- Defining what the levels of service and associated costs of them are:

• Mission Critical/Emergency Repair: Drop everything you are doing and come repair now. Something has stopped working and it is interfering with or impeding the continuing safe and orderly operation of the facility. (Specify additional fee and potential restrictions on who can make such requests.)
• Urgent Repair: Repairs need to be completed within the next 48 hours at your convenience. Something is making funny/odd noises or requires abnormal efforts to open/close or otherwise operate but is still serviceable at the present time. (Specify additional fee.)
• Routine Repair: Please put this item on your punch list and make it the top priority when you are on-site doing your contracted repair or maintenance activities, no special response is required or expected. Non-Urgent repairs or requests for re-keying locks or cutting replacement/new keys, etc.
• Contract Repair: The specific repair activities which are your responsibility under the contract you have entered into with the customer, the scheduling of the hours you put into it are entirely of your own choosing within the area of freedom the customer establishes, usually normal business hours.

The goal here is not to be at someone's total beck and call for a monthly stipend plus parts, as that could quickly spiral out of control... Obviously emergency repair calls would still cost your standard trip charge and normal labor rate as you are delaying other customers while dealing with the contracted customer's emergency and the priority of service you are giving that customer over all others who are one time calls, which might have included bumping or delaying another previously booked call, requires paying your normal prices for that level of service...

It is entirely up to you, but an urgent repair call could have a reduced trip charge that would cover gasoline and have a lower rate for labor because you are able to schedule when you do the repair in the next couple of days around the customers you already have appointments with which gets the contracted customer's work done without creating a scheduling headache... Routine and Contract are basically the same thing except a routine repair would be something not normally covered under the contract that would cost a small additional fee that would be completed next time that you are on-site to do your contract work at a time of your own scheduling...

- How many hours a month are they looking for you to put into achieving the mutually agreed upon contractual goal ? Again, as this is a standing contract which you can schedule at your own will, you would be factoring in a reduced labor rate for your time compared to a one time service call and you need to figure out what a fair price for that would be given the expected commitment of your time and resources they are looking for from you...

- Defining the EXACT nature of what is included in the contract, i.e. your primary objective under the contract is to maintain the door and locking hardware in a safe and operable condition...

- What the costs of other repairs not specifically included in the contract would be... Such as re-keying a lock cylinder, or cutting replacement or additional keys...

Entering into a contract like this is also a commitment on your part to establish and maintain a reasonable inventory of replacement parts stock for the devices you will be servicing, up to and including replacement crash/panic bars and lever handle trims of the correct styles and finishes to match what the customer has installed in their facility in the event one becomes totally FUBAR'd so it can be swapped out without having to special order something that matches and make a special trip back out to install it at your own expense when it arrives...

You should obtain a basic set of floor plans for the building which indicate door numbers so you can document repairs and refer to doors by their number...

You should also consider establishing a vendor log at the nursing home's main reception desk where you sign in and out every time you are there and document in that log whether it is an emergency call out or a contract visit...

I have experience dealing with elevator repair contracts and landscaping service contracts as they were specialties which were not cost effective for the facilities management division of the company I used to work for to have on staff, because hiring someone full-time (or the required two elevator repair mechanics for some tasks) to do a special task will only have so much work they can do before they begin having to repair and replace things not yet ready to be taken out of service just to stay occupied -- either that or they become very expensive general service techs who replace light bulbs and paint, etc. when not being called upon to use their specialty... The same logic applies to the beautifully maintained and manicured live indoor plantings and exterior soft scape maintenance... It is a lot of equipment to maintain for use on less than an acre total area of lawn to deal with that and you would have someone who would end up spending a majority of their 40 hour workweek sweeping up litter outside which is not a cost effective use of time for a skilled landscaper... Under those situations it is more cost effective to a contracted crew come out periodically to do the work on a scheduled basis rather than having in house employees...

~~ Evan

[EmCee]

Evan's point about maintaining a stock of relevant parts is a good one and needs to be taken into account as part of your overall considerations, because that will be your money tied up in stock.

However, I still say that it's best to try and cover all or certainly 'most' potential work within the contract. If you specify that emergency and urgent work is excluded, why should they pay a retainer when they'll be paying you as they are now for a lot of the work? Why should they pay extra for emergency/urgent repairs when the whole point of putting you on contract for preventative maintenance is to prevent the need for emergency/urgent work? If you are unable to identify potential problems during your routine inspection and servicing before they become emergencies, then what's the point of the service contract?

Some emergencies which cannot be foreseen will occur - but how often? Better, in my view, to add an amount of time to cover this rather than give your client a long list of all the things your contract does not cover and for which they will be charged extra.

Of course, some things can be excluded. Big things. For example, if they decide to replace all the doors and therefore need new bars and locks fitted everywhere that would be easily understood as being outside the normal contract.

It's important to work out the details of the contract as accurately as possible because you have to make a profit. However, in the real world, people offering services on a retained basis inevitably 'over-service' the client. Hence the suggestion to run the contract for a trial period. You'll still over-service, but only you can decide whether the benefit of regular predictable income outweighs the lower profit margin.

Cheers...

[globallockytoo]

I agree with many of the already raised suggestions.

I worked for a large company that held many contracts with vendors. The underlying reason for wanting contracts is to set up standard rates over a contract period, irrespective in your cost changes.

So, lets say you negotiate $40 per hour + attendance fee. That rate will apply for all labor for the length of the contract. If for some reason your bottom line costs change, during the period of the contract, you are locked into contract pricing.

Personally, I would be prepared to negotiate a contract, based on a minimum fee. That means, they will be required to have you attend X number of hours per month and be billed accordingly, whether or not any work has been done.

