Recent research has enabled Turner & Townsend to develop a framework to help organisations measure, improve and assure their commercial performance. We asked Associate Director David Whysall to outline the key drivers.
Achieving a high level of commercial performance is imperative for major projects and programmes. Driving improvement in performance requires organisations, programmes and projects to ensure that their entire commercial function – stretching across the supply chain – is working in an integrated and effective manner to deliver the outcomes that enable business or the investment objectives to be met.
Through in-depth global research involving a number of asset management organisations, the Turner & Townsend Commercial Performance team have identified the six drivers that provide a platform for driving commercial performance:
1. Financial performance
Achieving financial performance requires a comprehensive approach, from ensuring that a financial governance process is aligned to commercial objectives, to creating and implementing systems and controls that closely monitor financial baselines, forecasts, contingencies and risk expenditure.
2. Commercial solution
Taking an objective approach to designing, constructing and operating assets is critical to achieving commercial and wider organisational objectives. Opportunities to radically benefit from rationalising design, construction and subsequent operational activities depends on collating and using asset performance data in a focused and rigorous manner.
3. Supply chain performance
Commercial performance is delivered through the supply chain – so your objectives will only be achieved by engaging capable suppliers on a basis that incentivises them to deliver optimal performance against these defined objectives. Monitoring supply chain performance is vital – 67 percent of the businesses we spoke to had low confidence that some form of fraudulent activity was not happening within their supply chains.
4. Market assurance
Organisations with the ability and agility to read and act on global market conditions are likely to outperform their competitors; particularly by using market intelligence to optimise their sourcing and procurement activities.
5. Contract assurance
Claims, cost escalation, poor value, or delay arising from uncertain terms are almost inevitable unless a robust contract, properly administered and aligned to a commercial strategy and other relevant controls exists. 70 percent of organisations we spoke to feared their contracts were not being administered effectively.
6. Commercial controls
The ability to effectively scope, implement sufficient governance controls, and manage change and stakeholders, has a direct correlation to the level of risk expenditure and value you are likely to derive from an investment.
Our team will continue to explore these drivers and are working with several organisations to measure, improve and assure their performance.