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What Building Owners Get Wrong About Elevators… That May Cost Millions: LIVE BROADCAST · The Elevator Careers Podcast

• 0:00
  SPEAKER_02: Hello, and welcome to the Elevator Careers Podcast.
• 0:04
  SPEAKER_02: Appreciate you being here for this live stream.
• 0:08
  SPEAKER_02: Today's guests are Matt Jackson and Jose Perez from Blackstone Elevator Consulting, a rapidly growing firm focused on helping building owners, property managers, investors navigate some of the most complex and expensive challenges in vertical transportation.
• 0:23
  SPEAKER_02: Matt, the company's founder, brings more than 16 years of experience in elevator consulting, modernization planning, maintenance evaluation, and capital planning with a strong reputation for helping clients reduce risk and make smarter long-term decisions.
• 0:37
  SPEAKER_02: Joining him is Jose Perez, regional vice president for the Midwest, whose background spans consulting, modernization, planning, maintenance audits, service agreements, and equipment evaluations with experience at firms including VDA, Schindler, TK, and Urban Elevator.
• 0:54
  SPEAKER_02: Matt and Jose, welcome to the show.
• 0:57
  SPEAKER_02: Thanks for having us, Matt.
• 0:58
  SPEAKER_02: Thanks for having me.
• 1:00
  SPEAKER_02: I'm excited.
• 1:00
  SPEAKER_02: It's good to have you here with me today.
• 1:03
  SPEAKER_02: Obviously, today we're going to be talking about what building owners get wrong about elevators that may end up costing them millions of dollars.
• 1:10
  SPEAKER_02: We're going to touch on modernization, exposure, diverted maintenance, elevator contractor relationship breakdown, and even service contracts a little bit.
• 1:18
  SPEAKER_02: Won't dig deep into that, but first thing I want to do is kind of hit a couple elevator industry headlines that caught my attention.
• 1:28
  SPEAKER_02: It kind of feels like the elevator industry in some ways is entering a pressure cooker moment.
• 1:33
  SPEAKER_02: So for example, headline number one from Allied Market Research says that elevator modernization market could reach up to 20 plus billion by 2030.
• 1:43
  SPEAKER_02: And that's a big number, of course.
• 1:45
  SPEAKER_02: But when I looked it up, it says that the current, well, the 2020 um market is 7.8 billion.
• 1:52
  SPEAKER_02: So that's that's huge from, you know, if it was our only 19 going up to 20, that's that's one thing.
• 1:58
  SPEAKER_02: But from 7.8 to 20 is huge.
• 2:00
  SPEAKER_02: And then I want to hit this second headline here that um commercial real estate owners are facing massive deferred infrastructure costs.
• 2:08
  SPEAKER_02: And this is from Colliers.
• 2:10
  SPEAKER_02: Um so just want to bounce those two off you and um get your thoughts.
• 2:16
  SPEAKER_02: What uh what comes to mind as you guys hear those?
• 2:20
  SPEAKER_03: Um, you know, so the the market um cap for for modernization, without a doubt, I I believe that headline through and through.
• 2:31
  SPEAKER_03: Um and and I think there's a number of reasons for that, but but I think uh the the overarching um component is that the equipment, you know, we used to go and modernize equipment that was installed in the 60s and 70s.
• 2:47
  SPEAKER_03: I was modernizing those, well, quite frankly, still today.
• 2:52
  SPEAKER_03: The but I'm all at the same time, we're modernizing equipment that was either installed or previously modernized in as late as the early 2000s and sometimes even more recent than that.
• 3:03
  SPEAKER_03: So a lot of it is uh, you know, let's face it, it's technology driven.
• 3:07
  SPEAKER_03: Sure.
• 3:08
  SPEAKER_03: Um, you know, uh circuit boards, everything going microprocessor based.
• 3:13
  SPEAKER_03: There's a lot of technology improvements andor enhancements.
• 3:17
  SPEAKER_03: So you start to hear the term obsolescence a lot more um uh a lot earlier in the in the elevator life cycle.
• 3:25
  SPEAKER_02: For sure.
• 3:26
  SPEAKER_02: For sure.
• 3:26
  SPEAKER_02: Yeah.
• 3:27
  SPEAKER_02: Jose, what are your thoughts about um, you know, just talk about deferred infrastructure costs?
• 3:32
  SPEAKER_02: Do you see that happening?
• 3:34
  SPEAKER_01: Yeah, you know, I think the short answer is yes, right.
• 3:38
  SPEAKER_01: Um obviously every every building and every management firm has their different style, but at the end of the day, I would say more so than not.
• 3:47
  SPEAKER_01: And there's different reasons to that, right?
• 3:49
  SPEAKER_01: Um it at the end of the day, our goal and our role is not here to judge, right?
• 3:55
  SPEAKER_01: I think the the goal of any good consultant is to be objective and to just lay out the facts, right?
• 4:03
  SPEAKER_01: And I think the approach we like to take is hey, we're your we're your partner, we're here to, we're gonna give you the truth, regardless if it's good, bad, or indifferent, right?
• 4:12
  SPEAKER_01: And then hopefully work with you as your partner to what is the goal for this asset and how can we help navigate um you know within the confines of that goal, right?
• 4:22
  SPEAKER_02: Yeah, absolutely.
• 4:23
  SPEAKER_02: Yeah.
• 4:24
  SPEAKER_02: Well, let's let's start with you know, talking a little bit about how owners inherit expensive problems.
• 4:29
  SPEAKER_02: Uh Matt, you told me uh a story about a company, I guess an investment firm perhaps.
• 4:34
  SPEAKER_02: They they had estimated$7 million in modernization expense, and Blackstone comes in and said, now it's more like 20 million.
• 4:41
  SPEAKER_02: Talk talk through that just a little bit.
• 4:43
  SPEAKER_03: Yeah, so so not not uncommon, right?
• 4:47
  SPEAKER_03: Uh as building assets are trading, right?
• 4:50
  SPEAKER_03: Uh new new owners are coming in to to purchase buildings.
• 4:54
  SPEAKER_03: Certainly, they, you know, most of the time there's some level of due diligence that's taking place.
• 5:00
  SPEAKER_03: Right.
• 5:01
  SPEAKER_03: I think it's uh in some ways it's more apparent when it's the the uh um other areas other outside of elevators, right?
• 5:13
  SPEAKER_03: You walk into a building lobby, hey, do we need to renovate this because it's either outdated or other.
• 5:18
  SPEAKER_03: When when you start talking about elevators, um in the in the specific example that that you and I kind of uh explored, this was an owner that had received intel from the selling, the seller that, hey, look, we know that modernization is going to need to take place.
• 5:38
  SPEAKER_03: We've kind of built that into the structure of this this property, sure.
• 5:43
  SPEAKER_03: And they had allocated somewhere in the neighborhood of seven million dollars for that.
• 5:48
  SPEAKER_03: So the the uh purchaser had reached out and I just said, you know, look, I haven't even stepped foot on the building on site yet, right?
• 5:57
  SPEAKER_03: But give me give me the overview.
• 5:59
  SPEAKER_03: So we we did that, um, and and as we're looking through it, I'm it just wasn't adding up, right?
• 6:06
  SPEAKER_03: So there's a few reasons for that.
• 6:08
  SPEAKER_03: One, certainly costs have significantly increased.
• 6:12
  SPEAKER_03: Um, so I think there was a component of that, but uh then there was also maybe they don't know what they don't know.
• 6:19
  SPEAKER_03: Um, so so we started looking at this, and and I said, you know, guys, looking at the estimate that's built into the plan versus what I'm seeing just from an equipment listing standpoint, there's a huge gap.
• 6:33
  SPEAKER_03: So we ended up going uh to the site, doing that more thorough evaluation, and came back came back with that much almost well more than double what their original estimate was.
• 6:46
  SPEAKER_03: It did allow them to go back during that due diligence phase to kind of renegotiate.
• 6:51
  SPEAKER_03: And and the kind of the the cool end of that was they were still successful in making the um transaction happen, but then we we helped them through the modernization phase shortly after closing, and numbers came back exact within the range of what exactly what we told them.
• 7:14
  SPEAKER_03: Sure.
• 7:14
  SPEAKER_03: And and where we've been involved in situations like that in the past, and it's become the shock, and now they don't know how to do it because it's wasn't built into their financial plan.
• 7:25
  SPEAKER_03: Sure.
• 7:25
  SPEAKER_03: Uh conversely, this this property was prepared, negotiated appropriately, closed on the uh the transaction, and now they're moving forward immediately with the modernization that was well deserved.
• 7:40
  SPEAKER_03: Sure.
