The Guide to Creating a Property Maintenance Service Level Agreement!

June 21, 2021 | Read: 15 minutes

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The story is familiar: your company has successfully fixed a burst pipe and you think things are going well.

That is, until you get a call from the manager:

You’ve breached your property maintenance service level agreement…. for the third time this month!

The consequences aren’t good. You’re not going to get paid for your work and worse still, it means you’re contract is on probation. It might even get terminated. 

If you’ve struggled with scenarios like this, or are finding that you can’t win contracts anymore because you lack SLA history, keep on reading. This guide to creating and monitoring property maintenance service level agreements will help! 

Property maintenance companies tend to think that if the work gets done then the customer will be happy, but these days, both competition and customer expectations are higher than ever.

That’s why service level agreements are a mainstay in the field service industry, especially when working B2B. 

For more information about SLAs, check out our video, or keep reading below!

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What is a Property Maintenance Service Level Agreement?

A property maintenance service level agreement (or SLA for short) is a section of the contract between a service provider (a general property maintenance company or a specific type of contracting company such as plumbing, HVAC, electrical, etc.) and a customer (an office building’s management team, for example), where the provider agrees to a certain level of service or work standard. 

SLAs are part of a hiring contract; they are legally binding documents and come with penalties ranging from fines to contract termination in case of non-compliance. 

They’re most common when working with commercial customers, but it’s not unheard of to sign an SLA with a loyal residential customer either, especially if you plan to introduce a subscription-based service. 

Importance of a Property Maintenance Service Level Agreement

A service level agreement is required as an additional part of a contract because both parties need to agree on a standard of what “quality service” means for the specified transaction. 

Some customers will expect 24/7 availability when they sign a service contract, while others will want you to guarantee an asset downtime of no more than five hours. As with any legally binding document, these terms have to be reviewed beforehand so that both the provider and the customer are aware of their rights and responsibilities. 

In addition to this, an SLA can be revised with less administrative effort than a contract. While property maintenance contracts are usually reviewed and renewed after a year or more, you can revise an SLA every quarter depending on performance, previous agreements between the two parties, or changes in services. 

Basic SLA Agreements:

The table below shows an example of a basic property maintenance service level agreement. In real-life situations, the commitments would be more complex, as well as the follow-ups, but this should give an example of what you can expect.

Service Level CommitmentFulfilment CriteriaMinimum Performance RequiredService Level Breach Follow-up
Maintenance check visit for Asset #1Every 3 months99.9%5% Service Credit gained for each percentage under the specified Minimum Performance
Reactive technician visit8h from initial call90%5% Service Credit gained for each percentage under the specified Minimum Performance
Arrange repairs following technician visit12h90%5% Service Credit gained for each percentage under the specified Minimum Performance
Asset downtime48h from technician visit90%5% Service Credit gained for each percentage under the specified Minimum Performance

Consider what your business and technicians can comfortably commit to when creating a new contract or property maintenance SLA.

If you know they won’t be able to handle a certain level of service, don’t tell the client they can just close because you want to close a deal (it’ll come back to bite you).

Who Writes a Service Level Agreement?

The property maintenance company (or any service provider) will include a service level agreement draft in the contract tendering proposal

Some contract bids require this, while others simply expect it. However, showing what you’re ready to commit to is generally a point in your favor when competing against other maintenance companies. 

Some providers turn service level agreements into a sales strategy by proposing different tiers of service.

For example: a basic SLA could include a 48-hour response guarantee, while a premium one promises 24/7 availability and an 8-hour response time, with each being priced accordingly. 

If you’re working with a client and need to create a customized service level agreement that’s outside of your normal terms and conditions – you may need to spend extra time making sure all parties can confidently meet them.

What are the Key Components of a Property Maintenance SLA?

If you’re trying to write a property maintenance service level agreement, you’ll need to understand the building blocks if you want the client to have all the information they need. 

When creating an SLA within a contract, you’ll want to make sure it includes the following sections: 

Summary of Terms

Since a property maintenance service level agreement will almost always be a portion of a larger contract, it’s important to briefly state the type of service, who the customer is, and when and how it will be completed. 

But don’t worry about supplying major details here, you will get to them throughout the rest of the SLA. 

Objective of Contract

This section of the contract can vary widely based on the type of business you’re running. Regardless, it’s important to understand the goals of your clients and what they hope to achieve by using your services and/or products. 

When creating an internal SLA, the objective of the contract will be based on the performance metrics set by clients’ expectations or federal regulations. 

