Commercial Awareness (2 Day)
Course Duration: 2 Days
Course Outline
INTRODUCTIONS
1.SETTING THE SCENE
A video of a real project illustrating the attitude of the various parties involved in a project and the commercial implications.
NOTES: This is a very important session. The video demonstrates the breadth of commercial issues in a project. It illustrates that not only money issues are involved but also the phraseology used in discussions, body language and hidden agendas all have commercial implications
2. THE COMMERCIAL MANAGER (Brainstorming Session)
Brainstorming session to identify all the issues that need to be addressed in order to turn a Project Manager / Contract Director or Sub-Contract Administrator into a commercial individual.
NOTES: This session acts as an audit of the delegates’ capabilities and is a process for them to learn from each other’s experience. The session also acts as a test to see what the delegates have learnt from Session 1.
3. COST / PROFIT / PRICE (Lecture & Exercise)
- The basis of these terms.
- The origins of cost. When it is determined and where the peak occurs on a project.
- The importance of cash. When it is most needed.
- The time value of money. The importance of invoicing on time.
- ‘Which would you Pick’ 1 (exercise).
NOTES: The exercise uses the cost options for a HVAC system to evaluate if the installation of additional capability is economical.
4. PROCUREMENT & TENDER ASSESSMENT (Workshop & Exercises)
- Determination of the criteria in selecting tenderers (Brainstorming session).
- Prequalification (Exercise)
- ‘Which would you Pick’ 2. (Exercise)
- The marking criteria and the pros. & cons. of weighted evaluations.
NOTES: The prequal exercise links to Session 5. However, it is designed to show how tenderers’ capabilities can be determined by their responses and their attitude to risk.
Which would you pick 2 illustrates the difficulty of choosing the right organisation for a proposed tender list.
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5. CONTRACT TYPES (Lecture & Exercises)
How the different types of contract determine the allocation of risk and the degree of effort for project control.
- The division of work and the performance of work.
- The advantages and disadvantages of the different forms of contract.
A number of mini case studies. The delegates will decide the best way to allocate the risks and set up the contracting relationship between the parties involved. The delegates will decide on the optimum contracting arrangement from both a Buyers (Client) and Sellers (Contractors) perspective.
NOTES: This session aims to correct many misconceptions concerning contract types. The variants of the three basic forms of contract are explained in terms of risk. Other terms in general use are explained in terms of point of supply, scope of services and duration.
Day 2
6. RISK MANAGEMENT (Lecture)
The use of the Project Management Model as a dynamic and interactive model of Project Risk Management. The Principles of Risk Identification, The Risk Register, Risk Analysis and Response.
NOTES: This session summarises all of the issues concerning risk on a project
7. PAYMENT TERMS (Lecture / Discussion & Exercise)
• Lump sum / reimbursable contracts
• The timing of payments
• Payment procedures
• Methods of payment – Letters of Credit.
• Bonds and Guarantees.
Some mini cases to illustrate the commercial issues involved in payment terms.
8. CONTRACT LAW (Lecture)
An intensive introductory lecture on the use of law in a commercial environment. Covering how contracts are constructed and the vital elements of a contract
- Definition of a contract. Offer & acceptance, consideration, intention and capacity.
- Discharge of a contract. Agreement, performance, breach, frustration, express contract terms etc.
- Time is of the essence.
- Letters of intent / Intention To Proceed. Instruction To Proceed.
- Liquidated Damages.
A case study in the application of contract law to determine if a contract has been agreed..
NOTES: This session deals with the basic principles of English contract law applicable to all contracts. Some specific issues are explained. However, detailed interpretation of current legal issues are not addressed since these are more appropriately dealt with by a qualified lawyer in amore detailed contract law course. The case study would be omitted for a one day course.
9. PLANNING AND SCHEDULING (Lecture & Exercises)
- The fundamentals of Critical Path Analysis:
- Basic elements of networks. Precedence diagrams
- Early / late start. Early / late finish. Using them to manage risk and buy materials
- Types of float.
- Finding the key sequence that limits the overall duration of the project.
- Choosing the economic solution to shorten the duration.
- Monitoring and reviewing the network plan to assess the project status and identify solutions to problems.
- Simple resource loading and analysis.
10. PERFORMANCE MEASUREMENT AND REPORTING (Lecture)
- How to measure and interpret progress data.
- Using the resource loaded bar chart to develop ‘S’ curves
- The interpretation of ‘S’ Curves.
NOTES: The length of the session will depend on the time available during the actual course.
11. CREATIVE NEGOTIATING (Video & Discussion)
The importance of negotiating in day to day work activities. Identification of the three or four possible outcomes.
Using a number of mini scenarios to identify the success and failure factors in negotiating.
A discussion of together with the delegate’s own experiences.
NOTES: Again the length of this session will be determined by the time available. If time is short the mini scenarios will be omitted.
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