Commercial assurance for major MEP projects before construction

We supported the audit and assurance team of a specialist mechanical, electrical and plumbing contractor in reviewing commercial readiness across two major projects. The review tested whether pricing assumptions, programmes, delivery plans and management controls gave the teams a credible basis for achieving their committed margins as they moved from preconstruction into delivery.

Background

The work took place while design, procurement and contract arrangements were still developing and significant delivery commitments were being made. Programme dependencies, assumptions about labour productivity and the treatment of contingency could all affect the eventual margin.

The client needed a consistent way to assess how well each project was prepared, recognise effective controls and identify matters requiring intervention. Our review connected the business’s governance requirements with the practical conditions under which the teams would deliver the work.

Our approach

We developed a matrix of 21 critical success factors covering baseline documents, productivity controls, performance controls and people. Each factor had defined evidence requirements for scores from one to five. Factors that were not yet applicable to the project’s stage were excluded, allowing the assessment to reflect its actual readiness.

We issued a structured request covering 35 types of project record, distinguishing information needed in advance from evidence to be examined with the teams. We reviewed the material supplied independently, attended a monthly project review and held dedicated audit sessions with the project teams and the client’s assurance representative. The sessions tested how the controls worked and gave the teams an opportunity to explain the evidence and their plans.

We checked alignment between the tender settlement, contract sum and baseline cost forecast, and whether key team members understood the assumptions behind them. This included distinguishing expected expenditure carried within contingency from allowances for uncertainty, and clarifying how anticipated procurement gains and other commercial adjustments affected the margin expected by the business.

We examined programme baselines, interfaces with other trades and the route for managing changes to those dependencies. Where a formal programme remained unresolved, we identified the need to agree the installation periods and access conditions on which the price depended. We also challenged the relationship between assumed labour productivity and practical site-access constraints, so that the forecast could be tested against the conditions operatives would encounter.

The design and procurement review followed the flow of information into delivery. We tested whether consultant design, coordination, offsite manufacture and purchasing were connected to the installation programme. Recommendations addressed procurement trackers that did not clearly relate to the current programme, late order dates and actions without named owners. This made the review specific to the decisions needed to protect delivery.

We also examined how documents and communications would pass between the contractor, designers, client and supply chain, including the arrangements for identifying change. At business level, we reviewed approval records against the intended governance stages and identified important pricing and productivity assumptions that needed greater visibility to those approving commitments.

Each score was supported by observations and recommendations. The final report separated matters needing senior commercial decisions from improvements within the project teams’ control, recognising effective practices while setting out where further work was required.

Outcome

The client received a consistent, evidence-based assessment of both projects, with a clear record of the reasoning behind each rating. The findings translated margin risk into specific priorities: programme agreement, productivity assumptions, procurement timing, change management and ownership of residual risks.

The work gave project and executive stakeholders a common basis for challenge and action before delivery commitments became harder to change. It showed where the teams were well prepared and provided a practical route for strengthening weaker controls. The client’s Senior Internal Auditor said we were able to “understand a unique business context very quickly and provide value in real-time to teams”.