Measured Term Contract

A measured term contract (MTC) is a maintenance and minor works procurement vehicle that combines the convenience of a standing arrangement with the accuracy of measurement: the contractor delivers individual works orders as the authority instructs them, and payment for each order is calculated by measuring the actual work done and pricing it against a pre-agreed schedule of rates.

What is a Measured Term Contract?

Measured term contracts are used extensively in UK public sector property and infrastructure maintenance, where the volume and precise nature of maintenance works cannot be determined in advance but where the authority needs a responsive, continuously available contractor on agreed commercial terms. Common applications include:

• Planned and reactive maintenance for housing stock (local authorities, registered social landlords)
• Building fabric maintenance for government estates
• Highway and footway maintenance
• Utilities and mechanical and electrical maintenance

The contract period is typically one to three years, often with extension options. The contractor is available throughout the term to receive work orders; it does not commit to a minimum delivery and the authority does not guarantee a minimum value of orders. Payment is calculated on a job-by-job basis by measuring completed work against the schedule of rates.

The schedule of rates is usually based on a standard published price book (the National Schedule of Rates in the UK, or a regional schedule), with the contractor applying a percentage addition or reduction to that schedule as their bid. A contractor who bids "schedule minus 5%" is promising to do the work at 5% below the standard rates; a contractor who bids "schedule plus 8%" is charging 8% above. Competition focuses on that percentage, quality, and service capability rather than individual item prices.

This structure differs from a unit-price contract (which is typically project-specific) and from a term service contract (which pays a periodic fixed fee rather than measuring work). It is closely related to the indefinite quantity contract concept but is distinctive in its use of a published schedule of rates as the pricing baseline.

Why it matters for bidders

The competitive dynamic in measured term contract tendering is the percentage uplift or discount on the standard schedule, combined with the authority's assessment of your service capability, responsiveness, and track record. Pricing too aggressively (a large discount) leaves you unable to cover your costs; pricing too conservatively (a large uplift) means you lose the award.

Understanding how the authority actually uses the schedule in practice is also important: if certain high-frequency work types are not well-covered by the standard schedule, they may be priced as dayworks or as bespoke items, which affects your pricing strategy.

Example

A London borough council runs a three-year measured term contract for responsive repairs to its housing stock. The contractor bids a 3% reduction on the National Schedule of Rates. As repair requests come in from tenants, the borough issues work orders; the contractor completes the work and invoices against measured quantities at the schedule rates minus 3%. Total contract value at the end of three years reflects actual maintenance demand, not a pre-agreed sum.

Frequently Asked Questions

Who does the measuring on a measured term contract?

Traditionally, a quantity surveyor (representing either the authority or a neutral third party) measures completed works and certifies the valuation. On lower-value housing maintenance contracts, self-measurement by the contractor against standard item descriptions is common, with audit sampling by the authority. Disputes about measurement are resolved through the contract's valuation and dispute resolution provisions.

Can a measured term contract have a minimum guaranteed value?

Yes, some contracts include a minimum annual instruction value to give the contractor confidence that the arrangement is worth mobilising for. This is a commercial negotiation point; many contracts in the public sector do not include a minimum guarantee because the authority cannot predict maintenance demand.

How does a measured term contract differ from a framework agreement?

Both provide a standing arrangement with a contractor at agreed rates. The key difference is that a framework agreement (under Directive 2014/24/EU) typically involves multiple potential suppliers and requires call-off competition for orders above a threshold. A measured term contract is typically a single-supplier standing arrangement where the authority places work directly with the contractor without further competition.