Professional Services Under NEC

An NEC professional services contract pays a Consultant for skill and time, so two things matter most: how clearly the Scope defines the service, and which fee basis you pick. Get those right and most commercial arguments fall away.

This page looks at those two issues across the PSC, the PSSC and the PSS. Comparisons with other forms are on the NEC contract types page.

Writing a Scope that works

The Scope is the baseline for change: a compensation event under 60.1(1) can only be measured from something clear. For a service, this is harder than for a building, because the output is often judgement or advice.

Weak wording	Better wording
Provide structural design services	Produce detailed structural drawings for Blocks A and B, listed in Appendix 1, with two rounds of Client comment
Attend meetings as required	Attend one fortnightly design meeting on site, up to 26 in total
Liaise with stakeholders	Respond to queries from the planning authority and the two named utilities. Public consultation is excluded
Provide cost advice	Provide a cost plan at each stage and a monthly report in the format in Appendix 3

Limits such as "two rounds" or "up to 26" might feel unfriendly, but they make it possible to tell whether more work is a change. See what the Scope means for the general definition.

Fee bases compared

Form and Option	Basis	Who carries the risk of extra hours?	Best for
PSC Option A	Lump sum per activity	Consultant	Clear deliverables
PSC Option C	Cost against a target, with a share	Shared	Clear aim, uncertain effort
PSC Option E	Cost reimbursed, including time at People Rates	Client	Early or evolving work
NEC3 PSC Option G	Called off over a term	Depends on how each call-off is priced	Repeat tasks
PSSC Price List, priced	Stated prices	Consultant	Simple fixed commissions
PSSC Price List, time charge	People rates, plus expenses if listed	Client	Simple work that's hard to size

The notes in the PSSC's contract forms say it doesn't provide for a mixture of priced items and time charge in one contract. The guide to the PSC Options has more detail on each.

Time Charge in NEC3, People Rates in NEC4

Under the NEC3 PSC, the Time Charge was a defined term: staff rates multiplied by the staff time properly spent on the contract (11.2(13)). Compensation events on that basis looked at the effect on the actual and forecast Time Charge.

NEC4 changes the language. The main contracts talk about Defined Cost, and in the PSS, for example, the people component is the People Rates multiplied by the time properly spent. "Time charge" survives as a practical label, including in the PSSC data sheets and in the Framework Contract's time charge orders. If you are moving templates from NEC3, update the definitions rather than just changing a few names.

Where the Fee fits

In the PSSC, the Fee is calculated by applying the fee percentage from the Contract Data. In the cost-based forms, the Fee is added to Defined Cost in the same way. NEC's January 2019 amendments make clear that the PSSC's people rates are stated without the Fee, so check the rates and the percentage together, to avoid double counting or a shortfall. The general explanation is in the guide to the Fee.

A worked comparison

A fictional feasibility study, with illustrative figures. The Consultant estimates 200 hours at an average of £80, or £16,000. Hours turn out to be 240 because of more options than expected, none of them caused by a Client change.

Basis	Client pays	Consultant's position
Lump sum (Option A)	£16,000	Carries 40 extra hours, £3,200
Target with 50/50 share (Option C)	£17,600	Carries half the overrun, £1,600
Cost reimbursable (Option E)	£19,200	Recovers the time. The Client's only control is managing the work

This simple example ignores the Fee and assumes all the time was properly spent. Had the Client added the options itself, it would have been a compensation event, and all three bases would have adjusted.

Standard of care and defects

Under the NEC4 subcontract, a Defect is only the provider's liability where it failed to meet the usual standard of its profession (PSS 20.2 and 20.3). Correcting a Defect it isn't liable for is a compensation event in the PSC, 60.1(13). The practical effect is that a Consultant correcting an error needs to be clear, at the time, about whether it accepts liability. Otherwise it may do the work for free when it didn't have to, or the Client may pay for what should have been free.

What people get wrong

• Using time charge to avoid writing a Scope. You still need one, or you won't be able to tell when the work is finished.
• Not controlling hours. Under cost-based work, require a forecast with each assessment.
• No rate for a new grade. Agree the People Rates at the start, and say what happens if a grade isn't listed.
• Treating expenses as open-ended. List them, or state that they're included.

Related guides

• NEC Contract Types: Which Form Do You Need?
• Back-to-Back NEC Subcontracts
• Task Orders Under NEC Term Service Contracts

This guide is general information in our own words, not legal advice. Your contract and its Contract Data always govern. NEC, NEC3 and NEC4 are trade marks of Thomas Telford Ltd; Contract Status is not affiliated with or endorsed by NEC.