Commercial Management an Investigation Into the Role of the Commercial Manager

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NO. 81. 1997 Editor: Peter HarlowE-mail: [email protected]

COMMERCIAL MANAGEMENT:AN INVESTIGATION INTO THEROLE OF THE COMMERCIALMANAGER

by David Lowe BSc MSc PhD FRICS,

Peter Fenn BSc ARKS FClArb and

Sarah Roberts MSc

Professional ServicesThe Chartered Institute of Building

EnglemereKings Ride

AscotBerkshire

SL5 7TB


David Lowe is a lecturer and programmetutor for the BSc (Hons) in CommercialManagement and Quantity Surveying in theDepartmenf of Building Engineering atUMIST. His PhD is in the area of experientiallearning within design cost estimating, andhe is currently involved in research into theimplications of partnering on workingpractices within the construction industry,and research into project management as acareer. Peter Fenn is also a lecturer inCommercial Management and QuantitySurveying in the Department of BuildingEngineer ing at UMlST . He i s cur rent lyinvolved in research info dispute resolutionwithin the construction industry, and is jointco-ordinator of CIB TG 15 - Constructionc o n f l i c t : m a n a g e m e n t a n d d i s p u t eresolution. Sarah Roberts is a consultantwith Craig, Gregg and Russell occupationalpsychologists.

INTRODUCTIONIn 1989 a consortium of the UK’s leading

construction companies invited selecteduniversities to submit proposals for a newdegree programme in Quantity Surveying toprepare graduates for the wider aspects oftheir commercial activities. The Deportmentof Building Engineering at UMIST was

chosen to develop the first programme, tobe called Commercial Management andQuantity Surveying (CM&QS).

Ashworth (1994) has indicated that it isessential for programme designers toidentify what students will be expected to

know and understand and what skills will berequired of them when they enter intopractice. The aim of the programme,

together with Ashworth’s comments,highlight the need to define commercialmanagement and to identify the role of thecommercial manager.

As port of the review and monitoringprocesses associated with the programmedevelopment, a detailed investigation of then a t u r e a n d c o n t e x t o f c o m m e r c i a l

management was carr ied out by on

occupat ional psychologis t t ra ined ininterview and job analysis techniques.

METHODOLOGYA review of the literature did not unearth adefinitive statement of what was meant bycommercial management nor a descriptionof the tasks and skills associated with the

role of a commercial manager. Scott (1974)

and Gilbreath (1983) addressed some ofthe issue associated with commercialm a n a g e m e n t , w h i l e C o t t r e l l ( 1 9 7 9 )

identified those skills needed by the buildingquantity surveyor but, again, no definition

was found. An investigation by Cornick and

Osbon (1994), while establishing the role ofthe contractor’s quantity surveyor during theconstruction process, did not address the

specific issue of commercial management.

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A study by the Royal lnstitution of CharteredSurveyors (RICS, 1992) has identified af r a m e w o r k f o r t h e c l a s s i f i c a t i o n o fknowledge and skills that a professional

quant i ty surveyor (PQS) possesses. I t

concluded that the identification of coreskil ls and knowledge was essential inmaking any diversification sustainable and

maintaining a competitive advantage for thep r o f e s s i o n . W h i l e t h e s t u d y d i d n o tspecifically address the implications ofcommercialism on the profession, it did,however, comment on the need forChartered Surveyors to be responsive to

market demand.

Structured interviews were held with fivePQSs and 11 indiv iduals hold ing theposition of commercial manager (in somecases thei r job t i t le was not that of

commercial manager). Further opinion wasobtained from two solicitors to provide analternative perspective. The solicitorsspecialised in construction law and one hodpreviously been a commercial manager.

Based on the interviews it was hoped to:l define commercial management;l investigate whether commercial

management could be taught on o degree

programme and if so in what way;l elicit the tasks the interviewees performed

as port of their job and the skills neededto perform these tasks successfully.

