On the Record: The importance of FM records for PFI handback

Under a long term contract involving property, planned preventative maintenance (PPM) carried out properly is key to ensuring an asset operates efficiently and is in the appropriate condition when it comes to handing it back at the expiry date.

It can be easy to forget how important record keeping can be as part of this. Unlike reactive maintenance to address something which has failed (often visibly and with set response times), PPM is often carried out behind the scenes and needs to be carried out on a regular basis to ensure the condition of an asset is maintained and operates efficiently. A few years ago I acted for a client which had employed an Facilities Manager (FM) contractor to maintain their offices. The contract covered both reactive maintenance and PPM. Staff in all the offices complained about the temperature control system either being too hot or too cold. Sometimes one area of an office floor was cold while the other was hot. For the older offices this was sometimes put down to the offices just being old however, that didn't make sense for the newest flagship office which had been fitted out only a year or two beforehand. After its energy bills seemed rather high the client employed some energy efficiency experts to advise. The experts were hands on in every sense and were not averse to looking into the dark recesses of plant rooms and crawling through ducts. What they found is that some filters in the temperature control system were so blocked they had deformed due to the system trying to suck air through them.  Valves had been wired into position (open or shut) and generally the impression was that the system had not been well maintained and certainly hadn't had the level of PPM devoted to it required by the FM contract. The client's question was how this could happen when they were paying around £1m a year to an FM contractor which was supposed to maintain all of this equipment? The problems related to the PPM which was generally carried out behind the scenes. With the reactive maintenance element of the contract it was easy to measure whether the FM contractor had addressed a defect within the required timescale, or at all, as the contract provided KPIs for this work. In the case of the regular scheduled PPM it was harder (for example) for my client to remember the last time the FM contractor had cleaned or checked the fan coil units in a particular location. The FM contract contained detailed schedules which detailed precisely what PPM should be carried out on each item of equipment and when e.g. weekly, monthly, quarterly. It was apparent from the experts' inspection that much of the required PPM had not been carried out: If it had, the filters would not be that dirty, for example. However, it's not easy to prove whether the dust clogging a filter is a month old or, has been there for years, even though the suspicion was firmly on the latter. However, the contract required the FM contractor to keep detailed records of all the works it was required to carry out and the client had the right to request and audit those records. Therefore, we asked the FM contractor to provide records of the PPM it was contracted and paid to carry out. This request was supported by details of the inspections our hands-on experts had undertaken which had established our concerns that at least some of the PPM had not been properly undertaken. The failure by the FM contractor to carry out the required PPM had a number of adverse consequences. The energy consumption for the buildings was far higher than would have been expected, so the company was losing twice: it was paying for FM services that were not being provided, and it was paying more for its energy bills. The buildings were also not as comfortable as they should have been: the temperatures were difficult to control and there were often hot and cold spots. This could adversely affect any working environment, but could be a particular problem for hospitals or schools, and the building might not meet the required availability criteria. The asset was also deteriorating because of the lack of PPM. For example, because filters were clogged, fans were working harder to circulate air and that was reducing their working life. Some components failed much earlier than they should have done. It would cost far more to put the building back into the correct condition because the PPM had not been done. This could affect the lifecycle spend to repair and replace items, and the final handback condition of the asset. After some initial resistance the FM contractor eventually provided some documents in response to our request for records of PPM. A review of these with the hands-on experts quickly revealed that the documentation was incomplete and that at least some of it might have been fabricated. For example, some of the tasks claimed to have been done by the same person on the same day could not physically have been done properly in the time claimed, or by that person. The FM contractor protested its innocence. However, the contract was ongoing, so my client withheld monies from the FM contractor to reflect the work which the FM contractor could not prove had been carried out. Having established reasonable doubts that it had not carried out the work required it was reasonable to ask the FM contractor to prove it had done the work it had been paid to do:  It wasn't able to and, worse, its staff seemed to have fabricated records once we started making enquiries and putting the contractor under pressure. The result was the FM contractor eventually conceded some failings in its service and a settlement was agreed under which the FM contractor agreed to pay back my client over £1m to reflect the poor service. No court or adjudication proceedings were commenced to achieve the settlement. The key to this was records. Firstly, the contract was sufficiently detailed to prescribe the works to be undertaken and the records of that work the contractor was required to keep. Secondly, my client had the right to request copies of those records. Thirdly, the FM contractor couldn't provide the requested records. If your PFI/BSF project is approaching its expiry date (say, in less than 8 years' time), or you just have concerns that you might not be getting what you've paid for, then do consider whether the PPM is being carried out properly. Consider using any contractual rights to request that the SPV or FM contractor provides the records to demonstrate it has done the work required. It will usually be much easier to address any PPM failings, and ensure any remedial measures are put in place, earlier rather than later, so issues are not discovered late in the day without enough time to address them before the expiry date. You might also need enough time before the expiry date to apply sufficient deductions under the contract to be able to address the issues yourself or apply sufficient pressure on the FM contractor to perform. If you have any questions regarding anything mentioned in the article above, please contact our Construction & Engineering team.


The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.