• 7:41
  SPEAKER_03: And so, you know, just doing that that little bit of additional legwork on the front end saved them out of pocket not only the millions of dollars, but also the the more likely scenario is they wouldn't have been able to do the modernization for another 10 years, right?
• 8:02
  SPEAKER_03: And now they would have had more downtime, tennis tenant satisfaction, renewals, all of those things that really play into the the full life cycle there.
• 8:12
  SPEAKER_02: For sure, for sure.
• 8:13
  SPEAKER_02: Yeah, is this a situation where you know maybe deferred maintenance was going on and it's like, hey, we don't want to pay that, let's just sell it and you know, kind of kind of see if we can recoup?
• 8:24
  SPEAKER_03: You know, it it's interesting, and I I don't know the answer to this.
• 8:28
  SPEAKER_03: Um interestingly enough, the the specific and this this could go down a whole different rabbit hole, but um the the property um had been maintained by a mechan the same mechanic for a number of years.
• 8:43
  SPEAKER_03: Right.
• 8:44
  SPEAKER_03: And I'm gonna tell you right now that it was it is it is still the best look well best maintained job I have ever stepped foot on.
• 8:53
  SPEAKER_03: So quite frankly, the mechanic bought this, the previous owner, an additional 10 to 15 years of operation just because somebody that took real pride in what they did for a living.
• 9:06
  SPEAKER_03: Um, so you know, at first pass, I'm sure any buyer that walked into that building looked at it and said, Oh my gosh, this thing is impeccable, it's in great condition.
• 9:17
  SPEAKER_03: We probably don't need to invest.
• 9:19
  SPEAKER_03: The reason that they have to invest is is simply technological obsolescence and you know it's past its significantly past its useful life.
• 9:29
  SPEAKER_03: So, you know, I think I'm not sure if anybody was trying to get one passed on on anybody else, but the optics were there, but it that's where you need to have somebody that's gonna dive deeper, share the real uh the real message so that you have a very clear picture when you're going going into a transaction of this size.
• 9:49
  SPEAKER_02: Sure, sure.
• 9:50
  SPEAKER_02: Well, yeah, like I say, it's not uh I I have no way of knowing the the intent, but but it may be that yeah we we don't want to deal with it and and then you know who knows?
• 9:59
  SPEAKER_02: Maybe it's like a an old automobile, right?
• 10:02
  SPEAKER_02: I know it needs a new transmission, but I can just you know get it out the door.
• 10:07
  SPEAKER_02: Um Jose, what's your experience?
• 10:09
  SPEAKER_02: I don't know if you've worked with this customer or if you're seeing some of the same same things come up.
• 10:14
  SPEAKER_01: I mean, you know, I I'm you know, you had kind of mentioned it earlier, Matt, but I I'm based out of Chicago and I kind of run the Midwest operation, right?
• 10:22
  SPEAKER_01: So I can speak a lot more to to the Midwest market, if you will, right?
• 10:26
  SPEAKER_01: But at the end of the day, every every job and every building is different.
• 10:30
  SPEAKER_01: I mentioned that, right?
• 10:31
  SPEAKER_01: I think what you get a lot of, and Matt mentioned this earlier, but you can't pricing A, yeah, since COVID has gone up like significantly.
• 10:41
  SPEAKER_01: Like to the point where like today, you know, it's just like wow, what what a certain dollar amount bought you five, six years ago does not get you anywhere near to that now, right?
• 10:52
  SPEAKER_01: So that's that's pretty um, I mean, that's a whole nother economic rabbit hole we can go down right.
• 10:56
  SPEAKER_01: But I think that is something to recognize.
• 11:00
  SPEAKER_01: But a lot, I think a lot of it too is you have um not every modernization project or modernization scope is created equal, right?
• 11:10
  SPEAKER_01: So you'll have uh, hey, I was I was planning on insert number, I was planning on a million dollars.
• 11:16
  SPEAKER_01: Well, you yeah, that is a a number, and we can get to that, but that excludes all these components.
• 11:23
  SPEAKER_01: And uh it kind of comes down to that conversation, right?
• 11:25
  SPEAKER_01: Of what's the long-term plan for this asset?
• 11:28
  SPEAKER_01: You holding for 10, 15 years?
• 11:30
  SPEAKER_01: No, okay, then yeah, maybe let's go that route.
• 11:33
  SPEAKER_01: Or hey, you're you're planning to hold for a while.
• 11:35
  SPEAKER_01: Then I I candidly, I don't think that's the best move for us, uh, knowing this type of equipment and things like that.
• 11:42
  SPEAKER_01: So I think it's it's a lot of that.
• 11:44
  SPEAKER_01: You have uh every contractor's gonna bid a job differently, and that's kind of where we come in to kind of set the the playing field, if you will, just level.
• 11:53
  SPEAKER_01: Hey, this is what you need based on our conversation of what the plan is, and we'll help you navigate and uh ideally get you the best deal that we can, right?
• 12:02
  SPEAKER_02: Yeah, yeah.
• 12:02
  SPEAKER_02: Um and it sounds like you were able to, you know, they they called you in early enough.
• 12:07
  SPEAKER_02: Have you have you seen situations where maybe they went ahead and bought it and it's like, oh, wow, what do you do in that situation?
• 12:15
  SPEAKER_01: Yeah, yeah, we have seen it, and and you know, it's it's tough.
• 12:19
  SPEAKER_01: I guess one thing that I think um I pride our our group on is we we kind of have this model, it's just like, hey, just tell the truth and and as I mentioned earlier, be be objective, right?
• 12:32
  SPEAKER_01: But at the same time, be creative, right?
• 12:34
  SPEAKER_01: So I think any good partner, um, whether it's on the contractor side, consulting ten, whatever, you have to be creative, right?
• 12:42
  SPEAKER_01: It it should not ever be, hey, this is the fix and this is the only fix, and we can't do anything until you sign here.
• 12:50
  SPEAKER_01: Um more often than than not, there's always other avenues you can investigate.
• 12:55
  SPEAKER_01: It's just candidly, it's just doing the work, right?
• 12:58
  SPEAKER_01: And and having the commitment from the your other partners and vendors to want to do that work, right?
• 13:05
  SPEAKER_01: Um, and at the same time communicating all that that we're doing on the back end to the end user, which is your client, right?
• 13:13
  SPEAKER_01: For sure.
• 13:13
  SPEAKER_01: So it's difficult, right?
• 13:14
  SPEAKER_01: I I've been brought in in the past where, hey, listen, I have a mod.
• 13:18
  SPEAKER_01: You were not the consultant that wrote the spec, but I just can't get a hold of that that person or that group.
• 13:24
  SPEAKER_01: I just I don't know.
• 13:26
  SPEAKER_01: I'm being billed.
• 13:27
  SPEAKER_01: I don't know if they've done the work.
• 13:28
  SPEAKER_01: Can you come in, right?
• 13:30
  SPEAKER_01: So we come in and we just say, look, send us the contract, send us the scope, and we'll ensure that what was signed upon and agreed to, you're that you're getting it, right?
• 13:40
  SPEAKER_01: Right.
• 13:40
  SPEAKER_01: And I think as long as you approach it, you know, both with the client and the contractor, as just, hey, look, this is the approach.
• 13:48
  SPEAKER_01: I'm not coming in to beat anybody up or beat anybody down.
• 13:51
  SPEAKER_01: I'm gonna go to what was agreed upon by both parties, sure.
• 13:54
  SPEAKER_01: Generally works out.
• 13:55
  SPEAKER_01: Generally does, right?
• 13:57
  SPEAKER_02: Yeah, yeah.
• 13:58
  SPEAKER_02: No, I agree.
• 13:59
  SPEAKER_02: I'm just curious, you know, some of these people, you know, maybe they maybe they like say buy the building.
• 14:04
  SPEAKER_02: What's dollars-wise, what's the most expensive mistake you think you've seen?
• 14:13
  SPEAKER_03: Um I mean, great question.
• 14:17
  SPEAKER_03: I mean, it's certainly certainly we've seen multi-million dollar scenarios, and and and quite frankly, it's just it's I don't even want to say it it's not uneducated, it's it's uninformed, right?
• 14:30
  SPEAKER_03: So it's it's making it making some assumptions that 2025 pricing was the same as 2000 pricing.
• 14:40
  SPEAKER_03: That you know, that sure we um we have clients all the time that as they've built they've built a budget, they knew that they were gonna have to modernize, but they are so under budgeted because a rule of thumb, right?
• 14:52
  SPEAKER_02: Well, I know 20 years ago when I got in this industry, where you know, X was the number.
• 14:57
  SPEAKER_02: Use it.
• 14:57
  SPEAKER_03: Correct, right?
• 14:58
  SPEAKER_03: So I would say a lot of it, a lot of it's been that.
