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6.

3 COMMERCIAL ASPECTS

6.3.1 The importance of commercial personnel.

Must involve commercial personnel early in the 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.

6.3.2 Initial tender

The initial tender must be compiled using a limited number of personnel which lead to
various oversights culminating in the project being underquoted by around an estimated 10%.
A low tender or contract price will take place a contractor in dangerous territory bringing
about an even greater need to closely manage and monitor costs and commercial issues in the
project. Propose a small management team will often result in less monitoring and problem
detecting at project site.

6.3.3 Construction and Engineering issues

This project was late in progress with common issues experienced 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.
6.3.4 Commercial Solutions

The issues listed above are common within construction and engineering projects for
the Pura Kencana Mall. The contractor should be able to quickly identify and put into 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 the construction project recovery.

6.3.5 Subcontractor Management

In the Civil Engineering project commercial aspects are an important addition to any
project management team to carry out day to day tasks such as managing subcontractors
claims for payment, variations, additional time, prolongation costs and to assess the validity
of any assertions made within meetings or correspondence in general. Time consuming task
and inadequate numbers of commercial aspects will in many instances lead to some of these
responsibilities. The commercial team will deal with claims and commercial issues.

In this case, if the project had run smoothly the effective project commercial was
insufficiently staffed to effectively manage the commercial aspects of the project. The further
issues which arose regarding engineering and construction progress on site. Commercial
personnel should not be viewed as an unnecessary cost or even as a necessary thing. 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 pay according to
work progress in the construction site.

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