Commercial assurance – achieving bigger savings from prevention rather than cure

To quote Spike Milligan,

“a sure cure for seasickness is to sit under a tree”.

In other words prevention is better than cure.

We have found that preventing commercial issues yields bigger savings than finding them and dealing with them.

Here are some of the reasons why:

Uncertainty creates a negotiating position

If a contract clause is unclear, or a defined cost cannot be supported by a clear audit trail it is difficult for employers to achieve 100% success in a commercial negotiation. You might know that you are paying too much, but enforcing that position is difficult. Uncertainty creates wiggle room.

Commercial assurance attempts to identify and deal with uncertainty quickly to avoid this.

Contractor positions are entrenched

A commercial problem, such as a large overcharge, means that a Contractor’s margins will be reduced by any attempt by the employer to recover that overcharge. If they have reported the margin and been paid bonuses they will fight to prevent this. The need to deliver the job and maintain relationships with a contractor often mean that employers do not recover overcharges completely.

Commercial assurance attempts to prevent overcharging in the first place.

Contractual non-compliance creates overcharges

Particularly in relationships between a main contractor and a sub-contractor, lack of contractual compliance can lead to overcharging which is difficult to recover. This problem can also result from the lack of a signed contract or work being done outside of the original scope. Because the supply chain is potentially remote, these issues may never be spotted.

Commercial assurance covers the risks associated with the supply chain

Over the last 11 years of its life, The Orange Partnership has recovered more than £100m in overcharges and paid for itself, on average 10 times over. In the next ten years we expect these numbers to double.