By Euan Pirie and Catriona Kemp
The value of facilities management (FM) - the maintenance and repair of buildings – is sometimes underestimated; both in the scale of its contribution to the UK economy and in the importance of ensuring that these services are governed by a robust FM specific contract.
A recent report from RICS's Building Cost Information Service estimates that £66 billion was spent on maintenance in 2019, a figure that has increased annually over the past seven years and which represents just under 3% of gross domestic product. Put shortly, the FM market is big business.
Standard form FM contracts
There has been a dearth of standard form FM contracts and bespoke agreements are commonly negotiated on a project-by-project basis. The Chartered Institute of Building (CIOB) did produce a standard form FM contract in 1999 and NEC has a Term Service Contract to appoint a supplier to manage and provide a service for a period of time but it is not designed specifically for FM and both options have their limitations.
New NEC4 FM contracts
The launch of a brand new suite of contract documentation for FM agreements from NEC is therefore most welcome; particularly for public sector projects where users have become accustomed to NEC's underlying principles and partnering approach.
Adapted from the core NEC4 suite of contracts, the new FM standard form contracts have been developed with the support of the Institute of Workplace and Facilities Management (IWFM). They are intended to help to streamline processes, reduce the potential for problems and promote the best practice in the procurement of FM services.
Retaining "the best practice principles and features of the NEC forms of contract", the FM contracts incorporate all of the now familiar philosophies of NEC – early warning systems, simple agreements written in plain English and the unique requirement for parties to act in a spirit of mutual trust and co-operation.
The new FM suite contains four different contract options and is designed to be used for all types of FM procurement and delivery strategies. An NEC White Paper provides users with an overview of the contracts and their key features and benefits.
Limited contract and guidance documentation is currently available in pre-publication form following the launch of these agreements in January 2021. Official publication of the full suite of documents is anticipated in June this year.
Using the new NEC4 FM contracts
Harper Macleod has already begun to use the NEC4 FM contract in the procurement of two new major public sector facilities management projects which span extensive estates. NEC has also suggested that public sector bodies with existing PPP projects that are coming to an end could look to the NEC4 FM contracts if they plan to continue to outsource FM works on an ongoing basis. It will therefore be interesting to see how both the public and private sector embrace the new NEC4 FM contracts.
Harper Macleod has considerable experience of complex FM contracts. Please contact a member of the team to discuss the new suite of contracts and how they may be of use to your organisation.