A new set of FM contracts aims to offer a more consistent sourcing strategy
The UK facility management market is valued at around £ 120 billion a year. Despite its size, a special contract form has so far been missing.
At the end of January 2021, NEC launched a new set of contracts for the facility management industry, developed following research into the FM sector, stakeholder workshops with members of the Institute for Workplace and Facility Management, and individual consultations.
The suite is designed for all types of facility management procurement and delivery strategies, including FM contracts for integrated services (or “Total FM”), FM contracts for contractors, and FM contracts for single and / or multiple suppliers.
They offer a tailor-made alternative to the NEC Term Service Contracts (TSC), which many have previously adapted to FM.
The new contracts
There are four individual contracts in the new suite, each designed for a different contractual agreement.
- Facility Management Contract (FMC) – When a client appoints a service provider for a period of time to manage and provide all types of facility management services.
- Facility Management Subcontract (FMS) – When a service provider hires a subcontractor to manage and provide part of a service for which the service provider has been appointed under NEC4 FMC.
- Facility Management Short Contract (FMSC) – When a client hires a service provider to manage and deliver all kinds of facility management services that do not require sophisticated management techniques, include straightforward services and place low risk on the parties, with a service provider for a period of time .
- Facility Management Short Subcontract (FMSS) – when a service provider hires a subcontractor to manage and provide facility management services of all kinds that do not require sophisticated management techniques, include straightforward services, and place low risks on the parties and the service provider as part of the FMC, FMS or FMSC appointed.
Many have become accustomed to using NEC Term Service Contracts (TSC) forms and may question the need to switch to another option now.
However, the NEC TSC contract forms were not written for FM purposes and therefore required significant adjustments to bring the document into line with FM contract practice.
The new NEC4 FM suite includes provisions on onboarding, exit strategy and performance monitoring. However, more complex key FM areas such as data protection and employment still need to be included as bespoke Z-clauses as a consequence of writing general contracts.
The NEC4 FM suites contain a number of important provisions:
- Change Control – The FM contracts provide a clear and precise process for assessing the cost and, if applicable, timing effects of compensation events. This includes events resulting from changes in the client space.
- Service orders – These offer the customer the option of canceling work that is specified in the scope if necessary. The work to be canceled as part of a service order is determined in the tendering phase, and the prices and prices for the work are included in the price list of the FM contract.
- Project Assignments (FMC) – This is a secondary option and allows the client to assign additional work that has a degree of complexity, coordination and risk and may include changes or additions to the scope and price list.
- Service Failure – A failure to provide the service according to the scope is a service failure. The contracts contain provisions to deal with these and to take into account the various reasons, consequences and corrective actions that may be required. This provides a clear, robust, yet flexible method of achieving the agreed service levels.
- Performance Table – The contract provides complete flexibility in the content of the Performance Table for measuring delivery so that the customer can identify the performance goals, levels, values and timing for the assessment that determine the aspects of service delivery that are critical to them.
The first available documents are the FMC and FMS contracts and their flowcharts, as well as four user manuals. However, these are currently only available in E-View from NEC as pre-release editions. The contracts and documents will be printed in print from June 2021 and later in the year in the NEC Digital Library.
The contracts and supporting documents are a step forward to allow the sector to offer more integrated and consistent procurement strategies.
Karen Clarke is a partner and Anuja Trivedi is an associate at CMS