Infrastructure network maintenance contracts are generally let on a schedule of rates basis in the utilities. The listed activities are usually in the hundreds and sometimes thousands. This meets the need of procurement in competitively bidding a contract, but how can this be successfully applied in the operational environment, particularly when the work is primarily reactive, and the failure is underground? Unless the client physically identifies the relevant rate once the fault has been exposed, and then places the work order, how do they know that the contractor has invoiced for what was actually done? The reality is they don't, and orders are placed based on the expected rate and the contractor retrospectively changes the rate to match the actual work done. This leads to an atmosphere of suspicion and distrust.

The article proposes a fundamental change to contract philosophy, using the NEC Term Service Contract as the contractual vehicle. It challenges conventional thinking on contract management to meet the needs of todays regulatory environment where ever reducing costs with improved standards of service is the order of the day.

These contract philosophies were first introduced into Welsh Water by MCL Consultancy on sewerage networks, and subsequently adopted by South West Water who now have the most  operationally efficient sewerage network in the UK water industry. The case study demonstrates its most recent application to water supply networks with South West Water, who had struggled for many years to improve performance with a traditional schedule of rates contract.