How to choose between the NEC4 TSC and NEC4 FMC

KEY POINTS

• NEC4 TSC and NEC4 FMC can both be used to appoint a supplier to provide an FM or term maintenance service.
• FMC uses wording which is more relevant to the general FM sector, including for ‘soft’ services such as cleaning and catering.
• FMC has enhancements over TSC, such as having service orders, design-related options and a core performance table. The choice between TSC and FMC will depend on the perceived advantages of these.

The value of the UK’s facilities management (FM) and maintenance sector is set to reach £52 billion in 2026, around 7.5% of the gross domestic product (ReportLinker 2024). It could employ around 10% of the UK workforce.

Recognising that much FM and maintenance work is contracted under term contracts, NEC published the NEC3 Term Service Contract (TSC) in 2005 and updated it to NEC4 in 2017. The NEC4 Facilities Management Contract (FMC) was published in 2021 and drafted to be more relevant to the general FM sector.

The two contracts are very similar: either of them can be used to appoint a supplier to provide an FM or maintenance service for a client. So why are there two contracts, and which one should a client adopt?

Reason for two contracts

By the time NEC4 was launched, TSC had been accepted by clients in the maintenance and repair sectors, so-called ‘hard’ FM. But TSC had not made so much of an impact in other service areas, particularly ‘soft’ FM work such as cleaning or catering. It also had a reputation with those in these work areas of being a contract predominantly aimed at construction.

FMC was published following representation from, and development work with, the Institute of Workplace and Facilities Management (IWFM). Its aim was to build on TSC but to provide a contract that was understandable to the wider FM sector. It had to be acceptable to those developing UK public procurement frameworks, and as a standard FM contract it could reduce dependence on client-led bespoke contracts.

Summary of differences

The first principle in understanding the differences between TSC and FMC is understanding the similarities. There are no procedures or processes in TSC that are not in FMC. FMC could be considered as ‘TSC+’ with language, processes and procedures more aligned with the general FM sector. 

The following summarises where FMC differs from TSC:

• Language: for example, FMC uses ‘Service Provider’ and ‘Service Failures’ where TSC uses ‘Contractor’ and ‘Defects’.
• Design options: FMC includes design-related options X8, X9 and X15 to reflect there is often a design element in work done by the service provider.
• Ordering work: While FMC through option X27 on ‘Project Orders’ retains the TSC ‘Task Orders’ process to instruct additional project work requiring a programme (with just a change in the terminology), FMC additionally has a ‘Service Orders’ process to call off works of a responsive or reactive type. TSC does not have a specific procedure for this.
• Incentivisation: FMC has amalgamated TSC options X17 and X20 into a core ‘Performance Table’, which lists performance targets and the commercial impact of under- or over-achieving targets.
• Service provider change without novation: FMC adds option X28 on ‘Change of Control’ as many public procurements require an option to terminate if control of the supplier passes to another legal entity.
• Defective or failed work: FMC ‘Service Failures’ and TSC ‘Defects’ are essentially the same, except that FMC additionally considers what to do about failures that cannot be corrected because it is too late to correct them.
• Setting up and finishing the contract: where the TSC is silent on this, FMC provides for an optional mobilisation plan and an obligatory demobilisation plan, terminology which is in line with the ISO 41011:2024 Facility Management–Vocabulary.

Apart from the above differences, there are some small changes to drafting. These include the responsibility for maintaining records of work instructed, and of work done (which may not be the same), the option for the client of retaining liability for damage to its own property, and the requirement that the service provider passes over all warranties from subcontractors and suppliers. All these are intended to make the FMC better reflect the nature of FM work.

Choosing between TSC and FMC

Providing the FMC language does not cause any problems, a client versed in the NEC approach and now considering a term contract for the first time would be well advised to consider FMC. It has all the processes of TSC plus all the benefits given through the enhancements, such as service orders and the additional design-related options.

Clients already using TSC have a less easy decision. Do they continue with TSC because the style and language are known and understood, adding in extra FMC elements they consider useful, or move to FMC as existing TSC contracts come to an end?

For new clients in the FM sector who have not considered a standard form before and can now see the benefits of one, FMC is a natural choice. It provides terminology and concepts which are attuned to their current requirements and language. It will all be new, so they may as well start with a contract which provides for their sector.

The NEC is currently supporting both contracts and provides training for both forms. There is currently only an accreditation course for TSC service managers but an equivalent FMC service manager accreditation course is now being written.

Conclusion

FMC and TSC serve the same purpose. However, FMC while retaining all the procedures of the TSC, has added concepts and language more attuned to the FM sector. It is for prospective clients to decide whether the extra elements of FMC are of benefit in their contracts and choose accordingly. 

Reference

ReportLinker (2024) United Kingdom Facilities Service Market Overview 2024-2028, https://www. reportlinker.com/market-report/Maintenance-And-Cleaning-Services/456690/Facilities-Management.