Anyone out there familiar with the term 'performance contract(s)' and the application within our industry? Had a fella go through a pitch about this new way of doing business. Sounds too good to be true, which usually means it is. According to him they contract for MAJOR $$$ upgrades in everything from lighting to insulation to hvac to plumbing, and then their payment consists of the difference (savings) in utilities. In other words if the work resulted in a monthly savings of $10K then the customer would write them a check for $10k each month. No money for the MAJOR $$ up front OR on completion from the customer. Any other insight?
Boss, please delete this post or re locate to Pro's Forum. thanks. Irish.
[Edited by irishmist on 02-18-2005 at 01:42 PM]
The concept sounds good ,IMO too many variables, legal loopholes, and ownership changes could get you in trouble in a hurry....
I've been through that ordeal, once
The payback is there. The guarantee gets met every month. The job pays for itself, with money left over. For the contractor, that is.
The guarantee is a feeble amount. It get's the monitoring equipment into the building(s). This equipment tells them how long they can neglect the account and still make money.
By the end of the contract, the "milk is gone". Renew and they'll do it all over again. Don't renew, and you are in need of major maintenance, as documented by the wonderful monitoring equipment that you own and only one company can service.
Suggest to them they double the savings guarantee and see what happens. I always wanted to do that.