• 15:02
  SPEAKER_03: Um, but I think to Jose's earlier point, it's it's about understanding that situation, then coming up with creative solutions, because there are creative solutions out there, um, you know, from a scaled back scope or a phased type uh upgrade modernization to um you know financing options to you know cash flow considerations to uh so when when you peel back and and identify not just the elevator component, right?
• 15:41
  SPEAKER_03: Sure.
• 15:41
  SPEAKER_03: I I I say this all the time and I'm I'm going off on a little bit of a tangent, but about five percent, ten percent of what we do actually has anything to do with elevators, right?
• 15:54
  SPEAKER_03: It's it's commercial, it's it's how do we work together to towards an end goal just happens to be elevators as the product.
• 16:03
  SPEAKER_02: Okay.
• 16:03
  SPEAKER_03: But it's it's really about navigating relationships, partnerships, um, and being creative about solutions to meet what the client needs.
• 16:14
  SPEAKER_02: Right, right.
• 16:15
  SPEAKER_02: Yeah.
• 16:16
  SPEAKER_02: Whether I mean it's yeah, to your point, it's a it's a commercial building, we have to make it rentable.
• 16:20
  SPEAKER_02: Well, part of that is making sure we have a functioning elevator so that you can actually earn money on this, you know, second, third, you know, on up on the floor.
• 16:29
  SPEAKER_02: So um no, yeah, thank you.
• 16:30
  SPEAKER_02: Uh when you talked about creativity, I was gonna have you kind of dig in and you started to kind of kind of hit that a little bit with, you know, maybe you phase it, maybe you do one at a time over the next umpteen years.
• 16:41
  SPEAKER_02: Um, but it feels like there's there's so is some flexibility in there that, you know, I'm not a mountain mod guy, so uh I don't know uh what what those options are, but yeah.
• 16:51
  SPEAKER_01: I mean I I think Matt, like what what we've been seeing, I what I've been seeing, I I think specifically, I would say in the last 18-ish months, right, is you kind of get we get brought in a lot of times on the front and hey, do an audit, do an e-val, give me a a bill of health of what of what we have, right?
• 17:09
  SPEAKER_01: And I can get this is very recent um a condo board where we came in and said, hey, the elevators for what you have, right, they're they're being well maintained.
• 17:19
  SPEAKER_01: However, everything in this 50 plus high-rise building in in like the heart of downtown, all of this stuff is obsolete.
• 17:28
  SPEAKER_01: So we're kind of we're on borrowed time here, right?
• 17:32
  SPEAKER_01: Right.
• 17:32
  SPEAKER_01: And you get the look from management and and some of these board members like they like you have three heads.
• 17:39
  SPEAKER_01: Well, we we didn't know that.
• 17:41
  SPEAKER_01: And the other one is like, well, we don't we don't have, you know, you you tell them, hey, you have to budget at four and a half, five million dollars.
• 17:47
  SPEAKER_01: Well, we don't have that.
• 17:48
  SPEAKER_01: I empathize and I get it, but doesn't negate the fact that we have what we have, right?
• 17:53
  SPEAKER_01: And so let's get creative here and how can we address this, right?
• 17:57
  SPEAKER_01: Um, what what we've been doing and quite frankly have had success in doing is for some of the larger, bigger projects where um funding might not be readily available at the moment.
• 18:09
  SPEAKER_01: We have gone out, well, we're hey, we'll solicit bids, right?
• 18:12
  SPEAKER_01: We know the scope, we know what we need for code compliance and safety and all that.
• 18:16
  SPEAKER_01: We will bid it and quite frankly, we've just kind of put it out with the contractors.
• 18:22
  SPEAKER_01: Hey, listen, whoever wants a seat at this table um with this ownership group is going to be the group that comes back with with creative financing, right?
• 18:32
  SPEAKER_01: And we originally, when I was on the contractor side, the the attitude was very much um, well, we're not a bank, right?
• 18:45
  SPEAKER_01: And while sure that is that is true, right?
• 18:47
  SPEAKER_01: You're not a bank, and we're not asking the elevator contractors to be banks, but I think there is an argument for the right project, right?
• 18:54
  SPEAKER_01: Hey, look, this is a nice project.
• 18:56
  SPEAKER_01: These are good people to do business with.
• 18:58
  SPEAKER_01: They just what can you offer?
• 19:00
  SPEAKER_01: And we've we've seen, I mean, we've seen some examples where where one company offered 18 months, 0% financing, another one 22 months, right?
• 19:10
  SPEAKER_01: So some will say, hey, instead of X amount down, give us 10 down, 10%, right?
• 19:14
  SPEAKER_01: And then we can work in monthly payments, which I again kind of leads to that creativity.
• 19:19
  SPEAKER_01: Hey, look, we know your need and we know what how important this is.
• 19:24
  SPEAKER_01: Right.
• 19:24
  SPEAKER_01: Elevators are the lifeline of any building, whether it's commercial or residential, right?
• 19:29
  SPEAKER_01: So um to not have a plan, in my opinion, is just not acceptable.
• 19:34
  SPEAKER_01: Like, right?
• 19:34
  SPEAKER_01: We have first is the facts, and then how do we how do we turn these facts and and turn it into a cohesive plan that we can at least show progress, right?
• 19:42
  SPEAKER_01: Yeah.
• 19:43
  SPEAKER_01: So um, I think that's one good recent example of something.
• 19:46
  SPEAKER_02: I love that.
• 19:47
  SPEAKER_02: I love that.
• 19:47
  SPEAKER_02: I mean that again, it's creative, but it but it's offering the the contractors an opportunity to come to to the table with some creative options and and be willing to, you know, if you want to play here, yeah, what can you do?
• 20:00
  SPEAKER_02: And uh yeah, it kind of opens opens it up in that way, which I really like that.
• 20:05
  SPEAKER_02: Um so um I'm just gonna quick plug to our our audience.
• 20:10
  SPEAKER_02: Um, you know, have you ever inherited a a major elevator problem?
• 20:13
  SPEAKER_02: If you if you have, if you want to talk about it, go ahead and throw it in the chat and we'll uh we'll revisit here in a minute.
• 20:19
  SPEAKER_02: Um, but I really like yeah, like what you're saying.
• 20:22
  SPEAKER_02: I mean it sounds like it's uh, you know, you're there kind of helping helping both sides come together in a way that that could make it possible.
• 20:31
  SPEAKER_02: Um again, the kind of the analogy for me is you know, maybe they're driving a Studebaker, uh Studebaker, and and you know what, if that engine goes out, if the you know, nothing's gonna fit, right?
• 20:42
  SPEAKER_02: That's what you're saying when it's you know obsolete, correct?
• 20:45
  SPEAKER_02: Is that there's there's just no way to replace these parts.
• 20:48
  SPEAKER_02: Right.
• 20:49
  SPEAKER_01: Yeah, and I I think another um Matt kind of alluded it to it earlier, but sometimes the answer is isn't um, hey, you have five elevators in this bank, right?
• 21:02
  SPEAKER_01: And it's a commercial building or what have you.
• 21:04
  SPEAKER_01: But realistically, you probably don't need five.
• 21:07
  SPEAKER_01: You know, you're um commercial buildings, as we all know, the landscape today is a lot different than you know five, six years ago, right?
• 21:13
  SPEAKER_01: So maybe maybe we just if we modernize these, we could probably get the same traffic flow of you know with three or four, right?
• 21:22
  SPEAKER_01: And so we kind of come in and offer that.
• 21:24
  SPEAKER_01: I literally this morning I was at a building and they have you know groups, right?
• 21:28
  SPEAKER_01: Yeah, low, mid, and high.
• 21:30
  SPEAKER_01: And it's all the same equipment, but um there was there was really no plan, just five minutes of talking to management.
• 21:36
  SPEAKER_01: And I was like, okay, here's here's a recommendation.
• 21:39
  SPEAKER_01: And I think it's just a way to kind of chip at it.
• 21:42
  SPEAKER_01: And honestly, Matt, it's just uh a way to get the the wheels turning, right?
• 21:46
  SPEAKER_01: What if we did one bank, right?
• 21:49
  SPEAKER_01: We we upgrade that.
• 21:50
  SPEAKER_01: It shows commitment to the contractor that you're willing to invest and and improve your vertical transportation.
• 21:57
  SPEAKER_01: But then on the flip side, we can take.
• 22:00
  SPEAKER_01: That old those old drives, those old controller boards, those old door operators, keep them to cannibalize on the other side, right?
• 22:08
  SPEAKER_01: So it's it's not always a one size fit all and like this is how you have to do it.
• 22:13
  SPEAKER_01: It's hey, look, we can just let's just focus here.
• 22:17
  SPEAKER_01: We get in a good trusted contractor.
• 22:19
  SPEAKER_01: Guess what?
