Keep it simple – the dos and don’ts of saving £millions through cost effective commercial assurance

A foreign language

I have two daughters, one who is 18 and the other 21.  I love them dearly but they are, in many ways, creatures from another planet.  Their use of technology, language and overwhelming fascination with Kim Kardashian creates a barrier which I will never be able to cross.  When my youngest told me that, when she has finished her exams she is going to, “ton up”, I knew that all was lost.

In my experience, the world of assurance, audit and governance can be a bit like this.  Are words like “metrics”, “enablers” and “drivers” really necessary?  They are often symptoms of an overly complicated approach which can create barriers to understanding and lead ultimately to additional costs and no tangible added value.

The benefits of commercial assurance

If commercial assurance is done correctly it can give comfort, save millions (contact us for some examples) and can also be used to demonstrate robust corporate governance.

Based on our experience we have created a list of simple dos and don’ts in delivering cost effective commercial assurance

Do:

1. Create an independent group

Create a team which is independent of any of the parties involved in the programme.  Credible assurance relies on the person providing the opinion to be free, and to be seen to be free, of anything which might compromise their ability to tell it like it is.

2. Use credible people with the right experience and qualification

Quantity surveyors, engineers, lawyers and project managers add huge value to major programmes in many ways but they aren’t trained auditors.  Using trained and experienced auditors will give you robust and reliable assurance.

3. Spot commercial problems early and deal with them quickly

The output from commercial assurance should be comfort that things are working well or a list of detailed actions with owners and timescales to fix problems. It should spot problems early.  The longer issues go unresolved, the more difficult you will find it to recover your position.

4. Make it dynamic

During major programmes change is a constant.  The status of the works changes; staff turnover; the ownership of organisations change and so on.  Change means risk.  Make your assurance dynamic to allow you comfort that any changes don’t undermine commercial management.

5. Learn lessons

George Bernard Shaw said that

“Success does not consist in never making mistakes but in never making the same one a second time.” 

I don’t think he was talking about commercial assurance but he could have been.

Don’t:

1. Spend too much money on it

Robust and effective commercial assurance shouldn’t cost a fortune.  It should be targeted and appropriate.  You don’t always need a deep dive audit to find out what’s going on.  Often a, “sniff test” will do.

2. Cut corners

A well implemented programme, done by credible, independent people will pay for itself many times over and allow you to demonstrate robust governance.  Doing it on the cheap will not provide you with the same benefit and ultimately may be a waste of money.  (Although do bear in mind point 1 above!)

3. Create too much bureaucracy

In the past, I have worked for large consulting organisations who loved to use jargon and complexity to drive unnecessary bureaucracy.  It made their assurance products sound more expensive and enabled them to charge more in fees!  Avoid creating unnecessary red tape.

4. Rely too heavily on self assessment

Self assessment is a useful tool but it can become a checklist exercise without any thought or challenge and can create massive unnecessary bureaucracy.

5. Just look at your supply chain

Some commercial problems can result from the actions or inactivity of client teams.  Using commercial assurance as stick to beat your supply chain won’t uncover these types of issues.

As a final thought, in honour of my daughters, don’t be haters because this advice is sick.