The New NEC4 Facilities Management Suite

Monday, 21 June 2021 saw the NEC launch the latest addition to its offering of contracts – the final form of the NEC4 Facilities Management suite of contracts.

The new set of contracts have been drafted with the support of the Institute of Workplace and Facilities Management (IWFM) and are intended specifically for the procurement of facilities management services.

The suite consists of four contracts which include:

• Facilities Management Contract (FMC) – intended for use by clients looking to appoint a provider to manage and deliver any type of facilities management services.
• Facilities Management Subcontract (FMS) – intended for use by an FM provider to appoint a subcontractor to help deliver its service.
• Facilities Management Short Contract (FMSC) – intended to be used to appoint an FM provider to deliver any type of straightforward, low-risk services which do not require sophisticated management techniques.
• Facilities Management Short Subcontract (FMSS) – accompanies the FMSC and covers the same services for subcontractors.

The contracts are accompanied by six user guides and two flow charts. We understand that practice notes covering specific geographic and FM themes will also continue to be published over the coming months.

Key Points

Parties familiar with NEC contracts will find that the FM suite retains the usual NEC structure of core clauses, pricing options (Option A: Priced contract with a price list; Option C: Target contract with a price list; or Option E: Cost reimbursable) and secondary options, allowing the contracts to be tailored to suit the project.

In terms of what’s new and/or specific to the FM suite, the contracts offer an approach much more aligned to FM concepts and practice than the Term Service Contract which tended to be used by parties operating under NEC previously. This includes not just the use of updated and appropriate terminology but also a new core procedure for calling off works which is intended to reflect how FM works (such as reactive maintenance) are actually instructed in practice.

Key features within the FM suite include:

• Service Order – The order given by the Client to the Service Provider to undertake work, with the rates and prices being referenced within the price list.
• Service Order Requirements – Identifies those works which may be ‘called off’ by the Client by issuing a Service Order, as well as setting out any processes which need to be followed and/or any constraints that will apply.
• Project Orders – A Secondary Option offering a separate process to a Service Order, intended for use in respect of more complex works requiring additional coordination and/or risk management. Additional incentives (positive and negative) can be included in Project Orders to encourage the Service Provider to complete the work on time.
• Performance Table – A key part of the FM contracts, intended to set out what is required of the Service Provider (targets), when and how performance will be assessed and reported (measurements), and how performance is rewarded. The Performance Table offers flexibility in that it can be drafted to suit the Client’s particular performance requirements.

Conclusion

Given the extensive types of work carried out within the FM sector, there is no doubt that this new suite is a sensible and practical addition to the NEC’s offering. Only time will tell, however, whether the FM sector will choose to utilise these contracts and where it does so, the degree to which they will be amended.

As with any NEC contract, it is important to bear in mind that proper consideration needs to be given, both from a legal and a technical perspective, to all of the elements of the contract, e.g. contract data, Core conditions, Options, and Scope/Service Requirements, and whether any ‘Z’ clause amendments are required. No contract offers a ‘one size fits all’ solution and drafting should be carefully considered in the context of the works/project as a whole as well as the commercial deal between the parties.

This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. If you have any queries or questions regarding this article or would like to discuss your facilities management contracts, please contact Michelmores’ Construction & Engineering team.​