Assurance is the function of checking. Commercial assurance is the function of making sure that that value is not only retained but maximised as projects move through the various corporate silos of the business lifecycle.
In the perfect company as a deal or project moves from business development to financial analysis to Design and then through to Projects & Programs and on to Operations & Management the numbers and analysis flow seamlessly through each function. Each department is able to take the preceding analysis and add value creating a streamlined contracting and management process that maximises profit and minimises risk.
The reality is a lot clunkier. Internal entropy and friction are enormous. Departments fail to understand each other, analysis is duplicated, documents are endlessly re-created and spreadsheets re-formatted. In many cases it is a wonder anything gets done at all and mostly deals get done despite the business.
Most companies have a raft of commercial assurance and contract management procedures but they seldom join up in a coherent and comprehensive governance framework. Divisions and departments expend vast amounts of additional effort trying to understand each other and make sense of documents and numbers. As this functional entropy increases so too does risk as cost centres and teams attempt to pass risk off to the next business unit. Costs increase as do delays as risk becomes baked-in to the project.
Getting to the bottom of such a mess requires sophisticated tools, deep cross-functional knowledge, comprehensive cross-sector experience and a consolidated framework of understanding which increases process convergence from all parts of the business.
Commercial Assurance is the nexus of good commercial management, good project management, good legal advice and good architecture. It has the following key benefits:
- Increase Business Process Efficiency and Value.
- Increase Confidence in Governance.
- Reduce Risk.
- Increase Profit.
A good assurance function will achieve these results by maximising process convergence and then optimising process performance.