When writing this section, list the specific numbers and goals that meet the customers’ terms and that your company can comfortably commit to. 

Response Times

You’ll need to include clear expectations for how quickly the field technician will respond to different types of maintenance requests. If you’re unable to provide a specific number commitment – consider using urgency levels like “same-day, next-day, or non-urgent,” and prioritize them accordingly.

If you’re working within different response time metrics, lay out the penalties for exceeding agreed-upon timeframes.

Requirements and Deliverables

This section should tell your customers how you’re going to be completing the service or job and the costs behind it. If necessary, this portion should also outline anything the customer will be responsible for or if there are any requirements they need to meet to keep it active.

If this is an internal SLA, discuss what the departments involved will have to provide to each other to hit their metrics. You can also discuss the chain of command and how information should flow across departments. 

Procedure if Breach Occurs

Nobody enjoys thinking about what will happen if a service or product fails – or worse, doesn’t get provided. Customers will always like to know they’re protected and that the company they’re working with is prepared to handle any situation. 

When working with clients, you’ll have to outline how the service will perform and what happens if your business fails to meet those terms. 

Analytics or Reporting

Regardless of the type of business you run, you should have some sort of statistics on how your service and product will perform. Think about specific benchmarks and what information will be useful to your client.

For example, imagine one of your clients runs a packaging warehouse and a machine that your SLA is responsible for has stopped working. You’ve promised to have a technician there to make repairs within three hours, but your average time to get on-site is only one hour!

Since the client will be losing money for every hour they can’t operate – they’ll be more likely to go with your services if they know you can get the field technician there faster than the competition. You’ll still be safe if you make it within three hours, but highlight your strengths when you can. 

Any metrics you use to measure the standard of your service or useful statistics that show off your business in a positive light are a great way to wrap up your SLA.

Communication Protocols

Everybody has a preferred method of communication and you’ll need to specify how you’d like a client to raise any questions or issues (and vice versa). 

If there’s an unresolved issue or lack of communication, you’ll need to outline escalation procedures so the client doesn’t feel abandoned by your company. 

Tip: With online portals and automated phone calls or emails, you can streamline the communication process and always stay within response time expectations when it comes to reporting issues. 

Cost and Payment Structure

Unless your business only has one price for all of your services and products, you’ll need to outline how costs are calculated and the different types of billing cycles (e.g., flat fees, per-service charges, retainer agreements).

If you don’t already do this – consider using a good, better, best pricing model that offers different tiers of service with varying response times and cost structures. 

Nullifying a Contract

If there’s anything an organization could do that would result in immediate termination of the contract – you should list it here. 

There’s nothing worse than miscommunication turning into an expensive problem. Making sure all parties involved are on the same page throughout the life of the contract will help avoid any technical issues down the road. 

Insurance and Liability

Define the liability responsibilities for both parties in case of property damage or injuries. Clearly articulate the insurance coverage requirements, ensuring that each party is adequately protected and aware of their responsibilities in case of unforeseen events.

Dispute Resolution

Outline a fair process for addressing disagreements or service failures. Establish a step-by-step resolution procedure that promotes open communication and collaboration, with the ultimate goal of resolving disputes amicably. 

How to Draft a Property Maintenance Service Agreement

Now that we understand what SLAs are, their importance, and the key components of one – it’s time to dive into the steps you should take when drafting a property maintenance service agreement. 

Gather Information

Start by gathering essential information from your client. This includes details about the business and owner – like the name and address, contact information and preferred communication methods, and an identifier or reference number for the contract.

Define the Scope of Services

Clearly articulate the services your company and technicians will be responsible for providing. Specify the routine tasks and any additional services agreed upon. This section sets the foundation for expectations and helps prevent misunderstandings.

Set Response Times

Establish response times for each different type of service you may be providing to the client.

Whether it’s an emergency repair or a routine service call, defining response times is required if you want the client to select your business – and following through on those commitments will be even more important!

Outline Performance Measurement

Include measurable metrics to assess the performance of your maintenance services and field technicians. This could involve listing any relevant Key Performance Indicators (KPIs) – such as response time, resolution time, and overall customer satisfaction. 

Establish Communication Protocols

Communication is key in any service agreement so make sure to specify the preferred methods of communication (email, phone calls, or a designated online platform). Clients need to know how to immediately get in contact with you when they need the services they’re most likely paying a lot for. 

Additionally, if you’re monitoring the equipment from your end, be ready to notify your clients if you notice any issues. 

Address Cost and Payment

In detail, outline the cost structure for the maintenance services. Specify any recurring fees, additional charges for extra services, and the payment schedule.

