A high-rise building (let’s call it Building A) has been fixing its nine (9) elevators for the last twelve (12) years. Several times an elevator would fail, and passengers would get stuck, causing trauma and panic. Fortunately, the building’s security quickly rescued trapped passengers and suspended access to the dysfunctional elevators. But for the building’s owners, elevator reliability was a big problem.
The building management had resorted to buying and stocking spare parts but it didn’t alleviate the elevator problem. Management could not predict the next breakdown and parts on stock would never be enough. Management resorted to quick fixes to keep elevators running but breakdowns still happened.
In another building (call it Building B), the building’s management had just replaced two of its three elevators. The management was in the process of replacing the third.
The Building B’s management was replacing every part and electronic component of all its elevators. Except for the chassis and cab, Building B’s management was changing everything.
Building B’s two (2) newly replaced elevators were running like brand new. Both elevators ran smoothly and reliably without a hitch. The total cost of the replacements amounted to about 30% of what Building A spent per elevator.
What did the Building B’s management do better?
1. Building B had a clear, concise goal
Building B’s owners via its board of trustees defined what they wanted. They wanted the elevators to work with minimal disruption. The choice of words was important. For so long, Building B’s management was preoccupied in reacting quickly to elevator breakdowns or failures and at least cost. The tactic was to have frequent inspections and keep stock of spare parts. But that wasn’t consistent with what the owners wanted. The owners wanted minimal disruption. It wasn’t about controlling the cost of maintenance or reacting fast to elevator breakdowns. It was about making sure the elevators were always available to the building’s occupants and reliably delivering them to their destination floors.
Building A’s management on the other hand continued to focus on just buying parts and nagging the contractor to respond to breakdowns more quickly. It was more of reaction than action with a tactic of repairing only when needed.
2. Building B had a clear strategy
With that goal clearly set, Building B’s owners and management moved to replace all the elevators’ components except for its chassis and doors. Every moving part, wire, cable, and electronic component would be replaced. Broken or not broken, worn or not worn, every item would be changed. The owners and management figured that changing every item would make the elevators virtually brand new and less likely to break down every few years. Changing everything also would open the building management to consider other elevator brands and newer models.
This was a problem with Building A: the management and ownership refused to consider alternative brand models for the elevators.
3. Building B developed a clear and complete Terms of Reference (TOR)
Building B’s management drafted specifications and criteria, otherwise known as the Terms of Reference or TOR to carry out the elevator replacement strategy. The management and ownership rewrote draft after draft until there was unanimous consensus on the specifics and language of the TOR. The TOR documents in detail what the building ownership clearly wanted as the endpoint of their strategy.
Building A had no such TOR and never did make one.
4. Building B led a transparent bidding process
Building B’s management invited contractors to bid for the elevator replacement project. Contractors submitted not only their prices but also their detailed schedules and scopes of work. The building management provided guidelines and templates for bidders to ensure uniformity. The management would reconcile the bids with the TOR and compared their quoted terms & conditions against the respective TOR’s provision.
The first building did not have any formal guidelines for bidding and because management and ownership wanted to stick with an existing contractor, there wasn’t any bidding.
5. Building B monitored performance and made corrections
Despite the objective, strategy, and TOR, the replacement of the first elevator at Building B did not go smoothly. The contractor collected the down-payment but did not deliver the parts on schedule. Installation was delayed. When installation was finally underway, the contractor saw design conflicts with the power system, elevator’s closed-circuit television cables, and fire protection system. Completion was delayed but the contractor and the building management resolved issues.
To avoid delay in the replacement of the second elevator, Building B’s ownership agreed to pay immediately the corresponding down-payment even as finishing touches were ongoing for the first elevator. But the building management amended the contract to penalize the contractor if there would be delays in the deliveries of parts.
The replacement of the second elevator went much faster given what was learned from the experience with the first. The replacement of the third went just as smoothly.
At Building A, the contractor didn’t provide timelines or formal reports when repairs were done. Most communications were informal and undocumented. Building management forwarded purchase orders and checked disbursement requests without supporting documentation. This caused excessive spending without really reaping quality work.
The key word to Building B’s successful replacement of its elevators was ‘clear.’ A clear goal. A clear strategy. A clear TOR. A clear response validated by performance.
When problems are well defined and solutions are clear, getting results becomes straightforward.
Ellery's Essays 