• 22:20
  SPEAKER_01: You'll you'll improve your vertical transportation because it's modernized.
• 22:23
  SPEAKER_01: Now we'll have a whole closet full of attic stock.
• 22:28
  SPEAKER_01: Right.
• 22:28
  SPEAKER_01: And it's going to it's going to um make that contractor who is in there doing that, you it's going to keep them honest and candidly have them keep do incentivize them to keep doing a good job because they want to get the other two banks, right?
• 22:44
  SPEAKER_01: For sure.
• 22:45
  SPEAKER_01: So I think it's just it's a recipe for success.
• 22:47
  SPEAKER_01: And if you if you pitch it right to management and to the contractors, it it it it generally works out.
• 22:55
  SPEAKER_02: Yeah, no, I I like that.
• 22:57
  SPEAKER_02: That's uh it it's smart and it and it definitely seems and it honestly it leads to our next um point, which is um elevator relationships with their contractor, right?
• 23:07
  SPEAKER_02: Because what I'm hearing you say is, hey, there's a a better way to do this, let's work together versus you know, as adversaries.
• 23:14
  SPEAKER_02: Yes, and um I yeah, I'm just curious.
• 23:17
  SPEAKER_02: I mean, we talked the other day about a company that was ready to spend four million dollars to to modernize just so they could get rid of their contractor.
• 23:25
  SPEAKER_02: That blew me away.
• 23:26
  SPEAKER_02: I was like, oh my gosh, they must hate those people.
• 23:29
  unknown: Yeah.
• 23:30
  unknown: Yeah.
• 23:31
  SPEAKER_02: Talk about that, yeah.
• 23:32
  SPEAKER_03: Yeah.
• 23:33
  SPEAKER_03: So I mean, this this uh it's it's funny because it uh this story meant ultimately less work for our firm, right?
• 23:44
  SPEAKER_03: Sure.
• 23:44
  SPEAKER_03: Um meaning, meaning less capital upgrades and less consulting needed.
• 23:49
  SPEAKER_03: Uh, but I I still consider it one of my one of my favorite and most success uh it's it's a success story at the end of the day.
• 23:56
  SPEAKER_03: So the the long and short contractor had been in there for since inception, since um since installation.
• 24:06
  SPEAKER_03: Um very proprietary equipment, so the the owner didn't really have the option to go out to other vendors.
• 24:16
  SPEAKER_03: Um but that the the relationship had deteriorated very badly over time.
• 24:22
  SPEAKER_03: Um we did an evaluation and and uh based upon the life cycle of the equipment, they probably have another seven to ten years of useful life.
• 24:31
  SPEAKER_03: It's still very well supported equipment.
• 24:33
  SPEAKER_02: Sure.
• 24:34
  SPEAKER_03: Um, but they were so ready to get rid of this particular contractor, they said, look, we want to modernize.
• 24:42
  SPEAKER_03: So we started down that path.
• 24:44
  SPEAKER_03: Um, but parallel to that, what I what I our approach was, hey, look, let's bring in the incumbent contractor, let's do let's understand the equipment, let's walk this together, let's put together a plan to improve the existing relationship.
• 25:00
  SPEAKER_03: Because even if you end up severing ties, we still have a year or longer that we have to manage this relationship.
• 25:10
  SPEAKER_03: So we did those two things parallel to each other.
• 25:14
  SPEAKER_03: Um, elevator bids came back in.
• 25:16
  SPEAKER_03: They were very, very close to awarding to another contractor.
• 25:22
  SPEAKER_03: So um the original contractor would not obviously they would have been they weren't even invited to the party, right?
• 25:28
  SPEAKER_03: No, they would have been out in the equation.
• 25:30
  SPEAKER_03: Um but over that six to eight months that we were working together on the service side with the incumbent contractor, we were able to really turn things around.
• 25:44
  SPEAKER_03: Callback, and you know, it was everything from they weren't getting regular PM service to now they are.
• 25:50
  SPEAKER_03: Right.
• 25:51
  SPEAKER_03: We got uh a laundry list of deficiency items corrected.
• 25:55
  SPEAKER_03: Um, so callbacks are down.
• 25:58
  SPEAKER_03: We started doing uh monthly cadence meetings with not only the property management team, but also the board uh and really turned it to a point where they they really like the contractor.
• 26:14
  SPEAKER_03: And so prior to us awarding a four plus million dollar modernization, sure, we said, hey guys, you've got seven to ten years of reliable, useful life on this equipment.
• 26:24
  SPEAKER_03: So all that said, we were able to defer the modernization at least another seven years.
• 26:31
  SPEAKER_03: The contractor is in a better position now to earn that business when the time's appropriate.
• 26:38
  SPEAKER_03: Right.
• 26:39
  SPEAKER_03: The client is ecstatic about how they're the existing performance and relationship.
• 26:47
  SPEAKER_03: And on top of that, we ended up doing a small upgrade on the door operating door equipment.
• 26:54
  SPEAKER_03: So the contractor gets a you know a six-figure plus sure repair work order, which the to further improve operation.
• 27:04
  SPEAKER_03: I mean, it's just a just a really cool win-win win scenario for for all involved.
• 27:11
  SPEAKER_03: And it does, it doesn't hurt that the the the client now thinks that we walk on water because we you know that that it certainly doesn't hurt.
• 27:19
  SPEAKER_03: Um but the point is that's a relationship that we will have for forever.
• 27:24
  SPEAKER_03: Um and of course we'll do the modernization when the time's appropriate.
• 27:28
  SPEAKER_03: But man, if we can, if we can work on building that relationship and and turn things around, that's really what we're about, is trying to build that partnership.
• 27:37
  SPEAKER_02: Yeah, I mean, it sounds like it's a huge win, certainly for the the building owner and and not having to you know spend four million dollars just to get rid of somebody.
• 27:46
  SPEAKER_02: Huge win for the contractor.
• 27:47
  SPEAKER_02: I mean, I have to ask though, did did the contractor know they were that close to losing that business?
• 27:52
  SPEAKER_02: I mean, were they even aware?
• 27:54
  SPEAKER_03: No, I mean that's that's the funny part, right?
• 27:57
  SPEAKER_03: And um I unfortunately the contractors, and then this is not meant to be general or this isn't meant to point to everybody, but I think there is a uh an overarching statement that sometimes they fail to look in the mirror and really look at the the picture.
• 28:19
  SPEAKER_03: Um and that can that goes from, you know, hey, they're just running running service calls and somebody's not really watching, hey, what's the what's what are the trends that are happening?
• 28:30
  SPEAKER_03: What are the things that we can be doing to reduce callbacks, etc.?
• 28:34
  SPEAKER_03: So I think there's some of that, but but it's also I think oftentimes we see a blindness to the actual relationship that they have with their client.
• 28:45
  SPEAKER_03: You can call and and say, oh, hey, how what's your what's your connection here?
• 28:50
  SPEAKER_03: And they'll be like, oh, I know the manager, their name is X, so we're obviously best friends.
• 28:55
  SPEAKER_03: Well, you don't you don't really know the story, right?
• 28:59
  SPEAKER_03: And uh that can be a really that can be a I enjoy having that conversation, but sometimes that can be difficult because the contractors oftentimes think that they're in a better situation or in a better relationship than they really are.
• 29:14
  SPEAKER_03: And obviously when we're having those conversations with the client, the owner, the property manager, they're they're filling us in on the the real situation from their perspective.
• 29:27
  SPEAKER_03: And oftentimes it tells two very different stories.
• 29:30
  SPEAKER_02: Yeah, yeah.
• 29:32
  SPEAKER_02: Jose, what's your experience with this?
• 29:33
  SPEAKER_02: And I'm curious, you know, how how do these relationships break down and how how can the the you know the elevator contractor, I guess, be be a little more uh attuned to what customers really need.
• 29:47
  SPEAKER_01: Okay, I think this is a hill that I will die on, Matt.
• 29:51
  SPEAKER_01: And it's so it's so, in my opinion, it's so easy.
• 29:55
  SPEAKER_01: Um but when when I get I get asked a lot, right?
• 29:58
  SPEAKER_01: Um who is the best or or what is the best or what you know for me, what separates and what differentiates is very is communication, like candidly, just communicating.
• 30:11
  SPEAKER_01: And what what do I mean by that?
• 30:12
  SPEAKER_01: It's not necessarily giving me a call every week or whatever.
• 30:16
  SPEAKER_01: It's just elevators when they're running, it's quiet, right?
• 30:21
  SPEAKER_01: But they um they break down loudly.
• 30:24
  SPEAKER_01: And and what I mean by that, when it's downright, you're gonna hear yelling and screaming.
• 30:28
  SPEAKER_02: Everybody knows it, right?
