NEC, provider of procurement contracts to the construction industry has recently introduced a suite of contracts developed specifically for the facilities management industry. Here, Crystal Fan, Head of Product Development at NEC explores some of the issues currently facing the industry which the contracts hope to remedy.
The facilities management sector is extensive, with some estimates of it being worth as much as £120 billion in the UK alone. As with many contractor / client industries though, it can suffer from contract disputes, inconsistency and an ‘us and them’ mentality.
With such a large and diverse sector, there are varying levels of client expertise in the procurement and subsequent management of facilities management contracts. The maintenance of assets is one of the more significant expenditures a client will have, so anything that can make this easier, or more standardised, will reap real benefit.
Problems can arise from the sheer range of the service required, even from a single work type, such as a concierge service in a block of flats. So, for a client such as a hospital trust - which has multiple sites all with their own unique needs - it means that any contract that is applicable across the board must be extremely flexible. Up until this point, it has usually been remedied through bespoke contracts. The tide is beginning to turn with options now available which are standardising industry operations without a subsequent loss to specificity or flexibility.
By their very nature, facilities management contracts are noted for their longevity. As anyone in the industry will know, good working relationships take time to develop, along with understanding the client’s assets. This - coupled with the lengthy and expensive time spent in the procurement phase - means clients often want to avoid unnecessarily repeating the process. Therefore, the overall value is significant, even of smaller contracts when considered over a five-to-seven-year period. As a result, the contracts need to have flexibility to manage change, and the unforeseen impacts of, for example, legislation or, more recently, COVID.
Despite this, there is still a need for unity in the procurement process of all these diverse contracts. Although the service will be different, the administration of any contract will be very similar. In relation to the language and terminology used within projects, historically there has not always been consistency throughout the sector. With the common use of bespoke contracts, usually written by clients, there has not always been uniformity throughout the sector on the basic definitions and terminology for the parties concerned, creating a malaise of confusion. Creating a standardised and intuitive contract which can be applied across the Facilities Management sector provides the opportunity to simplify and streamline a process often troubled by inefficiencies.
It’s clear there is a demand for contracts which prioritise this approach. Fortunately, there is an increasing demand for consistency within procurement strategies and there are now options which ensure that contracts being used by the industry are built for purpose, while retaining and continually building upon best practice principles.
These principles, embodied by the NEC4 Facilities Management Contract Suite, will ensure contracts work to support good relationships between all parties, are industry agnostic across a wide variety of commercial situations or locations, and are written in clear, simple terms. The new contracts and improvements to procurement strategies represent a great step to enable the facilities management sector to add value to the supply chain and develop stronger, more collaborative, relationships and ways of working.