Marc Hanson examines the pros and cons
The specification is an extremely important
document in any facilities management contract. It will usually set
out the client's requirements in relation to services to be
performed, quality standards to be met and all information that the
facilities management contractor will need in order to perform the
services in accordance with the contract. It may also set out any
mechanism the client may wish to include in the contract to adjust
payment to reflect performance.
As it is the specification that the contractor will
look at when calculating his tender for supplying facilities
management services, the client should take great care in drafting
the specification to ensure that it contains all information
necessary for the contractor to adequately price the provision of
the services. It should, for example, set out in some detail the
services to be performed. Any restrictions in relation to operating
hours on site or in relation to access to or from the site should
be clearly stated. If the contractor is to undertake any work prior
to commencing the services on site, for example in relation to
liaising with an outgoing contractor to ensure an efficient
handover of any plant, staff and equipment, then such work needs to
be described in the specification.
Whilst the specification will set out the services
to be performed, for example cleaning services, catering services
and maintenance services, there are two different approaches to
describing in the specification how any performance standards in
relation to such services are to be met.
A traditional "input" specification will set out in
detail the exact services to be performed by the contractor in a
prescriptive fashion. For example, in relation to cleaning
services, not only would the standards the contractor is to achieve
be set out in the specification but also the exact means by which
those standards are to be met. If a contractor fails to perform the
services in accordance with the prescribed methodology then this
will be a breach of contract which may allow the client certain
remedies under the contract, for example the accrual of service
credits, abatements from sums due to the contractor or even the
termination of the contractor's employment.
In recent years, clients have increasingly moved
away from the use of "input" specifications in favour of "output"
specifications. An "output" specification would not prescribe how
the contractor is to achieve performance standards set out in the
specification. The contractor would be expected to come up with his
own proposals for how to achieve those standards. The logic behind
the use of "output" specifications is that the client's main
concern is not the means by which performance standards are met but
the fact that those performance standards are met. A contractor
should be entitled to use his own expertise to offer solutions that
achieve and exceed the client's performance requirements. It is
argued that an "input" specification will not allow the contractor
sufficient freedom to use his expertise and to offer innovative
solutions to the client's performance requirements. Also allowing
the contractor to define how he will achieve the client's
performance requirements will result in lower tenders being
received by the client as contractors may be able to suggest more
cost-effective ways of achieving the client's requirements than
those that may have been specified by the client in an "input"
"Output" specifications offer further advantages.
As the contractor is to define how performance requirements are to
be met, this obviates the need for the client to spend the
considerable time and expense necessary in preparing detailed
"input" specifications. This in turn should reduce the cost to the
client of tendering the outsourcing of services. It will, however,
result in an increase in the tender costs of the contractor and it
can be expected that the contractor will endeavour to recover such
costs in his tender.
Whilst "output" specifications do not require the
detailed text necessary for an "input" specification, they do
require very careful drafting. The client should be aware that if
an "output" specification is used, unless they make detailed
references in the specification as to how particular services are
to be performed they will lose control over the detail of how the
services are to be performed. For example, if the client has very
specific requirements in relation to security arrangements for the
site, if these are not set out in a prescriptive fashion, the
contractor will be free to provide a level of service he feels
meets the client's performance requirements. In certain
circumstances, it may therefore be necessary to utilise a hybrid
specification incorporating both "input" and "output" elements.
It is also important for the client to be precise
in the output specification on what exactly is required. A service
simply stating that a room is to be "kept clean" is too vague. Is
this to include cleaning blinds and upholstery? Telephones?
Computer equipment? Floors or windows? If a service in an output
specification is too vague, the contractor may not price for
performing a service that the client expected to be included in the
contract price, and this will invariably lead to conflict between
the client and the contractor. In addition if a specific service is
not referred to, and if it cannot be argued that such a service was
obviously required, then the contractor may demand additional
payment for performing the service.
A final point for those considering whether or not
to use an "output" specification is the different approach required
of the client in assessing the performance of the contractor.
Whilst it is relatively easy using an "input" specification to
judge whether the contractor has complied with the same (has the
relevant task been carried out?), with an "output" specification,
the client must look instead at whether the performance
requirements, often drafted in a relatively subjective way, have
been met. The very subjective nature of many performance
requirements mean that "output" specifications are most likely to
be successful when used in a contract where the relationship
between the contractor and the client is not adversarial but is
proceeding on a "partnering" basis.
For further information please contact Marc at
email@example.com or on +44 20 7367 2366.