• 30:29
  SPEAKER_01: Exactly, right?
• 30:31
  SPEAKER_01: So in those instances, like having a partner, right?
• 30:36
  SPEAKER_01: A vendor that communicates clearly, hey, this is the issue, right?
• 30:41
  SPEAKER_01: Or or even, hey, we don't know what the issue is yet, but we're digging into it.
• 30:46
  SPEAKER_01: Okay, it is goes above and beyond, in my opinion.
• 30:49
  SPEAKER_01: And I don't think that's hard.
• 30:50
  SPEAKER_01: And I I tell this to, you know, I often get asked sometimes to like, hey, we have a new guy coming in, would you mind chatting with them, he or her, whatever?
• 30:58
  SPEAKER_01: And I almost tell everybody the same thing.
• 31:00
  SPEAKER_01: It just over-communicate, especially in the beginning, right?
• 31:04
  SPEAKER_01: Even if the update is, hey, I don't have an update, it it means the world to most people, just having that it makes you feel like, hey, you have not forgotten about me.
• 31:14
  SPEAKER_01: Hey, your elevator's still down.
• 31:15
  SPEAKER_01: I recognize that, and I'm still working on it, right?
• 31:19
  SPEAKER_01: So I think that's at the end of the day, communication is is huge.
• 31:23
  SPEAKER_01: And what does communication lead to?
• 31:25
  SPEAKER_01: It's just trust, right?
• 31:26
  SPEAKER_01: Hey, if you're I end you generally just end up trusting somebody that comes up, and I'll give you I'll put it this way, Matt.
• 31:34
  SPEAKER_01: When I was a contractor, I had elevator mechanics, some that were super the brightest crayon in the box, but they just had a personality of a shoe, and then I had guys that couldn't fix much, but they were super outgoing, you know, right, communicated.
• 31:50
  SPEAKER_01: Sure.
• 31:51
  SPEAKER_01: And most of the time, right, the people will gravitate towards the the guy that is there and communicating with them, right?
• 31:57
  SPEAKER_01: So I think that goes a long way in making people feel heard, and that ultimately leads to trust, right?
• 32:05
  SPEAKER_01: Yeah, yeah.
• 32:06
  SPEAKER_01: Vendors react and and and good vendors communicate and and follow through, I guess is the best way to put it.
• 32:14
  SPEAKER_02: No, I love it.
• 32:14
  SPEAKER_02: I love it.
• 32:15
  SPEAKER_02: You the way you said just trust, I was like, wow, trust is gold, right?
• 32:19
  SPEAKER_02: Trust is is so valuable.
• 32:21
  SPEAKER_02: And and honestly, I see that a lot in my work, right?
• 32:24
  SPEAKER_02: Just just being willing to communicate, willing to respond and say, hey, you know, I got your message.
• 32:30
  SPEAKER_02: Maybe I'm a vacation, maybe it's going to be a couple weeks, but I I care enough about you.
• 32:36
  SPEAKER_02: And I think that's really the message, right?
• 32:37
  SPEAKER_02: The that trust is all about do you care enough about me to respect me as a human and and respond and whatever the answer is, right?
• 32:46
  SPEAKER_02: If I can't get a hold of you, if you won't respond, you obviously don't care about the relationship.
• 32:50
  SPEAKER_02: You don't care about me, you don't care about my elevators, you don't care, you know, and and I have to move on, I think is the message that people start to to believe.
• 32:59
  SPEAKER_01: A hundred percent.
• 33:00
  SPEAKER_01: And and I think I was I was guilty of this when I was younger, and you know, the first few years of my career, I always wanted to be the guy that gave the good news.
• 33:07
  SPEAKER_01: Hey, I have your part, or hey, we're gonna be out there this day, right?
• 33:11
  SPEAKER_01: But you kind of dreaded giving the the bad news, right?
• 33:15
  SPEAKER_01: Hey, I know I told you I'd be here this day, but we have to push it, whatever, right?
• 33:18
  SPEAKER_01: Whatever it could be a million different things, but at the end of the day, I you have to push past that and just people will respect generally somebody that comes out and just says the truth, like I said, earlier, good, bad, or indifferent, and you know, just shows that you empathize and that you care, and most people respect that.
• 33:37
  SPEAKER_02: Yeah, yeah.
• 33:38
  SPEAKER_02: Oh, absolutely.
• 33:38
  SPEAKER_02: Yeah, the the care, the the trust.
• 33:40
  SPEAKER_02: I mean, if you don't have the trust, it's more like, well, this this person's a vendor, right?
• 33:44
  SPEAKER_02: But if you do have the trust, then no, this is a trusted partner.
• 33:47
  SPEAKER_02: This is somebody that that I can rely on.
• 33:49
  SPEAKER_02: And it's as soon as you can't be relied on, well, then you burn that that bridge of trust.
• 33:55
  SPEAKER_02: So that's huge.
• 33:57
  SPEAKER_02: That's huge.
• 33:58
  SPEAKER_02: So it's interesting.
• 33:59
  SPEAKER_02: I've got a friend that's uh he's like a regional manager for a very large big box uh store in the east.
• 34:05
  SPEAKER_02: And um, well, it's a it's a region, right?
• 34:07
  SPEAKER_02: But they've got multiple escalators.
• 34:10
  SPEAKER_02: And and he called me, you know, a couple years ago or whatever, but he's like, Who do you know that works on escalators?
• 34:15
  SPEAKER_02: Right, right.
• 34:16
  SPEAKER_02: I'm like, well, you know, tell me what you got, right?
• 34:18
  SPEAKER_02: I don't, I said, I know people, I can make some phone calls, whatever.
• 34:21
  SPEAKER_02: He's like, I'm about to pull all my hairs out because every time I call this this company, they won't respond.
• 34:26
  SPEAKER_02: Or if they finally do, they're just charging me.
• 34:28
  SPEAKER_02: He's like, I just want it to work, right?
• 34:30
  SPEAKER_02: I I can't make sales if my escalator isn't working.
• 34:33
  SPEAKER_02: He actually went and and did, uh, you know, basically submitted a bid for a new escalator, right?
• 34:39
  SPEAKER_02: Kind of like this four million dollar mod.
• 34:40
  SPEAKER_02: He's like, I just want a new escalator because I'm so sick of this company.
• 34:44
  SPEAKER_02: He he didn't get approval for it, but it was well over a million dollars for just one location.
• 34:48
  SPEAKER_02: But he was that upset that he couldn't get it going.
• 34:51
  SPEAKER_02: I'm like, Yeah, I I hear you, man.
• 34:54
  SPEAKER_02: This is this is big.
• 34:56
  SPEAKER_02: So I um one of our one of our listeners here has said it always comes back to building a relationship and communicating well, communication and trust are key, which is exactly exactly what you guys said.
• 35:06
  SPEAKER_02: And um yeah, just just a little bit crazy.
• 35:10
  SPEAKER_02: So um I I do want to ask the uh the audience as well, you know, what matters most?
• 35:17
  SPEAKER_02: If you want to pop that in the chat, go ahead and do that.
• 35:20
  SPEAKER_02: Um before we hop into this next section, though, I do have a question here from one of our listeners just saying, um, you know, back to the budgets, is there a formula or strategy that y'all would would recommend so these budgets aren't so shocking when it comes time to make changes?
• 35:35
  SPEAKER_02: I mean, how do you how do you keep up with inflation?
• 35:37
  SPEAKER_02: I think is part of what they're asking.
• 35:39
  SPEAKER_03: Yeah, uh so there's not a real good hard, fast rule, but what I would say is, I mean, whether whether it's us or you know, any of the other many consulting firms out there, I think it it's worth having a conversation with.
• 35:57
  SPEAKER_03: Um I but but even even going and you know having the discussion with your service provider, um, you know, that I guess maybe the good or bad, right?
• 36:10
  SPEAKER_03: They're they're typically when they throw a budget, it it is quote unquote budget pricing, so it's gonna be a little inflated, which gives you a little a little room.
• 36:18
  SPEAKER_03: Um I just quite frankly, I think so many people because for for a long time, even though costs w went up, the pricing remained the same, meaning uh margins seemed to get tighter and tighter because of the increased competition, all of that.
• 36:38
  SPEAKER_03: So elevator pricing stayed fairly stagnant for a long period of time, and that's that's both modernization and just your regular service agreement.
• 36:47
  SPEAKER_03: Okay.
• 36:47
  SPEAKER_03: I think now now that uh and that's certain now is certainly inflated because the costs have gone significantly up.
• 36:56
  SPEAKER_03: And so you know, even having the conversation with the elevate your your existing service provider, that's valuable to at least get you in the in the right ballpark.
• 37:07
  SPEAKER_02: Okay, kind of a kind of a first step.
