NEC3: Term Service Contract Guidance Notes

These guidance notes place the new Term Service Contract into context with the rest of the NEC suite of documents. They then set out the background to the contract, its provisions and guidance on when and how to use it. The procedure for setting up a contract is covered and explanations are given on the meanings of individual clauses. Worked examples are provided of contract data. Finally appendices cover the clause numbering system, sample form of tender, sample form of agreement, use as a subcontract, form of performance bond and price list.

OGC endorsement of NEC3

Construction Clients' Board endorsement of NEC3

The Construction Clients' Board (formerly Public Sector Clients' Forum) recommends that public sector organisations use the NEC3 contracts when procuring construction.

Standardising use of this comprehensive suite of contracts should help to deliver efficiencies across the public sector and promote behaviours in line with the principles of Achieving Excellence in Construction.

Contents

Chapter 1

• The NEC family of contracts
• ‘A fundamental review’
• The Latham Report
• Increasing use of the NEC contracts
• The NEC family of contracts
• Culture change
• Have the NEC contracts been successful?

Chapter 2

• Key principles of NEC contracts
• Flexibility
• Clarity
• Stimulus to good management
 
Chapter 3

• Introduction to the Term Service Contract
• Purpose of the guidance notes
• When should the TSC be used?
• The contract
• Subcontracts
• Clause numbering
• Roles of the parties
• The Service Manager
• The Adjudicator
• The contract strategy
• The main Options
• A Priced contract with price list
• C Target contract with price list
• E Cost reimbursable contract
• The secondary Options
• W Dispute resolution
• X1 Price adjustment for inflation
• X2 Changes in the law
• X3 Multiple currencies
• X4 Parent company guarantee
• X12 Partnering
• X13 Performance bond
• X17 Low service damages
• X18 Limitation of liability
• X19 Task Order
• X20 Key Performance Indicators
• Y(UK)2 The Housing Grants, Construction and Regeneration Act 1996
• Y(UK)3 The Contracts (Rights of Third Parties) Act 1999
• Z Additional conditions of contract

Chapter 4

• Procedure for preparing a Term Service Contract
• Preparing the tender documents
• Contract Data part one
• Service Information
• Contract Data part two
• The Price List
• Inviting tenders
• Preparing a tender
• Assessing tenders
• Creating the contract

Chapter 5

• Explanatory notes on the clauses of the Term Service Contract
• 1 General
• 2 The Contractor’s main responsibilities
• 3 Time
• 4 Testing and Defects
• 5 Payment
• 6 Compensation events
• 7 Use of equipment, Plant and Materials
• 8 Risks and insurance
• 9 Termination
• Option W
• W1 Dispute resolution
• W2 Dispute resolution
• Secondary Option clauses
• X1 Price adjustment for inflation
• X2 Changes in the law
• X3 Multiple currencies
• X4 Parent company guarantee
• X12 Partnering
• X13 Performance bond
• X17 Low service damages
• X18 Limitation of liability
• X19 Task Order
• X20 Key Performance Indicators
• Y(UK)2 The Housing Grants, Construction and Regeneration Act 1996
• Y(UK)3 The Contracts (Rights of Third Parties) Act 1999
• Z Additional conditions of contract

Appendices

• 1 Clause numbering system
• 2 Sample form of tender
• 3 Sample form of agreement
• 4 Use of the TSC as a subcontract
• 5 TSC form of performance bond
• 6 Price List