Each interviewee was asked to describetasks performed in h i s/her ro le as acommercial manager or QS. They werethen asked to outline incidents where theyhad performed the tasks effectively orineffectively, that is, whether the outcome

was successful or unsuccessful. This wasfollowed by describing the behavioursa s s o c i a t e d w i t h t h e s u c c e s s f u l o r

unsuccessful outcomes. This producedessentials of job performance which makethe difference between success and failure

in a job.

The supervisors of the interviewees werealso interviewed to obtain confirmatory

data.

RESULTSThe results were analysed using contentanalysis. For job analysis this involvedorganising the incidents into various

categories that were then used to compile al i s t of tasks , sk i l l s and competencies

associated with the role of commercialmanager. These lists are given in AppendixA. The informat ion contained in the

interviewees’ responses to the questions‘What is commercial management? and

‘Should graduates be taught commercial

management? were analysed by identifyingthe key themes that arose in the answerssupplied. The data were then interpreted in

the context of the research aims.

BackgroundThe interviewees believed that in the last ten

years the construction industry hod becomemore competitive, with more companies

tendering for business. In particular, over

the lost four or five years, due to therecession, the amount of money availablefor building has declined. This hod resulted

in, as one person explained, ‘… 99% of thework going to the lowest bidder’. Further,

the money that is generated ‘… fromtendering is pretty breakneck, whereas

p r e v i o u s l y w e g o t t e n d e r s o nrecommendation.’ Those interviewedstressed that as a result of this situationPQSs and contractors were finding itincreasingly difficult to make a profit on

work obtained through compet i t ivetendering. The result of this was that the QShas hod to become more commercially

a w a r e i n o r d e r t o ‘max im i se eve ryconceivable source of income.’ Oneinterviewee described the situation as

fo l lows : ‘ I n t h e g o o d o l d d a y s Q S smeasured rates and we had argumentsabout those rates but nobody worriedabout it because the money come ineventually and you always got paid morethan you spent. These days you are

generally spending more than you are paid,the focus is absolutely acute because the

value of work in progress and the cash thatis needed to fund it is bringing a lot ofcompanies to their knees. I don’t think thatwill change unless competition is reduced.’

The general consensus was that commercialmanagement is a term used within theconstruction industry to describe thoseindividuals within construction companieswho manage the finances of large, complex

contracts.

Commercial management withinconstruction companiesWhen asked to provide a definition of

commercial management all intervieweesprovided on answer that centred on the

following: ‘commercial management is

looking after the profits of the company.That is done by keeping costs to a minimum

and maximising income.’

When asked to describe the actual skillsand tasks requi red of a commercia l

manager, in order to fulfil the above, allthose interviewed thought that the followingwere important: analytical skills, numerical

skills, logical thinking and the technical skills

associated with quantity surveying.

O n e o f t h e p r i m a r y f u n c t i o n s o f a

commercial manager is the management of‘cash flow’. This has been described as

‘good housekeeping’ or ‘applying the same

rules to the management of the company’smoney as you would use when managingyour own money’. An analogy used to

illustrate the latter definition, described byseveral interviewees, was not paying your


mortgage until your salary has been paidinto your bank account. Managing cash

flow is complicated and involves many

aspects, some of which are directly related

to a pro ject’s f inancia l pos i t ion. Th i sinvolves setting up payment clauses withincontracts so that sub-contractors are paidafter payments have been received from theclient. It also involves the analysis of subcontractor tenders to ascertain whichprovides the cheapest quality service. Thisincorporates analysis of weekly or monthlycash reports provided by the QS on site.The commercial manager attempts tobalance the payments coming into the

company or project with those going out.This can involve such matters as checkingsub-contractors’ claims and forecasting, atool used to predict future f inancia l

transactions and as a result the finalfinancial outcome of a project. This enablesincreases in costs or variations to beaccounted for and the opportunity tobalance out the increases in cost by areduction in costs elsewhere.