• 37:09
  SPEAKER_02: And then um and it, yeah, depending on I guess how how knowledgeable, how how current you are in the industry, you you may need an outside opinion because if you're not in it all that often, right, you just may not know.
• 37:22
  SPEAKER_03: That's correct.
• 37:24
  SPEAKER_02: So um, well, let's talk just a minute about contracts, uh, modernization, uh, some owner flexibility.
• 37:29
  SPEAKER_02: I'm curious, you know, we we've talked a little bit about um you know elevator service contracts.
• 37:36
  SPEAKER_02: And why why would you say those are so difficult?
• 37:38
  SPEAKER_02: Because I again I don't know personally, but I but I hear people talking about them all the time.
• 37:43
  SPEAKER_03: Yeah, so here's the uh the quick tip of the day is and and I don't mean this to speak disparagingly on any contractor, right?
• 37:55
  SPEAKER_03: But as a general rule of thumb, I would encourage any owner, property manager, do not sign an elevator company's service agreement, right?
• 38:05
  SPEAKER_03: And it's no different than you know, we go and buy something.
• 38:11
  SPEAKER_03: If you get a vendor's contract, it's good generally gonna start in their favor, right?
• 38:16
  SPEAKER_03: So unless you're really going back and negotiating terms and you've got an attorney retained, um, you know, it's gonna be in their favor.
• 38:25
  SPEAKER_03: The the challenge, um, you know, service agreements, the standard for forever have been, hey, here's a term and then it auto-renews, and if you don't give notice, you know, 120 days prior to an expiration date, then it's gonna auto-renew for a similar term.
• 38:44
  SPEAKER_03: So, you know, we see these service agreements that have rolled over three and four times that are 20 or 30 years old.
• 38:51
  SPEAKER_02: Well, they probably tried to get out of it 10 times and they keep missing the date.
• 38:54
  SPEAKER_02: Right.
• 38:55
  SPEAKER_03: You know, but but the industry has changed um in a lot of ways.
• 38:59
  SPEAKER_03: Um, and so the language from 20 years ago really is not relevant to today, right?
• 39:06
  SPEAKER_03: Um, because equipment types and components have changed.
• 39:11
  SPEAKER_03: Um the frequency of maintenance, likely the needed frequency has changed.
• 39:19
  SPEAKER_03: Um, you know, so it in general terms, uh, you know, again, going back to it, hey, one of the one piece of advice we give is don't sign an elevator company's agreement.
• 39:30
  SPEAKER_03: You need to have a conversation with somebody, you know, that can speak the language on your behalf.
• 39:38
  SPEAKER_03: Make sure that you have a structured agreement that fits your needs, not the contractor's needs.
• 39:44
  SPEAKER_02: So what I'm hearing you say is, for example, if they're working with you, you're gonna say, no, don't sign that.
• 39:49
  SPEAKER_02: Let me hand you one that we've written, that we understand what's in it.
• 39:53
  SPEAKER_02: And and it really does put the the kind of the ownership to borrow that word back in the owner's hands, right?
• 39:59
  SPEAKER_02: It's it's instead of you know, because you're not signing their paper, you're not surprised by certain difficult things that you that five, ten, thirty years down the road, you're still beating yourself up about.
• 40:10
  SPEAKER_03: Yeah.
• 40:11
  SPEAKER_03: And well, I'll give you uh just in in some of the some of the language, right?
• 40:17
  SPEAKER_03: So here's a typical elevator service agreement will read, we will regularly, regularly or systematically maintain your equipment.
• 40:25
  SPEAKER_03: Sure.
• 40:26
  SPEAKER_03: Well, if somebody can define what that means, I would love to know, right?
• 40:30
  SPEAKER_03: It'd be uh the the whole point is you know it it's the the lack of specificity is intentional, right?
• 40:38
  SPEAKER_03: Because if they don't show up this month or next month or for the next six months, it still falls in a regular and systematic, right?
• 40:46
  SPEAKER_03: Versus having some level of accountability.
• 40:50
  SPEAKER_03: And you know, the we have this conversation with contractors all the time.
• 40:56
  SPEAKER_03: Most contractors do not mind agreeing to a consultant type scope of work.
• 41:03
  SPEAKER_03: Okay, and um and believe it or not, it actually in a lot of ways makes their life easier because when somebody tries to shrink a route or expand a route, so say a you know a mechanic's got 120 pieces of equipment and now they're trying to add in another you know third of a route in there.
• 41:26
  SPEAKER_03: Now, when you're looking at it, they can say, hey, look, no, I have to be at these locations every month.
• 41:33
  SPEAKER_03: It's contractual, it's a contractual obligation.
• 41:36
  SPEAKER_03: So it gives them the the pushback to try to ensure that they're able to do the right thing.
• 41:42
  SPEAKER_03: At the end of the day, and I think I think we can all agree, generally speaking, people want to do the right thing, right?
• 41:50
  SPEAKER_03: Um it's it's the internal, sometimes external pressures that force people's hand to get away from what they might view to be the right thing.
• 42:01
  SPEAKER_03: And so when we're preparing a you know, a service agreement for somebody, and we put in this the specific KPIs in there, it allows them to much uh more easily manage their portfolio.
• 42:15
  SPEAKER_03: One, and it gives them the ability to push back on those internal pressures that prevent them from doing so.
• 42:23
  SPEAKER_02: For sure.
• 42:23
  SPEAKER_02: They're gonna be held accountable, right?
• 42:25
  SPEAKER_02: If if it's on your paper and here's what you have to do.
• 42:27
  SPEAKER_02: So give me, um, maybe Jose, you can speak to this.
• 42:30
  SPEAKER_02: Uh what are two or three things that are different about your paper versus a contractor's paper?
• 42:36
  SPEAKER_02: How would you show up differently?
• 42:38
  SPEAKER_02: Yeah.
• 42:39
  SPEAKER_01: So I I think you know, one reason, Matt, that I came and and joined Blackstone as a whole, right?
• 42:45
  SPEAKER_01: Was I think it's something I'm really proud of is uh I can sleep well at night because you this whole the whole company is just based on relationships and and doing the right thing and having a level playing field.
• 42:58
  SPEAKER_01: And and that goes for not just our clients, but also the contractors, right?
• 43:02
  SPEAKER_01: I was a contractor, I know like what it is to have a consultant or or just you know a partner that doesn't care, right?
• 43:12
  SPEAKER_01: And so I think that's something that I'm really proud of is like, look, yeah, we're gonna we're gonna write your maintenance agreement for you, Mr.
• 43:20
  SPEAKER_01: Client, but at the same time, we wanted to be fair to the other party, right?
• 43:25
  SPEAKER_01: And yeah, I I can give you a quick story.
• 43:27
  SPEAKER_01: Uh, this was within the last 18 months or so.
• 43:30
  SPEAKER_01: I had a client, they uh ended up switching providers.
• 43:34
  SPEAKER_01: That provider had been in the building for about a year.
• 43:37
  SPEAKER_01: Older equipment, call it 20, 22 ish years old.
• 43:40
  SPEAKER_01: And then they kind of came back about a year in and said, Hey, you know, here's here's a proposal for some machine work, and it was a six figure dollar amount, right?
• 43:49
  SPEAKER_01: Right.
• 43:50
  SPEAKER_01: Went met owners like, what the heck?
• 43:53
  SPEAKER_01: Right, met with the owner, really nice older gentleman, and he was Jose, do you think that they're just losing their their.
• 44:00
  SPEAKER_01: Their guns here.
• 44:01
  SPEAKER_01: Like, are they just in the red here?
• 44:02
  SPEAKER_01: I go, I have no idea.
• 44:04
  SPEAKER_01: But if you do you want to be a good partner?
• 44:06
  SPEAKER_01: Absolutely.
• 44:08
  SPEAKER_01: I think technically all of this is the way the contract is written is covered, right?
• 44:12
  SPEAKER_01: Now, if we do this, they if they're not losing their butts now, they're gonna be losing their butts, right?
• 44:18
  SPEAKER_01: And that's not a recipe for success on for the contractor, right?
• 44:22
  SPEAKER_01: So you want to be a good partner, we'll split this up, labor of material, right?
• 44:27
  SPEAKER_01: And we did, and it it came out where the material cost was somewhere in like the$30,000 ballpark.
• 44:33
  SPEAKER_01: Oh wow.
• 44:33
  SPEAKER_01: And I said, if if you want to be a good partner, you would eat that.
• 44:36
  SPEAKER_01: And he did, right?
• 44:38
  SPEAKER_01: And and it I think when we sat down with that contractor and we said, Listen, listen, technically this is all covered, right?
• 44:45
  SPEAKER_01: But you know, we want to show good faith, and manage ownership is willing to eat X amount right away.
