NEC for FM suite of contracts

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Maintenance / Facilities FAQs

Top Frequently Asked Questions

Q We are the service manager on an NEC3 Term Service Contract (TSC). Clause 11.2(9) second bullet (with clause 50.3) allows for payment to be calculated as a quantity multiplied by a rate from the price list. Clause 63.9 tells us that the price list is amended by compensation events. Finally, clause 63.6 and 63.10 tell us that the assessment of a compensation event is, in effect, final. Does this mean that compensation events are added to the price list only as lump sums and not as independent quantities and rates? Also, does it mean that, in assessing payments, an item in the original service information and included on the price list as quantity and rate is paid at quantity by rate, while work that is the subject of a compensation event is paid as lump sum when complete?

By way of illustration, suppose the price list includes 10 m of an item at £10/m and suppose there is a compensation event that adds a further 10 m of the same item and this is priced at £10/m also. Suppose then that of the original scope, 9 m is completed and of the scope added by a compensation event only 9 m is completed. Would we, as service manager, (a) certify 9 m at £10 for the original service plus £100 for the compensation event, or (b) certify 9 m at £10 for the original service plus 9 m at £10 for the compensation event?
Q We are a foundation contractor working under an NEC3 Engineering and Construction Subcontract (ECS) main option B (priced contract with bill of quantities). Some of the piling works have been omitted, causing a compensation event to occur. The main contractor has valued this work by simply not measuring the works omitted. We have argued that the omitted works should be valued using the shorter schedule of cost components. Which is the correct method of assessment?
Q We are the contractor on an NEC3 Engineering and Construction Contract (NEC3 ECC) Option C (target contract with activity schedule). When we purchase an expensive item of equipment for the works, such as a tunnel boring machine, when can we recover the initial payment? Secondly, when is the residual value accounted for and how do we calculate the change in value?
Q What is NEC4?
Q We are shortly going out to tender using the NEC4 Term Service Contract (TSC) for facilities management. We note clause Y2.2 states, ‘The date on which final payment becomes due is…if the Service Manager makes an assessment after the end of an accounting period, fourteen weeks after the end of the accounting period’. Is ‘fourteen weeks’ weeks correct as clause Y2.2 in NEC3 TSC states, ‘The final date for payment is fourteen days’?
Q Is there a written comparison available between the NEC3 Professional Services Short Contract (PSSC) and the NEC3 Professional Services Contract (PSC), identifying what has been missed out from PSC to create PSSC?
Q I am enquiring as to whether an NEC contract can ever be executed as a contract ‘under hand’, that is as a simple contract? My previous experiences working with NEC contracts have always been when an agreement was made under a deed.
Q We are currently considering procuring a new facilities management (FM) provider for our premises. Can you please advise if and how an NEC3 contract would cover the contractual requirements of an FM contract?
Q We are an employer using the NEC3 Term Service Contract (TSC). It appears from the contract that there are a couple of ways for the service manager to ask the contractor to carry out additional work – either by issuing a service manager’s instruction or by an option X19 task order. From what we understand, the service manager’s instruction is anything the service manager instructs the contractor to do that makes a permanent change to the service information. For example, the contract says clean block A and B, but the service manager now requests blocks A, B and C to be cleaned going forward. We understand that requests that do not make a permanent change to the service information, for example clean block C once, have to be dealt with as an option X19 task order. However, as the process looks quite long and detailed, is there another method for small one-off works of minimal value?
Q We are using the NEC3 Term Service Short Contract (TSSC). We and are looking to terminate in accordance with the provisions of clause 90.1 (reasons 2 and 3). The clause suggests that we have to issue a termination certificate. Can you advise whether there is a standard form for this, or whether it is anticipated that this will be a formal letter headed ‘termination certificate’?

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