Commercial management is also considered

to incorporate other aspects that are lessdirectly involved with the finances but which

are related to managing the cash flow of asite or company. Examples of these are:

l The ability to take a broad perspective:

This was described as the ability to be ableto see the effect of one action on other partsof the site or company. For example, ‘…recognising that if a dispute with a sub-contractor were to result in litigation, even ifyou win you still lose, it is not good for theimage of the company… a CM needs to beable to recognise that and do everything

he/she can to resolve the dispute before itgets that far’. Another interviewee gave thefollowing example, ‘Construction generates

a cash flow which is a big plus for a PLC. As

a CM you need to understand theimportance of that money for the rest of thecompany’.

l The ability to think laterally: This wasdescribed as problem solving by assessingthe problem by different or unorthodoxmethods, whilst considering the wholepicture. One interviewee provided onexample of this ‘… we couldn’t reach anagreement with a client about the paymentof a project. They were not prepared to pay

us what we had paid out… After muchsearching for a solution we came to thearrangement that the client would pay us the

amount of money they wanted to pay us six

weeks before we finished the job, as theywere not earning interest on it. We were

then able to earn interest on it and by thetime we finished the job it hod increased tothe sum we originally asked for, Everybodywas happy and the client then gave us more

work after that’. Lateral thinking was oftenassociated with being flexible. Many ofthose interviewed thought that a good

commercial manager could not always stick

to hard and fast contractual rules. Theyneed to know when to be flexible. Several

interviewees even went as far as to call itskulduggery.

l The ability to analyse risks: Managingcash flow was believed to begin at thetender enquiry stage. All those interviewedconsidered that those individuals who werecommercial ly aware would see theimportance of risk assessment at this stage ofa project. ‘A good commercial managerwill assess the risks associated with a tenderand decide whether they were acceptable or

unpriceable’. One interviewee describedthe process as follows: ‘To determine therisks I go through the tender documents andlook at the terms of the contract… are thecosts mainly principal ones? I look at thenature of the contract. The more complex

the building the more areas of potentialfailures there are and the more managementthings I have to do to make sure it does not

fail.’ The assessment of risk does not onlyoccur at the tender stage of the project but

at all subsequent stages. Almost all thoseinterviewed believed that risk analysis was

on important part of the commercialmanager’s role. Three stages of the riskassessment process were described:

l being proactive about assessingsituations and discovering possible

risks. The risk is then less likely to turninto a problem;

l determining the cost of the risk, thenassessing whether this cost/risk isacceptable;if not,

l discovering ways to reduce the risk andthus the cost associated with the risk.

l The ability to convert work required on

a project into packages: A commercialmanager, it was thought, needs to be able to

assess the best way of subdividing the worksinto packages. This involves assessingwhich solution provides the best service at

the lowest price. This task relates to bothhaving a broad perspective and managingthe cash flow.

Two skills that were believed to be importantin relation to all of those matters mentioned

above were those of negotiation andcommunication.

l The ability to negotiate: A continuousaspect of the commercial managers’ role isnegotiation. T h i s c a n i n c l u d e : t h enegotiation of payments with clients;

negotiating disputes with sub-contractors andresolving the implications of design changes

with architects. All those interviewedsuggested that in order to successfullymanage the finances of the site or companyon individual needs to be able to negotiate.This was described as ‘knowing the rules ofnegotiation’, when to put people at easeand when not to and it often incorporates

problem solving. However, one interviewee

believed that personality factors are often abig influence in these situations, ‘… people

either like you or they don't.

l The ability to communicate: Com-munication skills include written and oralcommunication and involve making sure that

all relevant individuals are informed ofmatters that concern them. It is also aboutbeing proactive and about searching for

information. As one interviewee explained,‘… if you don’t have information how oreyou going to make a valued assessment of

how much i t ’ s going to cost?’ Al l

interviewees stressed the importance ofwritten c o m m u n i c a t i o n t o beingcommercially aware. This was in particular

reference to variations and disputes.Further, all interviewees considered that acommercial manager should follow allprocedures ‘to the book’, so that mistakes or

misinterpretations were not made that mightresult in loss of money at a later stage.