• 44:51
  SPEAKER_01: The alternator's like, done, right?
• 44:53
  SPEAKER_01: And and I they they appreciated that we were willing to step up for them, right?
• 44:58
  SPEAKER_01: Right.
• 44:59
  SPEAKER_01: And we appreciated that the owner understood and recognized that.
• 45:05
  SPEAKER_01: So I I think um to Matt's point earlier, right?
• 45:07
  SPEAKER_01: We want to build um the contract to not only level the playing field for the client, but also be fair to the contractor because they're a business and they're not in this for uh to do things for nothing, right?
• 45:21
  SPEAKER_01: So we need to make sure that they do make a buck, but it has to be a fair buck, right?
• 45:26
  SPEAKER_01: And and in those one-offs where things come up and and you you just talk through it and generally um that has gone very well for me and I think for Matt as well.
• 45:36
  SPEAKER_01: And I think that that um speaks to why we've had such great success in in the last you know few years with the company.
• 45:45
  SPEAKER_01: Um, truly at you.
• 45:46
  SPEAKER_02: Yeah, no, I I really like that.
• 45:48
  SPEAKER_02: I I um just again from people I talk to, right, that there are times when when these relationships are really adversarial, you know, kind of like, you know, hey, I'm gonna get one over on you, and so you don't get one over on me.
• 45:59
  SPEAKER_02: Um, but what I'm hearing you guys say is is hey, if we approach this with a win-win-win attitude and we we make sure everybody's doing good work and they're getting paid for their work, and you know, that there's no reason anybody has to walk away a loser.
• 46:14
  SPEAKER_02: There's no reason anybody has to to feel like they got you know beaten and and kicked out of the curb.
• 46:21
  SPEAKER_02: No, it's you know, we've all got something to offer here.
• 46:23
  SPEAKER_01: Let's uh let's just meet each other and yeah, I I gave uh I gave a presentation about a yeah a year and a half or so ago at the Chicago Elevator Association meeting, which is which is just to contractors in the Chicago market, right?
• 46:37
  SPEAKER_01: And my biggest pitch, I said, you know, how many people here raise your hand view consultants as the elevator police, right?
• 46:44
  SPEAKER_01: And everybody rose their hand and and I go, I get it, right?
• 46:46
  SPEAKER_01: I that's that's how I viewed consultants when I was a contractor.
• 46:50
  SPEAKER_01: I'm here to to try and tell you that that's not how I want you to see me.
• 46:55
  SPEAKER_01: I want you to see me as a partner, right?
• 46:57
  SPEAKER_01: And at the end of the day, um, if you if if we're on your short list of trusted consultants, right, and if you're doing a good job, right, there's no reason for us to make you look bad, right?
• 47:08
  SPEAKER_01: I mean, I've gone into buildings where, hey, look, there's this, these are some areas where we can spend some time and and we can improve, but at the same time, hey, your your equipment's running well, however, it's 12 years old, those drives are probably gonna be failing soon.
• 47:24
  SPEAKER_01: Maybe you should buy a spare one or two, right?
• 47:27
  SPEAKER_01: And then that's that's a proposal that the the incumbent didn't have, you know, a few hours before.
• 47:33
  SPEAKER_01: So I think when you take that approach, I don't most people are very receptive to it and they're like, yeah, that makes total sense, right?
• 47:40
  SPEAKER_02: Right, right.
• 47:41
  SPEAKER_02: Well, again, it kind of speaks to trusted partner, right?
• 47:44
  SPEAKER_02: You you're you know, if the contractor's a trusted partner, great.
• 47:47
  SPEAKER_02: But but you know, even people sometimes with a you know, oh, they say I've got to need a root canal.
• 47:52
  SPEAKER_02: Well, I want a second opinion, right?
• 47:54
  SPEAKER_02: You're kind of coming in there with with uh an opportunity to to really kind of bring the two together and say, Yeah, you really do need a root canal in this case.
• 48:02
  SPEAKER_02: Um so um I want to open this up for uh some audience questions, you know, just call it ask the consultants.
• 48:10
  SPEAKER_02: And um, I've got a few of my own if if we don't get a few uh questions popping in.
• 48:15
  SPEAKER_02: And um, but uh just want to invite anybody that's listening out there to to uh throw something in the chat.
• 48:22
  SPEAKER_02: Um and I guess let me just start with one of mine, though.
• 48:24
  SPEAKER_02: What's what's the biggest mistake owners make from your perspective?
• 48:30
  SPEAKER_01: Um okay, I think this one's very uh for me at least, it's very um, I see it all the time.
• 48:36
  SPEAKER_01: Is you go into a building and you're looking and it's very easy to to overlook elevators.
• 48:44
  SPEAKER_01: Hey, it's running.
• 48:45
  SPEAKER_01: You know, a running elevator to sum it up, it does not mean a clean bill of health, right?
• 48:50
  SPEAKER_01: Or hey, we just upgraded these elevators and you go and it's like, oh, they put a new ceiling and new walls.
• 48:56
  SPEAKER_01: But but under the hood, right, is you have a 1990 whatever, right?
• 49:00
  SPEAKER_02: And it's like uh it's like a new paint job, right?
• 49:03
  SPEAKER_02: It's like, oh hey, it's brand new.
• 49:05
  SPEAKER_01: Paint it blue, call it new, right?
• 49:06
  SPEAKER_01: Is is is how they say.
• 49:08
  SPEAKER_01: So I think that is a lot um don't wait too long and just do a little bit of due diligence um in the front end will save you uh, you know, thousands, hundreds of thousands, or even millions in some instances, I think is very um uh an obvious thing that I see all the time.
• 49:23
  SPEAKER_02: Yeah, yeah.
• 49:24
  SPEAKER_02: So one of our one of our listeners is saying on that point, you don't typically see all inclusive contracts with building services, i.e.
• 49:31
  SPEAKER_02: HVAC, plumbing, fire systems.
• 49:33
  SPEAKER_02: Why does the market expect full coverage, hoist ropes, machine repair in elevator contracts, but does not want to necessarily pay for it?
• 49:42
  SPEAKER_02: Do you see contract scopes changing with more exclusions, but more transparency on costs agreed upon mark and agreed upon markup?
• 49:50
  SPEAKER_03: Yeah, so that's a it's a great question.
• 49:54
  SPEAKER_03: And I think um quite quite frankly, this the the question makes it makes a lot of sense, right?
• 50:03
  SPEAKER_03: In a lot of ways.
• 50:04
  SPEAKER_03: Now, you know, I think as an industry, um quite frankly, it's a it's a you know, this is way the way it's been done forever.
• 50:13
  SPEAKER_03: So in a lot of ways, our industry is still very antiquated, right?
• 50:17
  SPEAKER_03: It's why we've done it forever, that's how we're gonna keep doing it, right?
• 50:20
  SPEAKER_03: Um I will tell you that um when when a contractor excludes certain things, right?
• 50:31
  SPEAKER_03: I don't necessarily I don't red flag that and say, oh my god, we're not considering this person, right?
• 50:39
  SPEAKER_03: I think that it's a it op it opens up some discussion with the client um to have to have a real firm expectation of what the contract should or should not cover.
• 50:51
  SPEAKER_03: Um but uh but I but the other thing that's mentioned in here is more transparency on costs and markup, right?
• 51:00
  SPEAKER_03: Sure.
• 51:00
  SPEAKER_03: Well I you know right now uh without disclosing too much, I mean it's a the repair, service repair, it's a high margin business.
• 51:12
  SPEAKER_03: And while that's that's fine if if somebody said, Hey, look, we're gonna exclude hoist ropes, but when they have to be re replaced, we will structure it in XYZ manner, meaning, hey, this material or this is our flat labor rate, this is our flat material cost plus markup.
• 51:33
  SPEAKER_03: I think then you can have a much more intelligent conversation, meaningful conversation with the end user.
• 51:39
  SPEAKER_03: I will tell you that there are, I do know that there are some people that sit in our shoes that would dismiss and throw that out.
• 51:46
  SPEAKER_03: Um I share the the overall concern about this.
• 51:53
  SPEAKER_03: I mean, you know, to replace a set of hoist cables could be eighty thousand dollars in cost.
• 51:59
  SPEAKER_03: And and for an elevator that they're they're paying a thousand dollars a month for in a five-year term, that just doesn't make any sense.
• 52:08
  SPEAKER_03: Right?
• 52:08
  SPEAKER_03: So it becomes, hey, we gotta hedge our bets.
• 52:11
  SPEAKER_03: So what I'm not saying is for the contractors that are out there listening, exclude everything and let's but but I do think there is an opportunity for dialogue and communication.
• 52:24
  SPEAKER_03: And what I can promise is that we're not just just missing that approach.