This section should leave NO room for ambiguity regarding financial expectations. If customers are confused by the wording or pricing in your SLAs, you may need to make edits to your SLA template!

Define Term and Termination

Specify the duration of the property maintenance service level agreement and the conditions for termination. Whether it’s a fixed-term contract or a month-to-month agreement, make sure both parties are aware of the time frame and the circumstances under which the agreement can be terminated.

Include Standard Clauses

Incorporate standard legal clauses to protect the interests of both parties. This may include dispute resolution practices or confidentiality agreements but could look different for each contract. If you need to, consult legal professionals to help draft this section and have them review any future changes. 

What Happens When Trade Companies Breach a Property Maintenance SLA?

When signing a contract that includes an SLA section, you’ll have to agree on the consequences of breaching it. A service level agreement breach is an event where your service did not live up to the standard you’ve outlined in the contract. 

It doesn’t just mean you couldn’t do the work; anything you’ve signed off on in the SLA can represent a breach, from taking too long to send a technician around or not having the expertise required for the job.

Regarding the consequences of breaching an SLA, these will also be outlined in your contract and are usually discussed before signing. It’s up to you how hard you want to negotiate; if you want to win a contract no matter what, you can agree to whatever the customer proposes. 

Just make sure you’re able to uphold the SLA otherwise you run the risk of suffering one or more of the following four consequences:

Financial Penalties

If you breach a property maintenance service level agreement, there are three possible financial consequences: Deductions, Fines, or Withheld Payments. 

  • Deductions: The customer may deduct a specific amount from the payment due to the service provider for each instance of non-compliance, as outlined in the SLA.
  • Fines: The contract may stipulate specific fines for different types of breaches, such as exceeding response time limits or failing to resolve an issue within the agreed-upon timeframe.
  • Withholding Payment: In extreme cases, the client may withhold payment altogether until the breach is rectified.

If these instances become frequent across your book of business – whether as a result of admin negligence (or more likely poor SLA tracking and monitoring) then your business will be needlessly suffering. 

After all, you know your margins and while you can strategically plan for some mistakes, losses incurred in this way are almost always avoidable. 

Performance Improvement Measures

Mistakes happen and clients are usually understanding, but if you’ve breached an SLA more than once – they could require you to start implementing performance improvement measures if you don’t want to lose their business. 

  • Warning Notices: The property owner may issue a formal warning notice to the service provider, highlighting the breach and outlining expectations for improvement.
  • Corrective Action Plans: The service provider may be required to submit a plan outlining how they will address the breach and prevent future occurrences.
  • Increased monitoring: The property owner may increase their monitoring of the service provider’s performance, tracking response times and service quality more closely.

If this happens, your costs will go up. You’ll have to supply additional resources and time to make sure that specific contract isn’t going to incur any other breaches. 

Contractual Termination

Repeatedly failing to deliver the expected level of service can be an indication that either you over-promised and underdelivered in your proposal or that your business wasn’t properly prepared to handle the number of jobs you took on. 

  • Termination Clause: Many SLAs have clauses allowing the property owner to terminate the agreement if the service provider breaches it repeatedly or fails to meet performance standards.
  • Notice Period: Depending on the specific contract, there may be a required notice period before termination can take place.
  • Finding a new provider: The property owner will need to find a new service provider to fulfill their maintenance needs.

On top of that, you might even have to pay back damages to the customer and run the risk of spreading the word that your business isn’t able to respect a contract.  

Legal Action

In a worst-case scenario, one of your clients could end up taking legal action against you.

  • Lawsuit: In severe cases, the property owner may choose to take legal action against the service provider to recover damages caused by the breach. This could result in heavy financial losses due to property damage or your client losing revenue because you failed to act within the outlined time frame in the SLA. 
  • Reputation Damage: If you company is proven to be in the wrong, a lawsuit caused by an SLA breach can damage your reputation. It can be hard to rebuild trust in your business throughout the local community which makes it very difficult to secure future contracts. 

Automatically Monitor Your Property Maintenance SLAs using Software

Contracts and Service Level Agreements (SLAs) are easy to lose track of. But staying on top of contractual obligations is key for long-lasting customer relationships! 

The best SLA management software offers tools including billable rates, pricing and tracking inventory management, PPM schedules, and annual renewals – so you can always provide the best solutions.

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Thanks for checking out the Commusoft blog - I’ve been helping business owners improve their strategies for a few years now, so I hope you were able to take something away from the content I’ve written. Feel free to continue exploring the blog - or reach out to us with any questions!

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