Measured Term Maintenance Contract

Basis

A method of contracting used where there is much repetition of work, for example in the case of regular or planned preventive maintenance work is required, e.g. Housing, Schools, etc.

Tenders are sought on the basis of a Schedule of Rates, chosen for their applicability to the proposed work. Tenderers quote either their price for each work item, or where the Schedule of rates are a standard priced document, on the basis of a ‘plus or minus’ rate in each case. Additionally the tenderer will likely be asked to quote his minimum charge, or call out rate.

Contracts are generally let on a ‘Framework’ basis, generally for a period of between 2 and 3 years, although longer periods can be agreed and the contract often incorporates a means by which the contract can be extended for a further period of time, perhaps one or two years as an incentive for the contractor to perform. In this respect clients often define KPI’s (Key Performance Indicators) as part of the contract in order to provide measurement of the performance of the contractor.

After the contract commences, the Contractor measures the works carried out and raises invoices against the Schedule of Rates for each separate job. Applications for payment are based upon a monthly schedule and application for payment. Invoices are generally payable on completion of the service and monthly in arrears.

Additionally there can also be an additional annual sum per property for reactive repairs; and a further schedule of rates for renewals rather than repairs as applicable.

Payments for the reactive repairs element can be allowed to be adjusted down for any system down time or unavailability during the contract period.

Often used for repairs, maintenance, renewals and minor works by councils and other public authorities with major estate portfolios.

Advantages

· Creates a long-term integrated multi-party partnering approach between the client’s estate management team and the chosen contractor, to provide better communication and response.

· Allows the development of more open pricing over the life of the term programme

· Allows proactive change and risk management, including use of a risk register.

· Creates a supply chain partnering environment whereby problem solving and alternative dispute resolution can thrive.

· Provides process for continuous improvement by allowing the measurement of improvement and related incentives which may be incorporated into the contract terms

· Certainty of cost for each work task and can be verified and easily audited.

· Can incorporate Design and Build and Performance Specified works if required

Disadvantages

· Some clients believe that an open book agreement with a contractor may be a more economic way to proceed.

· Minimum charges can cause a feeling of mistrust between the client and contractor, where an apparently large number of ‘small’ charge jobs are carried out.

· A change in personnel may bring conflict and when things go wrong, there can be a serious breakdown between the parties.

Suitability

Works well where there is a high degree of repetition in the works, for example the renewal of locks, painting, replacement of glazing, plant repairs, which can be reasonably foreseen.

http://www.kerncm.com/MsdTerm.aspx