• 52:29
  SPEAKER_03: Right.
• 52:30
  SPEAKER_03: Um, I think it's it's something that we have seen the industry start to shift, and we are starting to see more of these types of call it exclusions, clarifications.
• 52:41
  SPEAKER_03: But I think being able to then define what does that look like if those excluded or uh components need to be addressed, having that really clear is is the path forward.
• 52:55
  SPEAKER_02: Yeah.
• 52:55
  SPEAKER_02: Well, and it sounds like you you would have to have a custom agreement if if and some awareness.
• 53:01
  SPEAKER_02: I love the the point here about transparency, right?
• 53:03
  SPEAKER_02: Just just kind of opening up a little bit and coming to the table and saying, hey, here's here's what we think could happen, here's what we you know, what we want to exclude or don't want to exclude, and let's let's go down the road being aware.
• 53:15
  SPEAKER_02: I I think the awareness piece is just from what I hear, again, you know, that that customers that s sign agreements and I don't know if this is true, but I heard from somebody certain agreements that they could never get out of.
• 53:28
  SPEAKER_02: I'm like, how is that possible?
• 53:31
  SPEAKER_02: Yeah.
• 53:32
  SPEAKER_02: You know, that's that's not transparent and it's certainly not uh, you know, sitting at the table and saying, hey, let's let's work together for a win-win.
• 53:40
  SPEAKER_02: So correct.
• 53:41
  SPEAKER_02: Yeah.
• 53:41
  SPEAKER_02: What uh what do you say is the biggest misconception about modernization?
• 53:50
  SPEAKER_01: Well I can I can chime in, I guess.
• 53:54
  SPEAKER_01: Go ahead.
• 53:54
  SPEAKER_01: Yeah, go for it.
• 53:55
  SPEAKER_01: It's not it's not just um making the elevator new, right?
• 54:00
  SPEAKER_01: Like I I have this um and what I say by that is like like like visually and aesthetically new, right?
• 54:05
  SPEAKER_01: I mean I I can't tell you, Matt, how in the beginning of my consulting career I I'd go in and say, hey, it's gonna cost you X, right?
• 54:13
  SPEAKER_01: And then you have a board or a uh commercial client's like, oh, we just spent half a million dollars and all we got was new buttons.
• 54:20
  SPEAKER_01: And it's like, well, because most of the stuff when you do a mod, right, is I I call it it's under the hood, right?
• 54:27
  SPEAKER_01: A majority of it, right?
• 54:28
  SPEAKER_01: The everyday rider is not going to see, right?
• 54:32
  SPEAKER_01: So um I or even feel you can't rev it rev the engine and oh listen to it for sure.
• 54:37
  SPEAKER_01: Yeah, yeah, but you know, at the same time, right?
• 54:40
  SPEAKER_01: Um I I my personal approach is like a modernization should never be fear-based, it should be a strategic approach, right?
• 54:48
  SPEAKER_01: So I think um letting everybody know, hey, look, if you're looking to, and this is one thing we do on all our reports, right?
• 54:54
  SPEAKER_01: If if it is a modernization candidate, like, hey, this is what you what this scope, this budget number is for this scope, right?
• 55:03
  SPEAKER_01: Now, please note it doesn't include aesthetically sprucing up your elevator if you'd like to do that, budget an additional Y approximately, right?
• 55:13
  SPEAKER_01: And I think you just have that conversation, right?
• 55:16
  SPEAKER_01: It is not a code required thing that you make your elevator more aesthetically pleasing when you mod, right?
• 55:22
  SPEAKER_01: However, if you don't do that, you're more than likely you're gonna have some tenants or some residents or whatever say, Hey, what the heck did we spend all this money on?
• 55:30
  SPEAKER_01: So it's just a conversation to have, right?
• 55:33
  SPEAKER_01: I think that's one of the the bigger ones I see, right?
• 55:36
  SPEAKER_01: It's like, oh, we did this and all we got buttons is no, there's one button, right?
• 55:40
  SPEAKER_02: It's hard to know, yeah.
• 55:41
  SPEAKER_02: So so we're almost out of time.
• 55:42
  SPEAKER_02: I just want to throw a few rapid fire questions at you guys.
• 55:46
  SPEAKER_02: So like one or two answer responses as we wrap up.
• 55:49
  SPEAKER_02: Um and I'll start with you, Matt.
• 55:51
  SPEAKER_02: We'll just kind of bounce between you and uh Matt and Jose, but uh biggest elevator misconception.
• 56:01
  SPEAKER_03: Wow, that's um it's supposed to be rapid fire, right?
• 56:06
  SPEAKER_00: And in theory if it's really today, it's healthy.
• 56:09
  SPEAKER_00: I I right.
• 56:10
  SPEAKER_00: I mean that's that's one, right?
• 56:12
  SPEAKER_02: Yeah, I think most overlooked building risk.
• 56:20
  SPEAKER_01: Um obsolete equipment um hiding behind a pretty elevator.
• 56:27
  SPEAKER_01: I I think uh is is one trying to be rapidly.
• 56:31
  SPEAKER_03: Or because it's brand new, you're good.
• 56:34
  SPEAKER_01: Yes, yeah, that's a good one.
• 56:36
  SPEAKER_01: That's a really good hey, I just modded two years ago.
• 56:38
  SPEAKER_01: I I'm I I'm fine.
• 56:40
  SPEAKER_01: I don't need any I'm good.
• 56:42
  SPEAKER_01: Right.
• 56:42
  SPEAKER_01: One thing owners should ask contractors.
• 56:47
  SPEAKER_02: What's your retention rate?
• 56:51
  SPEAKER_02: Okay.
• 56:51
  SPEAKER_02: One thing contractors should understand about owners.
• 56:58
  SPEAKER_01: Not every owner is created the same.
• 57:01
  SPEAKER_01: Um, so i in my experience, contract uh all the time, right?
• 57:06
  SPEAKER_01: My my my elevator mechanic would be like they need a mod.
• 57:10
  SPEAKER_01: And it that is such an easy answer for an elevator mechanic in the field, like, oh, just spend the money and do that.
• 57:15
  SPEAKER_01: But guess what?
• 57:16
  SPEAKER_01: Not every owner has that um that money stashed away, right?
• 57:20
  SPEAKER_01: So it's navigating um the complexities of hey, what what these owners are gonna do with with their buildings and assets.
• 57:27
  SPEAKER_02: Yeah, yeah.
• 57:28
  SPEAKER_02: Yeah.
• 57:29
  SPEAKER_02: Uh most abused word in the industry.
• 57:33
  SPEAKER_02: Absolutely.
• 57:34
  SPEAKER_02: Yeah.
• 57:37
  SPEAKER_02: Uh modernize early or push equipment longer.
• 57:42
  SPEAKER_01: Uh that one's tough.
• 57:43
  SPEAKER_01: I think I can't you can't do either blindly, I think, but uh evaluate, right?
• 57:48
  SPEAKER_03: Yeah, it it it depends.
• 57:50
  SPEAKER_03: Uh this the simple answer is it depends.
• 57:53
  SPEAKER_03: It depends on the existing make and model, um, knowing what equipment's there to support it.
• 58:00
  SPEAKER_02: Um so so last question here.
• 58:06
  SPEAKER_02: Um what's the most important trait of a trusted advisor?
• 58:14
  SPEAKER_01: I'm gonna repeat what I've already said.
• 58:17
  SPEAKER_01: Objectivity and creativity, in my opinion.
• 58:20
  SPEAKER_03: Transparency and communication.
• 58:23
  SPEAKER_03: Beautiful.
• 58:24
  SPEAKER_02: Yeah, thank you.
• 58:25
  SPEAKER_02: So um I I I think you guys have done a great job just really talking about, you know, parties coming together, building trust, um, trying to figure out what building owners really want and need.
• 58:35
  SPEAKER_02: And that's really one of the pieces I was, you know, wanted to get at is rather than losing millions of dollars, right?
• 58:42
  SPEAKER_02: Being able to to have enough communication, enough of uh trusted partners, whatever, to be able to fix um, you know, whatever comes.
• 58:51
  SPEAKER_02: So um I I do believe at the end of the day the industry works best when owners, consultants, contractors stop treating each other like opponents, start acting like long term partners.
• 59:01
  SPEAKER_01: Yeah.
• 59:01
  SPEAKER_02: And uh I appreciate you being on here today.
• 59:03
  SPEAKER_02: It's been a lot of fun.
• 59:04
  SPEAKER_01: Thanks for having us, man.
• 59:06
  SPEAKER_02: Thank you.
• 59:07
  SPEAKER_02: Good luck to you as you keep building your business.
• 59:09
  SPEAKER_01: Appreciate it.
• 59:10
  SPEAKER_01: Take care.