Certain types of behaviour add significant value, such as openness and partnering.
Fortunately many contractors behave positively when it comes to the commercial management of major construction projects.
The 5 best commercial behaviours
1. Highlighting problems early
The sooner a problem is recognised and addressed, the easier the fix will be. Finding and correcting an issue at the start of a contract is much easier than dealing with it at final account stage.
2. Being open to challenge and improvement
Contractors work on wafer thin margins and tight cashflows. In order to protect and enhance those margins and cashflows, the best contractors will be open to new ways of working and innovative commercial arrangements.
3. Applying the contract
The best contractors make sure all their staff members understand and can implement the contract. They also make sure that any post contract amendments are properly considered and formally implemented.
4. Actively managing risks and opportunities
The best contractors incorporate active risk management into everything they do and regularly review and react to changing risk profiles. They also give the identification and exploitation of opportunities equal weight.
5. Continuous improvement
Learning lessons and continuous improvement rarely happen effectively in practice but the best contractors do this. They rely on effective and timely reporting mechanisms and innovation.
Complacency: The biggest risk to major construction projects
We have audited the vast majority of the large contracting organisations and not all contractors are the same. We have seen some excellent examples of commercial management.
Although it may be reasonable to expect that all contractors exhibit the best commercial behaviours it isn’t always the case. Without being paranoid, you should consider the potential for commercial issues arising from these issues. The biggest risk of all is complacency.
The importance of independent and expert review
To make sure that as a client you are receiving value for your spend and that you are not facing unnecessary commercial risks you should consider some form of regular and targeted independent review of your project. An independent and expert view will provide you with a reliable understanding of what is going on in the commercial management of your project.
The transparency an independent and expert review will provide you with will allow you to take action on problems before they get out of hand and help avoid unwelcome surprises.
Any programme of independent and expert reviews can be targeted to those areas of greatest risk and in our experience, will pay for itself many times over.