NEC3 Term Service Contract Guidance Notes

Contents
Foreword v
Preface vii
Acknowledgements viii
Amendments ix
Chapter 1 The NEC family of contracts 1
A fundamental review’ 1
The Latham Report 1
Increasing use of the NEC contracts 1
The NEC family of contracts 2
Culture change 2
Have the NEC contracts been successful? 2
Chapter 2 Key principles of NEC contracts 3
Flexibility 3
Clarity 3
Stimulus to good management 3
Chapter 3 Introduction to the Term Service Contract 5
Purpose of the guidance notes 5
When should the TSC be used? 5
The contract 6
Subcontracts 6
Clause numbering 7
Roles of the parties 7
The Service Manager 7
The Adjudicator 8
The contract strategy 8
The main Options 9
A Priced contract with price list 9
C Target contract with price list 9
E Cost reimbursable contract 9
The secondary Options 10
W Dispute Resolution 10
X1 Price adjustment for inflation 10
X2 Changes in the law 10
X3 Multiple currencies 10
X4 Parent company guarantee 10
X12 Partnering 10
X13 Performance bond 11
X17 Low service damages 11
X18 Limitation of liability 11
X19 Task order 11
X20 Key Performance Indicators 11
Y(UK)1 Project Bank Account 11
Y(UK)2 The Housing Grants, Construction and Regenation Act 1996 11
Y(UK)3 The Contracts (Rights of Third Parties) Act 1999 11
Z Additional conditions of contract 11
Chapter 4 Procedure for preparing a Term Service Contract 12
Preparing the tender documents 12
Contract Data part one 12
Service Information 13
Contract Data part two 14
The Price List 14
Inviting tenders 15
Preparing a tender 15
Assessing tenders 16
Creating the contract 16
Chapter 5 Explanatory notes on the clauses of the Term Service Contract 17
1 General 17
2 The Contrator’s main responsibilities 21
3 Time 25
4 Testing and Defects 26
5 Payment 28
6 Compensation events 32
7 Use of equipment, Plant and Materials 37
8 Risks and insurance 38
9 Termination 41
Option W 42
W1 Dispute resolution 42
W2 Dispute resolution 44
Secondary Option clauses 47
X1 Price adjustment for inflation 47
X2 Changes in the law 48
X3 Multiple currencies 49
X4 Parent company guarantee 49
X12 Partnering 50
X13 Performance bond 51
X17 Low service damages 52
X18 Limitation of liability 52
X19 Task order 52
X20 Key Performance Indicators 54
Y(UK)1 Project Bank Account 55
Y(UK)2 The Housing Grants, Construction and Regenation Act 1996 57
Y(UK)3 The Contracts (Rights of Third Parties) Act 1999 59
Z Additional conditions of contract 59
Appendices 1 Clause numbering system 60
2 Sample form of tender 66
3 Sample form of agreement 67
4 Use of the TSC as a subcontract 69
5 TSC form of performance bond 72
6 Price List 76
7 Contract Data – worked example 77