Potentially, this could be a significant money spinner for you, as you have a guaranteed income. This might also allow you to discount your rates (to that customer) because you will have a regenerative income from them.

Many reasons could be for their desire to set up contracts, but I suggest it might be because they have been approached by a facilities management company that essentially set up contracts and outsource work to their list of contractors.

[Evan]

However, I still say that it's best to try and cover all or certainly 'most' potential work within the contract. If you specify that emergency and urgent work is excluded, why should they pay a retainer when they'll be paying you as they are now for a lot of the work? Why should they pay extra for emergency/urgent repairs when the whole point of putting you on contract for preventative maintenance is to prevent the need for emergency/urgent work? If you are unable to identify potential problems during your routine inspection and servicing before they become emergencies, then what's the point of the service contract?

Because "emergency" work which is caused by physical damage (whether accidental or intentional) to the door or locking devices is not normal wear and tear which could have been detected and the resultant failure avoided by a contract to provide preventive maintenance services to the facility...

If a delivery person FUBARs a loading dock door because of a mistake with a pallet jack while unloading during an inside delivery, that is NOT something which the OP's contracted preventive maintenance service could have prevented from happening and thus it is NOT covered within the contract unless you have absolutely no clue about what to negotiate or how to define terms and responsibilities in a business contract...

In a nursing home there are multitudes of LARGE heavy carts, wheeled chairs and gurneys in use, any one of which could break or seriously damage locking hardware upon impact with a closed door with any sort of speed involved... Again, that sort of damage or failure is not preventable through a preventive maintenance program... Neither is vandalism of doors or locks like superglue in the cylinders or someone taking a wrench to the outside knob/lever trim...

Some emergencies which cannot be foreseen will occur - but how often? Better, in my view, to add an amount of time to cover this rather than give your client a long list of all the things your contract does not cover and for which they will be charged extra.

Of course some emergencies will occur... Yet as someone contracted to provide X-number of man hours of preventive maintenance adjusting and lubricating locking hardware, a critical failure due to a non-preventive related issue is not something which you could have avoided for them while you are upholding your contractual obligations... Therefore, the "come fix it now" response requires paying your standard fee as they need your services NOW, not when you have downtime between calls or a slow work day when you could put the body time in on the contract and still be making money...

Nearly every contract I have seen personally or heard about under which the client made a specific service request had some associated service call fee for it the price of which was determined for the next renewal period based on the total number of technician man hours billed during the period of the last contract, hours spent on capital projects excluded... So a larger facility who uses more man hours will usually experience a lower labor rate due to the predicted number of man hours the the contractor can anticipate billing that client over the coming year compared to someone calling up blind for a one time repair call...

Of course, some things can be excluded. Big things. For example, if they decide to replace all the doors and therefore need new bars and locks fitted everywhere that would be easily understood as being outside the normal contract.

Right... That would be a "capital project" and not considered preventive maintenance as it would involve prepping a usually completely blank steel or wood commercial door to take that model of exit device which you are instructed to install...

It's important to work out the details of the contract as accurately as possible because you have to make a profit. However, in the real world, people offering services on a retained basis inevitably 'over-service' the client. Hence the suggestion to run the contract for a trial period. You'll still over-service, but only you can decide whether the benefit of regular predictable income outweighs the lower profit margin.

It is NOT a lower profit margin to contract out with someone to provide X-number of hours of preventive maintenance work at their facility on a monthly basis... When you establish priority levels for repairs and communicate with your client, it saves them money... Because re-keying a door to an empty office when you are out next week to lube crash bars won't cost the client a service charge as it is something which you can do on your time when you show up to fulfill the required man hours of your contract... Since it is not an urgent repair, as the office is vacant until a new employee is hired, it can be handled for a minimum additional expense to the client compared to the client having to pay your set service call charge every time you set foot on their premises...

However, when requesting that you come as soon as you can, that is monopolizing your time and business for a one-man show and therefore requires additional compensation since the work can not be performed at the time of your own choosing around your other appointments...

Examples of routine repairs, although elevator related are still good examples, I have dealt with in the past which were non-emergent yet still needed to be carried out were:

re-lamping burnt out indicator lamps inside an elevator cab; a vandalized elevator floor selector button which was partially melted with a lighter but still worked (they were all eventually replaced with metal buttons after a year long spree of melted buttons which also involved a security upgrade of installing a CCTV camera in each elevator cab to prevent further damage and discourage any other form tampering or attempt at gaining unauthorized access to restricted floors); replacement of cab key switches to new ones keyed to different keys; disassembly and cleaning of the cab vent fan which was partially obstructed by dust...

These were things that the elevator company had contracted man hours provided for during the "inspection" and "preventive maintenance" aspects of their visits which they scheduled to fit the elevator company needs and requirements... Had we wanted any of the above done at a specifically scheduled time or by a certain very forthcoming deadline, it would have required paying a service call fee and a slightly higher labor rate to have those things taken care of on our schedule...

~~ Evan

[valentin_84]

Guys, I wanna thank all of you for the advice and knowledge you have given me here. I have to say that I am very very amazed by how much everyone has gone into detail to explain all of this to me. I really appreciate all of your time and effort and hope that this thread will be of assistance to others in the future!

[Evan]

Guys, I wanna thank all of you for the advice and knowledge you have given me here. I have to say that I am very very amazed by how much everyone has gone into detail to explain all of this to me. I really appreciate all of your time and effort and hope that this thread will be of assistance to others in the future!

Do let us all know how things turn out for you with this client if you establish a contract with them...

Best of luck...

~~ Evan