Driving Commercial Performance

Learning Points

1. Early integration ensures commercial models support project success and collaboration

Early integrating of commercial and delivery models is crucial for project success. Aligning these models from the outset ensures that commercial arrangements support desired outcomes and behaviors throughout the project's lifecycle. By considering commercial factors early, organizations can better calibrate risk and reward, avoid inefficiencies, and drive performance. This integration allows for realistic scope and clear roles, fostering collaboration and innovation. It also helps in setting appropriate incentives, ensuring that all parties are aligned toward common goals. Ultimately, this approach mitigates risks and enhances the predictability and success of complex projects​.

2. Collaborative models manage complexity and scale, fostering innovation and efficiency

Collaborative delivery models, such as alliancing and enterprise models, are essential for managing complex and large-scale projects. These models promote early involvement and incentivisation of the supply chain, fostering innovation and efficiency. By aligning all stakeholders toward shared goals, they help manage the increased complexity and scale of modern infrastructure projects. These models also support integrated team processes and decision-making, crucial for handling broader outcomes like carbon reduction and social value. Collaboration, combined with clear roles and responsibilities, drives better project outcomes and addresses the limitations of traditional, fragmented delivery methods.

3. Strong leadership and capabilities drive effective commercial strategy implementation

Effective commercial strategy implementation requires strong capabilities and leadership, particularly with the emergence of roles like the Chief Commercial Officer. This position holds board-level accountability for driving value across investment and operational expenditures. Organisations need to develop commercial functions tailored to their chosen delivery models, ensuring alignment of roles and incentives. Building capabilities for front-end commercial strategy is essential, focusing on early investment in commercial model design and integration. Leadership must drive alignment, clarity in roles, and decision-making authority to support collaborative models and ensure successful project outcomes.

4. Flexible commercial arrangements adapt to changing conditions, ensuring project success.

Flexibility in commercial arrangements is vital to manage changing economic, political, and market conditions throughout a project's lifecycle. Major projects often span several years, during which initial conditions can shift significantly. Flexible commercial models allow for adjustments to be made, ensuring that contracts remain effective and relevant. This adaptability helps maintain the balance of risk and reward, supports continuous alignment with project goals, and accommodates changes in scope or external factors. Flexible arrangements are crucial for sustaining collaborative behaviors and achieving long-term project success, despite evolving challenges.

5. Frameworks and procurement strategies align projects with goals, enhancing performance

Frameworks and procurement strategies play a critical role in supporting various project delivery models by providing structured, flexible approaches to contracting and collaboration. Frameworks can underpin traditional, partnering, and enterprise models, facilitating resilience and access to a broad spectrum of suppliers. Modern procurement strategies ensure that projects are realistically budgeted and aligned with strategic goals, avoiding confrontational arrangements. These strategies enable the assembly of appropriate capabilities, set consistent commercial terms, and drive the desired behaviors across the supply chain. Effective use of frameworks and procurement strategies ensures project alignment and enhances performance.