In order to perform all of these skills well, theinterviewees stressed that the ability to work

in a team was important. This includedknowing when to delegate.

Private Quantity Surveyors’ views ofcommercial managementThe role of the QS in private practice varies

slightly from that of the commercial manageremployed within o construction company.The PQSs interviewed suggested that if a QSwas to be successful and progress to omanagerial position within private practicethen they needed to be commercially aware.Those who were considered to be ‘beancounters’ would remain in a technical roleand not progress within the practice. The

P Q S s a g r e e d t h a t t a k i n g o b r o a dperspective, thinking laterally, having good

negotiating and communication skills; being

proactive in assessing and finding solutionsto risks and problems were all skills and

competencies associated with commercial

management. The ability to manage cashflow was not considered as important forPQSs because their role did not require them

to balance accounts or forecast figures, tothe same extent as a commercial manager.However, it was considered important to be

knowledgeable about such things as: theeffect delays in the project would have onthe client’s interest charges and whether

bank rates were going up or down. Thesupervisors of PQSs stressed that at a higherlevel within a private practice (managerial

or partner level) it was relevant for a QS tobe more concerned about profit margins

and cash flow, and in particular about the

effect certain actions could have on thepractice as a whole. Again, this relates tothe ability to take a broad perspective. Thislost point was also considered important forthose employed in a similar position withinthe solicitor’s practice.

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There were three issues associated withcommercial management highlighted by

P Q S s t h a t w e r e n o t m e n t i o n e d b ycommercial managers in a contractingorganisation. These are:

l an understanding of developmentappraisal;

l knowledge and understanding of

market forces;l the ability to choose an appropriate

procurement strategy.

l An understanding of development

appraisal: a QS must manage all aspectsof the client’s financial outputs, which meansit is important to have an understanding ofdevelopment appraisal. This was described

as ‘knowing how the developer is structuringtheir appraisal for doing the development,

how the var ious costs f i t together’ .

Incorporated within this is a knowledge of

rents and yields. It was also consideredimportant to be able to determine whataspects of the building process would becritical far controlling costs. One of theseaspects was considered to be time: if acontract over-runs the client loses possibleearning potential. In short, an understanding

of development appraisal is concerned withunderstanding a client’s f inancial anddesign position.

l Knowledge and understanding of the

market: ‘One of the aims of a QS is to getvalue for money out of the building, to make

sure, in conjunction with the rest of thedesign team, that the building is attractive to

the market. Therefore, being aware of themarket is important so that you can feed intothe design process.’

l T h e a b i l i t y t o c h o o s e t h e r i g h t

procurement strategy: this was consideredto be important in relation to the client’sdevelopment appraisal. A QS should bea w a r e o f t h e a d v a n t a g e s a n ddisadvantages associated with different

procurement strategies and have the abilityto advise the client on the best strategy,

having considered the client’s development

appraisal, that is, does the client considertime, costs or quality as the key criterion?

COMMERCIAL MANAGEMENTWITHIN THE PROGRAMMECURRICULUMAs the BSc in Commercial Management andQ u a n t i t y S u r v e y i n g d e v e l o p e d , t h eprogramme team designed a programme

based around: a r igorous univers i tyeducat ion; a th ick sandwich courseinvolving Supervised Work Experience

(SWE) and collaboration between theuniversity and the sponsoring companiesprovid ing the SWE. To date th i s has

appeared to work well; feedback intoprogramme development was provided by aseries of committees and satisfactionamongst the sponsoring contractors andgraduates is high. The lack of an agreed

4

definition for commercial managementmeant that the provision of commercial

management within the curriculum wasinitially dealt with on an ad-hoc basis.

However, since the investigation formulated

a definition of commercial management this

posed further questions for the programmeteam. Could the skills and competenciesattributed to the commercial manager beacquired through the programme andshould it be included within the syllabus or

as a wider curriculum issue?

