Commercial Management

For Construction Project

RICS professional guidance, UK
Commercial Management: theory and practice

BY:-Hosam Elkmhawy
What is commercial management?

 At its core, commercial management is about:-

i. value; informing its definition as investment decisions are
made and,
ii. providing ‘stewardship’ throughout the lifecycle of a
programme in realising that value,
iii. Commercial management also entails the effective
management of change control,
iv. the collating of objective and consistent feedback on project
performance from beginning to end and the demonstration of
value to the client through cost avoidance, risk management
and realising efficiencies.
BY:-Hosam Elkmhawy
Good commercial management

 When effective, good commercial management will promote forecasting

accuracy and commercial control in a way that avoids or reduces fiscal
surprises for the client.
 Commercial managers should ensure that programmes and projects are
characterised by their integrity, thorough governance and a sense of due
process while role modelling ethical, professional and collaborative
behaviours.

BY:-Hosam Elkmhawy
Common ‘commercial Manager’ activities
in project-oriented organisations.
 Generally:
 Identifying and evaluating commercial opportunities.
 Identifying, evaluating and mitigating risk.
 Constructing novel forms of commercial arrangement (agreements and contracts).
 Reviewing and evaluating agreements and contracts.
 Estimating costs.
 Applying life cycle management (and its various processes and procedures) to
commercial and contractual issues.
 Providing commercial input to projects.
 Preparing, reviewing and submitting management reports; auditing projects and
undertaking.
 commercial reviews.
BY:-Hosam Elkmhawy
 Common ‘commercial Manager’ activities in
project-oriented organisations.

 Pre-award
 Building business cases for business needs or requirements.
 Selecting appropriate procurement strategy(ies).
 Assessing the costs and risks of a particular venture/opportunity.
 Constructing a business case for a potential deal.
 Dealing with contracts: drafting, negotiating and agreeing complex contracts and
agreements.
 Preparing bids; forming part of, or leading bid teams (panels).
 Owning the bid authorisation procedures3 ; and providing commercial authorisatio.
 Developing and publishing standard terms and conditions of contract for products and
n/or services.
 Arranging ‘back to back’ subcontract terms to mirror main contract provisions.
 Obtaining legal and regulatory sign-off for undertaking business opportunities.
BY:-Hosam Elkmhawy
 Common ‘commercial Manager’ activities in
project-oriented organisations.
 Post-award:
 Managing and administering complex contracts and agreements (post-award contract
management):
 Advising project management teams on contractual issues, providing critical
business support to ensure the project is delivered in accordance with the agreed
contract terms.
 Managing/administering commercial/contractual issues and initiating
correspondence:
 receiving and processing contractual correspondence: variations and claims, etc.
 valuing, preparing, submitting, assessing, negotiating and agreeing additional
payment (fees).
 and/or extensions of time in respect of contractual changes (variation) and claims.
 producing and maintaining financial reports and forecasts.
 arranging insurance provisions.
 valuing, preparing, submitting, evaluating and agreeing interim payments and
ensuring timely. BY:-Hosam Elkmhawy
  Procuring subcontractors and materials: establishing trading accounts with
suppliers and subcontractors
 managing/administering subcontracts and suppliers
 receiving and processing subcontract interim payment claims and final
accounts
 liaising with the accounts section to ensure timely payment of monies due
to suppliers and subcontractors
 Valuing, preparing, submitting, assessing, negotiating and agreeing final
accounts

BY:-Hosam Elkmhawy
The Commercial Manager report to
whom?
 Reporting to Commercial Directors in each business unit,
the Commercial Manager’s role is to ensure that:-
 all projects meet their contractual and commercial requirements.
 Also, in conjunction with other ‘financial’ groups in the business,
they support the winning and monitoring of contracts.

BY:-Hosam Elkmhawy