The NEC term service contract options are A (priced contract with price list), C (target contract with price list) and E (cost reimbursable contract). There is no B, D or F. The TSC prices work from a Price List rather than an activity schedule or a Bill, and that shapes how each Option behaves.
The TSC is built for a service delivered over time, such as maintenance or facilities work, with a Service Manager in the Project Manager's place. This page compares its main Options under NEC4, with NEC3 differences noted. See the NEC4 Term Service Contract guide for the form itself, or the main Options overview for the ECC equivalents.
The three Options
| Option A | Option C | Option E | |
|---|---|---|---|
| Basis of payment | Finished lump sum items, plus quantity x rate for items with a quantity | Forecast Defined Cost plus the Fee, with a share against the target | Forecast Defined Cost plus the Fee |
| Role of the Price List | Sets what is paid | Sets the target | None for the Prices, which are a forecast |
| Share | No | Yes, 54.1 to 54.3 | No |
| Disallowed Cost (11.2(24)) | No | Yes | Yes |
| Quantity differences as compensation events (60.2) | Yes | Yes | No |
| Compensation events change | The Price List | The target Price List | The forecast of the Prices |
| Client's cost risk | Lowest of the three | Shared | Highest |
The Price List is the document to watch. It can contain lump sums, such as a monthly fixed fee for inspections, and rated items, such as a per-unit price for a repair. That means Option A can be a mixture of fixed and measured payment within one contract.
How Task Orders fit with each Option
Under NEC4, Task Orders are in the core clauses at clause 19. Under NEC3, they come from Option X19. A Task Order is the Service Manager's instruction to carry out a Task, priced from the Price List or by quotation, and it isn't in itself a compensation event (19.8). Under Option A, finished Task items count in the amount due alongside other items. Under Options C and E, the Defined Cost of doing the Task flows through payment instead. A fuller explanation is at Task Orders under NEC term service contracts.
A fictional example
Illustrative figures. A housing maintenance contract includes a monthly lump sum for call-out cover (£12,000) and rates for repairs. Under Option A, in one month:
| Item | Basis | Amount |
|---|---|---|
| Call-out cover | Lump sum, finished for the month | £12,000 |
| Boiler repairs | 32 completed at £180 | £5,760 |
| Roof repair under a Task Order | Lump sum item from the Task Order, completed | £8,500 |
| Added to the amount due this month | £26,260 |
Under Option C, the same month would show the actual and forecast cost of doing that work, plus the Fee, and this table would just be the running target. Under Option E, there would be no target calculation at all.
NEC3 and NEC4 payment differences
| Topic | NEC4 TSC | NEC3 TSC |
|---|---|---|
| Client's name | Client | Employer |
| Options C and E: cost basis | Defined Cost forecast to the next assessment date, plus the Fee | Defined Cost the Contractor has paid, plus the Fee |
| Fee definition | In clause 11.2 | 11.2(8) |
| Share | 54.1 to 54.3, at the dates in the Contract Data | C53.1 to C53.3, at the dates in the Contract Data |
| Task Orders | Core clause 19 | Option X19 |
| Payment held if no plan | 50.5 | 50.3 |
| Changed Prices under Option A | Changes to the Price List (A63.14) | Changes to the Price List (A63.12) |
The dates are one of the bigger differences from the ECC. The share under the TSC is assessed at dates in the Contract Data, so it can be taken during the service. Under the ECC, the first assessment waits until the whole of the works reaches Completion. For a contract running many years, that makes sense, but it also means the target has to be right during the service, and the Price List needs active upkeep.
Compensation events differ too
The NEC4 TSC has 18 compensation events at 60.1, against 21 in the NEC4 ECC, and they aren't in the same order. There's no weather or physical conditions event. Quantity-only changes are priced from the Price List (63.1), with Defined Cost assessment for anything else (63.2). Under NEC4 you can't assume an ECC clause number works on a TSC. Check before quoting one in a letter.
Choosing a main Option
- Option A suits repeatable services where a Client wants a known unit cost and low administrative overhead, though the Contractor's Price List has to anticipate the work mix.
- Option C suits long-term services where the demand or work mix can move, and where you want a shared stake in reducing cost. KPI payments under X20 aren't part of the cost total used for the share.
- Option E suits emergency response or poorly understood assets, at least until there is enough data to set prices or a target.
Thinking about a shorter or simpler form? See the NEC4 Term Service Short Contract, or compare works and services in ECC vs TSC.
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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.