Definition of a service contract
A contract for pecuniary interest concluded in writing between a service provider and a contracting authority, i.e. client.
Definition of a service
A service is a work that is not part of an organization’s core business, i.e. its main function, but which needs to be provided to carry out the business.
Special nature of service contracts
Significant factors which differentiate service contracts from other types of contracts
1. Defining the requirements can be more complex.
2. Less easy to measure delivery in a service contract.
3. The contract may extend over a longer period.
4. Generally involves closer contact between customer and service provider.
5. The service provided may interface with other services.
Drawing up the specifications
The specification should define;
1. The scope of work, why it is required, and where it is to be done.
2. The output required.
3. Standards to be met.
4. Response times.
5. When and how the work is to be measured.
6. Equipment, facilities, and materials to be supplied by the service provider and by the client.
7. Identification of any key events or activity and any approvals required before the next activity commences.
8. Completion dates.
9. The service provider’s continuing responsibilities on completion of the work.
1. Completeness – the main task and any ancillary services.
2. Clarity – ensuring that terminology and the service provider’s responsibilities are clearly defined.
3. Measurability – measurable outputs and measurement as objective as possible.
4. Objectives – why the service is performed.
5. Interfaces – responsibilities of the service receiver and provider.
6. Resource input – experience, education, qualifications, and other skills and equipment of defined standards and compatibility.
Should include information on;
1. How the service will be provided.
2. The procedures and controls the service provider will use.
3. The people involved in delivering the service.
4. The quality of materials to be used.
5. How the contract will be monitored by the supplier.
6. What customer satisfaction measures will be used?
7. How complaints of poor services will be handled.
8. How problems will be resolved.
9. How the contractor will be penalized for non-compliance.
Contract strategy should define;
1. The type of contract to be used.
2. The number of contractors to be used to provide the service.
3. What contracting procedures will be used?
4. A procurement plan defining actions and individual responsibilities.
5. Key staff involved.
6. The length of the contract and options for extension.
1. Requires the contractor to find out and comply with all relevant laws and rules relating to safety.
2. The contractor must also ensure observance by all relevant employees and sub-contractors,
In the case of unsatisfactory performance by the contractor, the client can use another contractor to carry out the work and recover any additional cost from the original contractor.