The PM fee is the small number
Organizations negotiate the preventive maintenance fee because it is the number in the contract. It is usually a minority of what they spend on HVAC.
The rest is repairs: hourly labor at straight time and at multipliers for after-hours, weekends and emergencies; parts at a markup; trip charges; minimum billing per visit. None of that is constrained unless you constrain it.
This produces a predictable outcome. A supplier wins on an aggressive PM fee and recovers it on the repair work the PM contract entitles them to be first in line for. The PM fee was never the business model.
Negotiate the repair economics with at least as much attention as the PM fee, and model total expected cost rather than comparing PM fees.
Build the asset list before you go to market
The prerequisite for everything else is an asset inventory: equipment type, age, tonnage or capacity, location, criticality and condition.
Without it, bidders price a walkthrough and a set of assumptions, their assumptions differ, and the bids are not comparable. With it, PM scope can be set by asset class, response tiers can be set by criticality, and you can make a reasoned decision about which assets deserve preventive maintenance at all.
Most organizations do not have this list. Building it is a week of work that pays for itself in the first bid comparison.
The rate card is the contract
Four things determine repair cost, and all four are negotiable:
Labor rates by technician grade, at straight time. Ask what grade actually attends, because a contract full of apprentice rates staffed by journeymen is not the contract you priced.
Multipliers for after-hours, weekend, holiday and emergency work. The definition of each matters just as much. “After hours” starting at 4pm rather than 6pm moves a lot of work into premium billing.
Parts markup, capped as a stated percentage over verifiable cost, with invoices required above a threshold. Uncapped markup, or markup applied to an undefined list price, makes a competitive labor rate irrelevant.
Trip charges and minimum billing. A two-hour minimum on a twenty-minute filter change is a real cost at scale.
Response tiers, not a single response time
A uniform response commitment is either too expensive for comfort calls or too slow for a data room, a laboratory, a cold chain or a production line.
Tier by consequence: define priority levels, attach a response and resolution commitment to each, and make sure the asset inventory records which tier each unit sits in. Then attach credits to the tiers that matter and stop paying a premium for the ones that do not.
What to put in the RFP
- Asset inventory: type, age, capacity, location, criticality
- PM task list and frequency by asset class, not “per manufacturer recommendation”
- Labor rates by grade, straight time and every premium multiplier, with definitions
- Parts markup, capped, with cost verification above a threshold
- Trip charges and minimum billing
- Tiered response and resolution times, with credits
- Repair approval thresholds, so work above a value needs authorization
- Reporting: work orders by asset, repeat failures, PM completion rate
What good looks like afterward
PM completion evidenced rather than assumed, repeat failures visible by asset, repair spend reconciled against the rate card, markup checked against invoices, and an asset list that is maintained rather than rebuilt at every sourcing event.
HVAC sits inside the broader facilities services category. Where energy cost is the larger prize, see energy and sustainability.
- Asset inventory
- PM task list and frequency by asset class
- Labor rates by grade
- Parts markup
- Trip charges and minimum billing
- Tiered response and resolution times
- Repair approval thresholds
- Reporting
Issued in your structure, not the vendor's, so every bidder prices the same scope and the bids can be compared line for line.
How we help
- Spend Analysis: Spend analysis establishes where your organization stands and where value is trapped.
- Procurement Transformation: Transformation decides where procurement should go and what deserves resources first.
- Strategic Sourcing: Strategic sourcing turns strategy into implemented results.
- Value Tracking: Value tracking protects and extends value after implementation.
- Procurement Training: Training builds your team's capability so results last after the engagement ends.
- Fractional CPO: A fractional CPO gives you senior procurement leadership without a full-time hire: someone who owns the function, sets the commercial agenda and builds the team that eventually replaces them.
- Procurement Assessment: A structured diagnostic of how procurement actually operates across six dimensions, evidenced rather than asserted.
- Category Management: Category strategies that survive contact with the business.
- Supplier Negotiation: Negotiation outcomes are decided in the preparation.
- Cost Reduction: Cost reduction judged on what reaches the P&L.
- RFP Management: We run the whole sourcing event: scope, bidder list, document, evaluation and award.
Frequently asked questions
Why is our HVAC spend so much higher than the maintenance contract?
Because the preventive maintenance fee covers scheduled servicing only. The larger spend is repairs, billed at hourly rates with multipliers for after-hours and emergency work, plus parts at a markup, plus trip charges and minimums. A contract negotiated only on the PM fee leaves the majority of the category unpriced.
What should an HVAC maintenance RFP include?
An asset inventory with equipment type, age, tonnage and location, the PM task list and frequency by asset class, straight-time and premium labor rates by technician grade, parts markup capped as a stated percentage, trip charges and minimum billing, response times by priority level, after-hours definitions, repair approval thresholds, and reporting including work order history by asset.
How do we control parts markup?
Cap it as a stated percentage over verifiable cost and require supporting invoices above a threshold. Uncapped markup, or markup on an undefined list price, is where a competitive labor rate quietly stops mattering. Some organizations supply major parts directly for large assets, which removes the question entirely.
Should we buy preventive maintenance at all?
Yes for assets where failure is expensive or disruptive, and where manufacturer requirements affect warranty. It is less defensible on low-criticality assets nearing end of life, where run-to-failure and replacement can be the cheaper plan. Deciding that asset by asset requires an inventory, which is why the inventory comes first.
What response times should we require?
Tiered by consequence rather than uniform. A failure affecting a data room, a laboratory, a patient area or a production process needs a different commitment from a comfort complaint in an office. Uniform response times are either too expensive for most assets or too slow for the ones that matter.