Exemplar Commercial Management
Although all of the Fusion-Commercial offerings are interlinked, the execution of exemplar commercial management practices is the cornerstone. This is a deliverable which is achieved for our clients through the implementation of best practice commercial management processes within your business.
Our expertise covers all commercial management disciplines but most notably we strive to align them with the other areas of a contracting operation as seamlessly as possible, making commercial considerations and controls a natural part of everyday operations not as a silo sitting to one side trying to control or interfere.
We help your staff
Make your business more commercial astute without becoming commercially aggressive or difficult to do business with.
Consider the commercial implications when making decisions..
Understand what you are paid for, how you are being paid under your contracts.
Maximise your commercial opportunities while minimising your risks.
Consider the commercial implications when making decisions..
Capture information that is required to record change, allocate costs and other project information that may become crucial later as it happens as part of a business as usual cycle.
The commercial disciplines touched on above can cover everything from the preparation of estimates, risk and opportunity management, procurement, programming, valuations, cost management and forecasting in a cohesive and aligned way that works with your day to day operations. We deliver commercial value add by implementing robust methods, disciplines and techniques that protect both the commercial interests on each of your projects and drive growth at a business level.
Below are some examples of how we have used our expertise and methods to successfully implement commercial improvements initiatives to assist contracting organisations to put commercial at the heart of their operations.
Introduce commercial rules
Rule #1 of commercial management – never start work without a contract and until you know how you are going to paid for work and manage change.
Rule #2 of commercial management – never set supply chain to work without a contract and until you both know how you are going to pay them and manage change.
Rule #3 of commercial management – never be the one in a hurry to make a commercial agreement, try to be the one who can wait.
Introduce focus areas for commercial success
Fusion-Commercial can also assist a contracting organisation to focus on the areas that will bring the optimum balance between success and effort. In the past, we have simplified the message to ensure that effort is focussed on the areas that will bring the most success through the least change. An example of this is below where we working with our client to understand what felt right for them. After some brainstorming they strongly felt that they wanted to focus their efforts and attention on four key areas which are summarised below:
- Manage Contracts – ensure that those who understand and study their contracts were able to cascade the message to the other staff that needed to know. This way business as usual, day to day operations were readily able align to what was required under their contracts.
- Manage Revenue – ensure that how they are paid is understood by everyone in the business and that their commercial and finance teams operate in a way that enables applications for payment to be submitted accurately on time in a format that will enable their clients to approve and pay promptly. In addition, ensure that everyone who needs to know within the team is aware of how they can maximise valuations/revenue and how to effectively deal with change.
- Manage Risk – they wanted to work to embed a risk & opportunity management culture within the business. To do this they now appoint the responsibility of risk management with someone who has the authority and drive to make things happen, they educate everyone within their teams how critical this activity is, they keep the risk & opportunity register up to date and create a monthly risk management cycle of identify, evaluate, manage, track, update so that action plans can be put in place to minimise their risks and maximise their opportunities.
Manage Costs – together we defined a cost report pack and then worked to ensure that their cost capture & allocation processes were robust and consistently actioned. They then embedded cost reporting as part of their monthly performance reviews.
Commercial process definition
To provide some further context, below is an extract from another previous commission where we defined and implemented best-practice commercial management practices.
In this example, the client wanted to go into more detail and build a commercial handbook of processes.
Initially, the commission concentrated on demonstrating how all the commercial management processes are interlinked and brings together all elements of a contracting organisation.
Below the holistic end to end process diagram is a short definition of each of the eight core areas summarising where Fusion-Commercial can add value in addition over and above simply ensuring that fit for purpose systems and processes are in place:
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Covering bidding and other pre-construction activities to ensure controls in place to ensure that all preconstruction estimating is sustainable and deliverable.
Management of all preconstruction activities including design; measuring progress, capturing costs and identifying change in accordance with all the relevant construction processes.
Understanding design and the impact of design change to drive value or reduce the lifetime cost as well as the negative impact design change can have on the programme and project cost. Establishing a post-tender budget to build to feed into the valuing work and forecasting process. Develop a project controls framework to compare budget, programme and actual costs against a WBS structure to allow budget/time/cost to be used to manage project performance.
Subcontract and Supplier Management
The procurement of subcontracts, services, materials and goods or hired items. Ensuring that there are adequate processes and controls in place to ensure that all supply chain prices received at the preconstruction stage are based on the right information, audit trails are in place and that decisions made at all stages are based on facts. Management of Subcontract change in accordance with the Subcontracts and that this is fed into the main contract change processes. Management of the purchase to pay process, ensuring that there are sign-off stage gates in place to ensure that commitments and payments are controlled.
Using appropriate methods to value work done to drive client applications and also to feed into the cost value analysis process. Capturing and managing change to protect entitlement as well as ensuring that the impact of change is captured within project forecasting.
The development of cost capture and allocation processes for all elements of cost (labour, plant, materials & subcontract) to facilitate timely, accurate reporting and forecasting costs.
Forecast and Cost/Value Analysis
Using the WBS structure to forecast out-turn cost and value including the evolution of budgets to construct and cost forecast as projects progress. This process includes cost value reconciliations to assess costs to date, earned value and margin at a point in time as well as the forecast outturn position.
The production and maintenance of cash flow forecasts to assist the business in understanding its overall cash flow requirements. Using the overall project cost and value forecasts aligned to the project programme to understand how the flow of cash in and out of the business can be accurately forecast to ensure there are always sufficient funds in place.
Risk and Opportunity Management
The management of the project and company risk registers to support proactive management enabling risks to be minimised and opportunities to be maximised while there is still time to make a difference. The key to this is to maintain and review and risk & opportunity register for all projects in a consistent format that can be rolled up to company level. This aspiration can only be achieved if management and staff are educated and disciplines are in place to capture and update risks and opportunities in the risk & opportunity register.
Embedded behaviours to drive improvements in commercial performance
We always look to underpin our clients’ businesses using core principles which from experience can change the way businesses operate with immediate effects. We love to work with our clients to further develop and amend these together to tailor as closely as possible to how they want to operate.
1. Decision making
- Use facts and realism to make decisions
- Scrutinise the facts to make decisions more informed
- Make decisions with the head not the heart
- Encourage challenge and make it healthy to challenge facts and realism
2. Honour commitments, do what you say you’re going to do
- Develop a culture where everyone does what they say they’re going to do
- Make the culture open so that anyone can hold anyone else to account to do what they said they were going to do
- Doing what we say we would do builds trust and credibility as well as getting things done
- Encourage challenge and make it healthy to challenge incomplete actions
3. Learning from experiences
- Hold up good experiences as best practice and celebrate it
- Use any bad experiences as a development opportunity
- Encourage good and bad experiences to be discussed and used as ways to develop best practice and improve
Working with Us
Fusion-Commercial can help you to lever commercial advantage from your projects and programmes of work to improve your margins. We are the enabler who will turn this into a strength for your organisation by setting you up to succeed. Click on the link below to discuss how our agile resourcing solutions might work in mobilising your project more effectively.