Josiah Lee, Quantity Surveyor at Base talks about his experiences of using Term Maintenance Contracts (“TMCs”).
A Term Maintenance Contract (“TMC”), simply put, is a contract for the supply of maintenance services over a set period of time. The contract creates a mechanism for the client to instruct services or works at different locations without needing to procure a new contract every time.
Through our experience of working with TMCs, we have identified a number of key advantages and potential pitfalls of working with these types of contracts.
The primary advantage of a TMC is the streamlined mechanism for the procurement of works; there is no need to procure separately each time and no limit to the number of instructions or volume of work that can be instructed; they are flexible and a great deal of time, resources and funds can be saved, making them particularly popular amongst local authorities, who have the added burden of EU procurement rules.
Cooperation, trust and shared goals are central to the success of a TMC. Incorporation of a balanced suite of Key Performance Indicators (“KPI’s”), that monitor the performance of the entire supply chain and not just the contractor, helps to create a culture of mutual cooperation between the parties.
In our experience of working with TMCs, the promise of follow on work incentivises the contractor to deliver good quality and value, where follow on work is dependent on prior performance. This is particularly important in the case of local authorities where public safety and satisfaction is paramount, as well as the reliability of budgets.
Equally attractive to local authorities is the flexibility afforded by TMCs. During the tender process for the TMC, a competitive schedule of rates/price list is negotiated and these rates are used for estimation and payment of works orders throughout the duration of the contract term – this allows scope and price to be agreed early on and for price certainty to be driven into the process.
However, although the schedule of rates is agreed in advance of the term contract, it is likely that unforeseen items will arise. In this event, we advise clients to identify issues early, and in our view a successful TMC will allow for continual feedback and updating via a collaborative approach to the resolution of disputes and the agreement of variations and changes.
Base Quantum is experienced in providing Quantity Surveying services and contract advice to both Public Authorities and Maintenance Contractors working under Term Partnering Contracts.