Can and should we teachcommercial management?The general consensus of those interviewedw a s t h a t t h e s k i l l s a s s o c i a t e d w i t h

commercial manager are acquired through‘experience on the job’. Some evenexpressed the opinion that they would prefer

to hire a day release student rather than a

full-time graduate as they had gained‘experience on the job’. However, they didacknowledge that after a few years ofexperience the graduate often performsbetter.

This view is supported by Male & Stock(1991) who argue that within construction

there is a heavy reliance placed upon

experience, a knowledge and high-ordersource of advantage. They also commentthat there is a high reliance on individuals atall levels within construction organisations

and management development is held to be

a key source of competitive advantage.

Langford & Newcombe (1991) suggest thatmanagement development is a process thatupgrades a company’s manager ia lresources to meet its present and futureneeds, which can be achieved through a

variety of means.

Despi te th i s v iew, those interv iewedsuggested that if it was possible to givestudents a grounding in the skills mentioned,then universities should seek to do so.

All interviewees expressed the view that atheoretical approach would not suffice.

They gave the opinion that experience ofactual situations was needed. Simulationwas suggested as a way to do this byallowing students to experience a situationwhere they could analyse risks, problemsolve, search for information and make aprofit on a project, etc. One intervieweesuggested computer simulation, whileanother suggested group exercises with

students within the group taking on different

r o l e s . T h e s t u d e n t w i t h t h e r o l e o fcommercial manager would then try to findout the relevant information needed to make

the site run smoothly and make a profit.

Some of those interviewed suggested theuse of visiting speakers from industry to give

students a flavour of what to expect. Oneinterviewee suggested that students shouldbe encouraged to question guest speakers

and that the agenda should be set by

students.

Despite the fact that it was thought that these

skills should be taught at university, it was

emphasised that it is more important for

students to learn the technical skills of theQS. ‘… When you hire a graduate youwant him/her to be the back room boy/girlwho can turn out bi l ls of quantit ies,estimates, etc. Often graduates believe they

are going to be a manage… that issomething they can learn on the job… Firstand foremost they ought to learn how to be

a quantity surveyor, secondly they ought tolearn how to be a manager.’ This pointhighlights the views of Barrie (1995), who

reports the difficulty experienced by leadingQSs in finding graduates with basic skills.

Implications for the delivery ofCommercial Management themeswithin the curriculumThe skills of the commercial manager asdescribed above can be divided into two

main areas, d e c i s i o n m a k i n g a n dinterpersonal. However, in addressing themost appropriate methods of fostering theseabilities and skills the programme team wasrequired to consider implications that fell

between their initial remit, that is, theprovision of a broad rigorous education

(university) and vocational training [the

construction organisations).

l Decision making skills

Ashworth (1994) acknowledges that therehas been a discernible shift within the

surveying profession from a reliance uponmemory recall of available knowledgetowards problem solving. He asserts that the

current emphasis is towards understanding,the development of transferable skills andcompetent application. He also states that

the development of the trained mindincludes; critical thinking and reasoningskills; the ability to think conceptually and

intellectual perspective and independence ofthought. The abilities collated under this

heading inc lude adopt ing a broadperspective, lateral thinking/problem solving

and flexibility/openness.l B r o a d p e r s p e c t i v e : A w o r k i n g

def in i t ion of th i s t ra i t has beenprovided by Handy (1989) who refersto a process of re-framing, which hedefines as “… the ability to see things,problems, situations or people in other

ways, to look at them sideways, orupside-down; to put them in anotherperspective or another context; to thinkof them as opportunities not problems,

as hiccups rather than disasters”. Heconsiders reframing to be important asit unlocks problems. Likewise, anawareness of the implications of an

indiv idual ’ s comparat ive act iondecisions is central to the concept ofdecision support and decision makingtheory.


l Lateral thinking/problem solving: DeBono (1985) considers lateral thinkingto be a neutral process, an ability tochange perception and to keep onchanging perception, pattern-switchingw i t h i n a p a t t e r n i n g s y s t e m . H esuggests specific and formal methodsfor generating new ideas or a newapproach (unorthodox problem solving)

