Airport capital projects: the importance of commercial assurance

Airports are difficult places to build things

Capital expenditure projects in the UK aviation industry are subject to massive external scrutiny from passengers, press, airlines, the Civil Aviation Authority and the Competition Commission.

To make things even more challenging, there are specific risks which relate to airport projects:

  • The logistical difficulty of working in a live airport environment
  • The potential for contractors to use logistical difficulties to mask inefficiencies
  • Controlling costs on multiple jobs delivered by a single contractor in a relatively enclosed environment
  • The difficulty in obtaining meaningful benchmarks other than those relating to prior airport projects
  • The limited supply chain which is able to mobilise and work airside
  • Lower tier suppliers working on airport for a number of years building unhealthy relationships
  • The pressure created by deadlines for regulatory outputs and airline requirements

In this environment things will go wrong.

Commercial assurance and corporate governance

To maintain the trust and confidence of stakeholders, robust corporate governance is essential.
Commercial assurance is an integral part of corporate governance.  It involves a programme of independent, objective and expert reviews to answer two questions about the commercial management of a contract:

  1. Is it broken?
  2. If it is broken, what needs to be done to fix it?

The benefits of commercial assurance are the confidence and peace of mind that you are doing everything you reasonably can to deliver a smooth running project with no unpleasant commercial surprises.

From a corporate governance standpoint it helps clients to demonstrate that they are doing everything possible to meet stakeholder expectations.