The Importance of Commercial Personnel in Construction – A Live Example

Summary of points to note

  • Involve commercial personnel early in a project to allow the necessary systems and procedures to be implemented. This will allow issues to be detected and dealt with at an early stage.
  • Construction and engineering problems will require commercial solutions.
  • Allow for an adequate number of commercial personnel on a project, this is not an area to cut costs on.
  • In any event, it is likely that a good commercial team will pay for itself.


In early 2013 CSI were engaged by an EPC contractor to provide commercial assistance on a  project midway through the construction phase. At first glance the assignment seemed to be fairly typical  but the severe lack of both commercial personnel (even with our involvement – which initially was one consultant) and adequate commercial systems in place soon became apparent.  Despite CSI highlighting these problem areas the EPC was unwilling to dedicate the resources necessary to effectively manage the commercial aspects of the project. Construction and engineering complications ensued exacerbating the problem. The EPC was  unprepared and therefore unable to effectively deal with the commercial fall-out of these issues. The purpose of this case note is to highlight the importance of embedding an adequate commercial team and implementing the appropriate commercial systems at an early stage in order to be ready for complications which may arise.

Initial Tender

The EPC’s resourcing problems were not confined to the commercial area, the initial tender was compiled using a limited number of personnel which lead to various oversights culminating in the project being underquoted by around an estimated 10%. A comparatively low tender/ contract price will on most occasions place a contractor in dangerous territory bringing about an even greater need to closely manage and monitor costs and commercial issues along the way. The EPC in question seemed to have the opposing view which was along the lines of ‘we can save on costs by managing the project with a small team’. A small management team will often result in less monitoring and problem detecting across the board.

Senior Project Management

The EPC contractors senior project management  viewed commercial personnel as an unnecessary cost and saw little value in the work they carry out. This cultural clash further exacerbated the problem as  the small commercial team attempting to rectify the problems were note given the necessary support from above. .   Part of CSI’s service provision was regular meetings with the EPC’s corporate level management who were advised of the commercial deficiencies and agreed that changes needed to be made.  However the dichotomy between head office and the project team continued and very little changed.  Ultimately this seemed to be a corporate level failure to become involved in project level issues . In time there were changes to the senior project management,   however this action was taken by the EPC’s corporate level management far too late and at a stage where the project was virtually unrecoverable.

Construction / Engineering issues

The project was plagued with common issues experienced on industrial projects such as:

  • Incomplete design
  • Late design
  • Late delivery of equipment and materials
  • Incorrect component delivery requiring rework
  • Work scope not accounted for in original tender

Construction of the project was originally programmed to be carried out over an 18 month period; this has been extended and will continue to push out to around two years.

Commercial Solutions

The construction / engineering issues listed above are common enough within construction and engineering projects that EPC and construct only contractors alike should be able to quickly identify and put into place a strategy  to deal with them. Construction and engineering issues will often require significant commercial input in order to recover  additional costs incurred. It is a commercial function to gather and record the relevant raw data and subsequently present it in a suitable way to maximise chances of recovery.

Subcontractor Management

From an EPC’s perspective commercial personnel are an important addition to any project management team to carry out day to day tasks such as managing subcontractor’s claims for payment, variations, additional time, prolongation costs and to assess the validity of any assertions made within meetings or correspondence in general. Any one of the above can be a time consuming task and inadequate numbers of commercial personnel will in many instances lead to some of these responsibilities falling between the cracks and not being carried out placing an EPC in dangerous territory. An adequate and robust commercial team will deal with claims and commercial issues when they arise and notallow them to pile up creating a ‘fire fighting’ situation.


In this case, even if the project had run smoothly the EPC was insufficiently staffed to effectively manage the commercial aspects of the project.  The further issues which arose regarding engineering and construction changes painfully exposed these weaknesses.

Commercial personnel should not be viewed as an unnecessary cost or even as a necessary evil.  A good commercial team is an important part of the overall project team.   Through the effective management of cost and the maximising of value, the commercial team can in many cases pay for itself.