- these included stepping stones - wherean idea is employed for its movementvalue instead of just its judgementv a l u e , e s c a p e - w h e r e c u r r e n t

methods/processes are assessed interms of their appropriateness and

random stimulation - where we openourselves to influences other than thosewe directly sought.

l Flexibility/Openness: Lateral thinkinginvolves a willingness to search forbetter concepts. It is to do with change,especially when change necessitatesescaping from working patterns that

have been satisfactory in the past.Therefore, it requires the individual tobe open to changes in the working

practices that may result. However,

most people dislike the uncertaintygenerated by change and as Knowles

(1970) acknowledges adults acquire alarge number of fixed habits and

patterns of thought, and tend, therefore,to be less open minded.

Decision making skills, therefore, have adirect impact on the commercial manager’sability to manage cashflow and to assessrisk by being proactive in appraising

situations, determining the cost of risk and indiscovering ways o f r e d u c i n g a norganisation’s exposure to it.

l Interpersonal ski l lsInterpersonal skills are important to the

commercial manager. In the case of

l e a r n i n g t o w o r k i n t e a m s w i t h i norganisations, professional education wasf o u n d t o b e l a c k i n g . ( E r a u t , 1 9 9 4 )However, should the development of thesesk i l l s be rest r icted to an indiv idual’s

immediate working environment? It has beenshown that people who have learnt how towork together on a course can continue tolearn from each other and provide mutualsupport when they return to work, (Eraut,

1994)

l Core skills of the QS

The core skills of the QS as identified by

Ashworth (1994) ore:l communication and the use of language;

l numeracy and an understanding andappreciation of data;

l problem solving;l teamwork and interpersonal skills;l information technology;l world of work.

The RICS (1992) suggest that the core skills

of the QS should be taken to mean Analysis,Appraisal/Evaluation, Communication,Documentation, Management, Quantificationand Synthesis.

Are these skills exclusive to the commercialmanager or QS? Eraut (1994) considersdeliberate processes such as planning,

problem solving, analysing, evaluating anddecision making to be the essence of

professional practice. He proposes that

these processes cannot be accomplished byusing procedural knowledge alone nor byadhering to a practice manual. They

require, he suggests, a unique combinationof:l prepositional knowledge;l situationol knowledge; andl professional judgement.

Within many professions, therefore, there isan emphasis on the need for interpersonalskills, the ability to work in teams and

cognitive skills such as problem-solving. Theincorporation of these skills and abilities

within the CM&QS programme wouldbenefit from a review of the developmentand delivery of parallel professionallyaccredited degree programmes. Eraut

considers that all of the above can be

developed and demonstrated outside theworking environment and that this issometimes a better solution.

l Methods of implementationTraditionally universities have usually dealtwith knowledge rather than skil ls andabilities. However, the implication of the

survey is that a theoretical approach is notappropriate nor sufficiently helpful inallowing students to acquire the necessary

s k i l l s a n d a b i l i t i e s r e q u i r e d o f t h ecommercial manager.

It is recognised that the formal lecture is notperhaps the most appropriate method ofstudent learning. While there has generally

been a move towards the use of tutorials,seminars and student centred or projectbased learning, it would appear that moreattention is required in focusing on studentlearning than teaching if a student’scapability in commercial management is tobe developed. The following are ways inwhich this may be achieved:

Team work and Outdoor Management

Development Courses (OMDCs): Betts andLiow (1993) suggest that working in groupson projects is more related to the real

professional world. It is likely to be moreuseful in employment and assists in the

development of communication skil ls.Further, they suggest that at an interpersonallevel, active participation with feedback

prepares students to contribute ideas anddevelop leadership qualities appropriate to

their chosen profession. Also, Boud (1989)suggests that much learning within a group

centred approach occurs from interactionbetween group members. Further, there isusually an emphasis on democratic decisionmaking and the consideration of differentpoints of view within the group, whilst thedevelopment of the group itself is often afocus of learning.

