Business need

Costain approached Penmark to implement the Commercial Health Check Reviews, a process compliance requirement linked to N420-COT-WRK-AM-000067 Rev 01 and N420-COT-WRK-AM-000017 Rev 02, The Commercial Administration Procedure.

The Commercial Health Check Reviews were a contractual requirement linked to KPI 2.5.1 and 2.5.2, commercial performance Indicators, with financial benefits to Costain for achieving Stretch or Excellence grading on a Periodic basis.

Historical implementation of this KPI suite was not meeting the business or customer expectations in terms of documented outcomes and application of lessons learned, adopting a Continuous Improvement mentality. Costain engaged with Penmark and agreed a scope of work that included:

  • Review the requirements for KPI 2.5.1 and 2.5.2.
  • Designing a suite of Commercial questions linked with N420-COT-WRK-AM-000017 Rev 02, The Commercial Administration Procedure.
  • Implementing a robust audit process with the Package Quantity Surveyors on the London Bridge Station Redevelopment Contract.
  • Capturing, trending and analyzing data findings.
  • Reporting outcomes to the business.
  • Achieving Stretch KPI rating on a Periodic basis.
  • Recommending Corrective Actions for any non-compliance identified within the audit process.

Penmark’s approach

Penmark commenced an extensive review of the requirement stipulated within N420-COT-WRK-AM-000017 Rev 02, The Commercial Administration Procedure and chaired a number of meetings with the Commercial management team to ensure the suite of questions proposed met with procedure requirements and key business needs. This approach ensured the buy in of key stakeholders whom recognized the benefits the audit process could offer the commercial business unit.

Penmark agreed the Sub Contractor work packages to be reviewed with Costain, ensuring a diverse range in size, scope and work type, Twenty Three Sub Contractor work packages were chosen to participate in the audit process. Penmark believe in a consultative approach, open dialogue and facilitation was initiated prior to the audits taking place. This ensured the Quantity Surveyors had time to review the questions and prepare prior to the audit being conducted on their specific Sub Contractor work packages.

Penmark designed a number of documents to support the audit process inclusive of a delivery programme, a formulated spreadsheet that captured and trended the Non compliances and a KPI Dashboard, identifying key trends and focus areas for business improvement. A file was created on Costains L Drive to capture all evidence and documentation required to meet KPI compliance. On completion of each Sub Contractor Health Check Review, meetings were arranged with the applicable Commercial Manager to review the findings and agree timeframes for corrective action implementation to mitigate identified non compliances.

This approach ensured a robust monitoring process to meet KPI requirement for closing actions identified along with implementation of numerous business improvement initiatives, controlled and monitored by the Commercial Managers. On completion of fifty percent of the Sub Contractor audits, Penmark submitted an interim report to the business capturing key findings, Corrective actions implemented and recommendations for the business to consider. A further report was submitted on completion of the Twenty Three Sub Contractor work packages capturing the overall trends, strengths and areas for improvement.

The findings were reviewed and the business agreed a new suite of questions focusing on Change Administration within Construction Force as the key focus for the second round of audits to be delivered between October 2016 and March 2017.

The outcome

The findings Penmark documented from the Commercial Health Check reviews initiated a number of positive business initiatives to support Change Administration commercial governance, inclusive of:

  • Costain achieved Stretch and Excellence ratings for KPI 2.5.1 and 2.5.2
  • A Sub Contractor Variation Order (SCVO) improvement strategy to address variations within Construction Force without an applicable SCVO in place.
  • Review and amendment of the SCVO process following actions identified through the Commercial health Check Reviews.
  • Design and weekly circulation of a Master Early Warning Notice (EWN) report, identifying any EWN not raised within the Twelve Week KPI time stipulations.
  • Commercial Manager reviews and alignment of Quantity Surveyor work load, Roles and Responsibilities and training needs
  • Training delivered to Fifty Three Quantity Surveyors on the Construction Force Change Administration process, identified as a business requirement following the work package Commercial Health Check reviews.
  • Agreeing reasonable time scales for receipt of quotes from Sub Contractors applicable with scope variation works and implementation of an escalation process to monitor compliance.
  • A cultural and behavioral change and approach to the Change Administration process adopted at the London Bridge Station Redevelopment Contract. Regular package reviews were implemented along with spot check compliance reviews by the Commercial Managers to ensure work package commercial compliance in preparation for Interim and Final Accounts.

Client Testimonials

Don’t take our word for it – here’s what our clients say:

F.R.I.C.S. Commercial Manager

“Penmark have been central in the implementation of Processes, Procedures, Audits and Reporting of subcontract administration performance to support commercial governance of a billion pound rail infrastructure project. These have been badged as “Subcontract Commercial Health Checks”. The output data has allowed us to target our project commercial improvement plans steering us toward our target of 100% for performance bonuses. Penmark have also facilitated achievement of tangible cost and time efficiencies utilising their “Lean” skills.”