New NEC4 Facilities Management Contract Suite Launched

Introduction

NEC introduced a new suite of facilities management (FM) contracts at the end of January. The contracts, developed in conjunction with the industry, are intended to be more accessible to the FM sector by using terminology and processes more aligned to current practice, and are designed to be used for all types of FM delivery. The first contracts available are the Facilities Management Contract (FMC) and Subcontract (FMS), initially as a prepublication edition, with the short form contracts (FMSC and FMSS) following in June 2021.

The Contracts

These contracts will feel familiar to NEC users. The modular structure common to all NEC contracts is retained, as is the requirement for the parties to act “in a spirit of mutual trust and cooperation”. The aim of this approach is to stimulate good management of both the work and the working relationship between the parties, which is reinforced by the inclusion of the early warning process requiring the prompt notification and discussion of issues.

The core new procedure in the contracts is the ‘Service Order’, which is intended to reflect how work such as reactive maintenance is instructed in practice. This procedure allows a client to ‘call off’ work identified in the scope (in the Service Order Requirements) as and when required. The Service Order is simply the order given by the client to the service provider to undertake some work, with the price being determined by reference to the price list. The Requirements also detail the processes to be followed and any constraints that apply – for example, if approval is needed above a certain value of works. As such, ordering and pricing simple works is intended to be a straightforward process (more complex works may be addressed via a separate process, Project Orders). However, as the Service Order process is specific to the client’s requirements and the services being provided, the key to a well-functioning process will be ensuring that the scope is comprehensive and reflective of day-to-day operations and processes.

The ability to measure performance and apply sanctions for non-performance is a core element driving service delivery in all facilities management contracts, and so the suite has introduced the Performance Table. This is a document that sets out what is required (targets), when and how performance is assessed and reported (measurements) and how performance is rewarded. As the contents of the table will be dependent on the client’s service requirements it will be crucial to ensure this document is comprehensive, fit for purpose, and easily understood by the users.

Conclusion

The NEC’s approach to these contracts could fairly be described as aspirational. It will be very interesting to see whether the FM industry embraces use of the suite, how the contracts are adapted and implemented in practice, and whether the frequency of disputes is reduced. We also question whether this suite will be suitable for clients requiring a total FM package (i.e., soft and hard FM) as NEC would appear more appropriate for hard FM; time will of course tell, and we look forward to seeing how industry use in this area develops.

Lastly, while we note that the NEC believes the contracts should be capable of being picked up and used by FM practitioners, we would sound a note of caution: it will be essential to prepare the contracts and scope with legal and technical input in order to avoid any unintended consequences, and during the operational phase advice should be sought before taking contractually significant steps.

Sharpe Pritchard has extensive experience in preparing all forms of facilities management contracts and with the NEC series more generally. If you require further information or advice on the new FM suite, please contact Timothy Farr or Justin Mendelle.

This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any issue raised in this article, please contact us by telephone or email enquiries@sharpepritchard.co.uk

Posted in Construction, Latest news and blog.