Holdfast Training Services Trial Blog

Background:

• Heathrow Airport use an overarching Framework Agreement (bespoke contract: target price, similar to NEC Option C) with a principle contractor (Mitie) for the supply of services.

• I am working within the Energy Demand Management Team that looks for one-off opportunities to employ novel technologies (energy efficient lighting, intelligent air-con control etc.) to make financial savings.

• These one-off works make use of a Works Package clause within the framework contract, where the contractor can be set to work under a simple Purchase Order (PO) agreement.

• These agreements follow the form of a fixed-price (NEC OptA) as they as it has been the simplest at the outset to manage. Although still subject to many of the payment and H&S clauses of the framework contract, there is no contractual obligation for submission of a works programme (by the contractor) or detailed project deliverables (by the client) beyond the scope that is given in the PO.

The potential problem:

• Although the projects are relatively small (6-10 weeks and typically less than £100,000) I think there still exists significant risk for both parties should there be time or financial issues.

• There already exists a good working relationship between the Client and Contractor but in this uncertain environment where the bean counters have most of the say, there may be cause for friction.

Where I come in:

I gather that it is probably rare to be given so much scope in an organisation! I am keen to play with different options and tailor the contract based on the scope definition of the individual work package and my own (and boss’) personal willingness for risk and admin. I am told I have the option to change the commercial model as per my requirement in any specific work package. I could specify any of Fixed Price (OptA), Target Price (OptC), Cost Reimbursement (OptE) or a combination of them.

Questions:

• My initial thoughts are to formalise the existing client/contractor relationship and to head down an NEC OptA route using NEC Minor Works contract.

• Has anybody else any experience of working with principle contractors on jobs of similar sizes/costs? Has there been any particularly good or bad experiences and what are the significant pitfalls to avoid?