Commercial risk review for major power infrastructure packages

We supported an engineering contractor reviewing the commercial position across two major power infrastructure sites. The commission began with the relationship between budget, programme and cost information. As procurement developed, our review focused on the risks within key construction packages: what the prices included, how incomplete design would be valued, and whether the forecast reflected the obligations being placed with the supply chain.

Background

The contractor was procuring substantial packages while design information continued to develop. Budget categories, contract schedules, programme activities and supplier enquiries did not necessarily use the same structure. A headline comparison between a tender price and a budget allowance could therefore leave important scope and valuation questions unanswered.

The practical task was to understand the basis of those figures and identify the commercial decisions required before package commitments became more difficult to change.

Our approach

We reviewed the available contract, budget, programme and procurement information, establishing a document record and an information-request schedule. The contract schedules were reconciled between earlier and signed versions so that the team could locate the current scope, pricing, programme and interface requirements consistently.

Structured workshops with the project and commercial teams examined how costs moved from purchase orders and invoices into the reporting structure. We followed the relationship between the work breakdown, package commitments, staff forecasts, changes and remaining budget. The review also considered how costs and allowances were represented across the two sites and in different currencies.

This showed why the exercise needed to go beyond indicative rates and quantities. We worked with the client to focus the package review on design maturity, procurement scope, pricing mechanism and the treatment of risk as the design developed.

For the concrete works, the workshops examined the package boundaries and the proposed remeasurement approach. The discussion brought out interfaces with roads, drainage, earthworks, specialist design and other packages. We identified where a scope item might sit under a different budget heading and where the wording or unit of measurement needed to be checked before the final package price could be understood.

The structural steel review considered the difference between lump-sum and remeasurable offers, together with the status of primary members, connections and secondary steel. It also examined how design-dependent allowances, finishes and potential material-price movement could affect the comparison.

Interfaces were explored in practical terms: who provided the support steel, cladding rails, access arrangements, temporary works and related civil work, and what information the supply chain still required. This helped the team distinguish a known price from an allowance that remained exposed to further definition.

The workshop record allocated follow-up actions and identified the documents needed to resolve the outstanding questions. Our advice also considered ways to obtain greater price certainty as design progressed, including the potential to agree defined elements separately rather than leave the whole package on an uncertain basis.

Outcome

The client had a clearer record of the commercial questions within its budget and procurement position, with specific package issues and information requirements identified for action. The review connected the financial reporting discussion with the design and contract arrangements driving the forecast.

The value was in directing attention to the decisions behind the numbers. It provided a more informed basis for developing the cost-to-complete position and managing package commitments as the project moved forward.