The scope of due diligence (and the zombie apocalypse)*

I went clothes shopping for my holiday on my own recently.

Although my wife had tried to warn me, it was only when I walked along the seafront wearing my new, “zombie playing basketball” t-shirt that I realised I had made a big mistake.

It was too graphic and realistic. Children were crying and running away to seek comfort in their mother’s arms. The fact that they were my own children only made it worse.

Due diligence is a way of avoiding commercial problems from the outset of a project. It probably doesn’t need to cover sartorial appropriateness, but what areas of commercial delivery should directors try and gain early assurance over?

In partnership and alliancing arrangements, this is crucial.

Some of our suggestions are:

• Behaviours
• Alignment of objectives
• Clarity of roles and responsibilities in the project organisation
• Clarity and practical applicability of the contract
• Existence of robust and well controlled accounting infrastructure
• Existence of robust and well controlled commercial processes, for example for managing risk, change and fraud.
• Project controls capabilities and reporting
• Effectiveness of sub-contracting arrangements

Making sure these elements are in place early, sets the tone for the project and allows any problems to be dealt with before they create more serious commercial issues.

* I read some marketing advice that said I should try and scare my readers when writing short papers to try and get a reaction. Hence the zombie theme. I thought it was more appealing than, for example, “the top 5 reasons why your project will go horribly wrong”.