What an independent commercial assessment of a construction project covers

NNODI Group · 7 min read

What an independent commercial assessment is

An independent commercial assessment is a structured review of a construction project’s commercial position by a chartered quantity surveyor who has no stake in the numbers being reviewed. It examines the budget and what has been committed against it, the forecast final cost, the state of change and claims, and whether the contract is being administered in a way that protects the party commissioning the review. The output is a written assessment with a schedule of exposures, a view on the reliability of the reported position, and prioritised actions.

It differs from the routine monthly cost report in two ways. It is independent of the team producing that report, and it tests the assumptions behind the figures rather than restating them.

When one is commissioned

• Funding due diligence. A funder or investor wants the contract sum, the risk allocation and the cost-to-complete tested before drawing down, or a forward-funded scheme needs its building contract aligned with the funder’s requirements.
• Board assurance. A board or programme sponsor is being told the project is on budget and wants that tested by someone outside the delivery team.
• Signs of distress. Applications are rising faster than progress, notices are arriving, contingency is being consumed early, or the reported forecast has not moved while the site has.
• Before a claim or dispute. Either party wants a clear-eyed view of entitlement, quantum and the strength of the records before positions harden.
• Acquisition of a part-built scheme. A buyer needs the cost to complete, the liabilities under the existing contract and the value of the work in place.
• Close-out. The final account is contested, or the employer wants the settlement position checked before signing it off.

What we examine

Budget and commitments. The approved budget, its history, every commitment made against it and the authority under which each was made. This is where undocumented instructions and unbudgeted scope usually surface.

Forecast final cost. Whether the forecast is built from the contract sum, agreed and pending change, known risks and a deliberately set contingency, or whether it is the budget restated. We re-forecast where the evidence does not support the reported figure.

Change and claims. Variations, compensation events and claims, each traced to its instruction, its notice and its valuation. Entitlement is tested against the contract before quantum is examined, because a well-priced claim with no entitlement is worth nothing.

Contract administration. Notices, payment cycles and payless notices, programme submissions, insurance and security (bonds, guarantees, retention), and whether the roles the contract assumes are actually being performed. Under NEC, the discipline of early warnings and compensation-event timescales; under JCT, the extension-of-time and loss-and-expense machinery; under FIDIC, the Engineer’s determinations and the claim notices.

Programme and cost together. Delay is money. We look at the current programme against the contract programme and the cost consequences of the difference, including prolongation exposure and acceleration already being paid for informally.

Procurement and supply chain. Unlet packages, provisional sums, named or nominated specialists and the exposure they carry, and the terms on which subcontracts have been placed where they matter to the employer.

Reporting quality. Whether the cost report a board is reading would let it make a decision, and what should change so that it would.

What you get

A written assessment, usually in three parts: the position (what is committed, what is forecast, and how confident we are in each figure), the exposures (a schedule of risks and unresolved items with an indicative value and the action that closes each one), and the recommendations, in priority order, with the evidence for each. Where a figure rests on an assumption, the assumption is labelled. Where the records do not support a conclusion, we say so rather than fill the gap.

What it costs

An assessment is scoped and priced before it starts, as a fixed fee for a defined scope. The main drivers are the size and stage of the project, the number of contracts and packages involved, and the state of the records. A single-contract building project with reasonable records is a matter of days; a multi-package programme is longer. What you need to provide is listed at the outset, and the review proceeds at the pace the documents arrive.

How to commission one

Send us the contract, the latest cost report, the current and contract programmes, the change and claims registers and the payment history. We will confirm the scope, the fee and the timescale in writing, and start when you instruct us. Everything we produce is prepared under RICS professional standards by a chartered surveyor accountable for it.