Ro le-p lay , S imu la t ion and Games :

Entwistle (1992) defines simulations asactivities that are designed to mimic real-wor ld exper iences and provide, for

example, controlled opportunities for

exploring actions and their consequences inteaching problem-solving. Additionally, the

opportunity to engage in role play allowsstudents to take on the identity of someoneelse thereby gaining insight into the

motivation and feelings of that person,something that no lecture or discussion couldever provide. Lansley (1985) put forwardthe case for a games-based simulationapproach within building education.Ndekugri and Lansley (1994) discuss the

benefits and advantages of simulation withinconstruction management: those that seempertinent to the delivery of commercialismwithin the curriculum include:

l a decision support system;l a vehicle for teaching theoretical concepts

in construction project management;l a tool for training and management and

organisational development;l an instrument for team building.

Games, on the other hand, are similar tosimulations but introduce a competitive

element where there are rules, points areawarded and there are winners and losers,

Lovell (1980) is of the opinion that bath

games and simulations enable students tolearn by experiencing at first hand at leastsome of the elements of realistic problems.He considers them to be ideal for illustrating

how systems work and drawing attention to

cause and effect. However, he points outthat role-play, simulation and games need tobe followed by periods of discussion,evaluation and rethinking in detail of theway the exercise was approached.

Therefore, if debriefing is not incorporatedand students do not attempt to integrate theirexperiences with their previous knowledge

and understanding, then these exercises area waste of time. Moreover, the closer toreality that a role play, simulation or game

becomes the more successful it is likely tobe.

It would appear, therefore, that simulations

do stimulate and develop both thinking andinter-personal skil ls but only when theprocesses are explicitly discussed within thegroup.

AROUSAL (A Real Organisat ional Unit

Simulated as life): A development ofs imulat ions and games i s the use of

computer simulations such as AROUSAL

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developed by Lans ley (1985) whichrecreates the decision making environmentin which construction companies aremanaged. The areas of decision makingmodelled by the system include:l corporate strategy regarding type, size

and location of work to focus on;l bidding;l cashflow management;

l recruitment and termination;l staffing of projects;l tempo of working on contracts (normal or

crashed];l salary administration etc.

A further sub module focuses on the decisionm a k i n g p r o c e s s e s i n v o l v e d i n t h emanagement of sub-contracted work and

s u b - c o n t r a c t o r s . T h e a p p l i c a t i o n o fcomputer simulations such as AROUSAL

seems to be a way in which realism and acommercial attitude can be replicated within

a university setting.

S u p e r v i s e d w o r k e x p e r i e n c e : T h eincorporation of supervised work experience

in the form of ‘thick’ and ‘thin’ placementshas been central to the philosophy of themajority of QS degree programmes. The

CM&QS programme incorporates therequirement for students to undertake 46weeks of supervised work experience.Ashworth and Saxton (1992) suggest thatplacements should develop maturity; enablethe exploration of the theory-practice link;encourage the development of critical butpragmatic thinking; and facilitate systems

thinking. However, for this to take placeplacements should be treated as providinggenuine educational experiences.

Further, they raise the following questions:

l how can such placements be managedso as to give maximum benefit to thelearner?

l what is the role of the supervisor at theworkplace?

l how can students be encouraged toreflect on the situation and to developlearning opportunities themselves?

l what is the role of the visiting tutor?

They suggest that typically students are

unprepared to make best use of theplacement as a learning opportunity.

Further, in the past there has been muchcriticism of work experience, derived fromthe difficulty in ensuring that all studentsobtain valuable experience that relates tothe academic or professional content of thecourse. (Entwistle, 1992)

Entwistle suggests that the following are thethree most difficult problems in providing

effective work experience:l ensuring an appropriate match between

the academic content of the programmeand placement activities;

l ensuring that mentors are able to providethe necessary support;

6

l assessing the work experience in waysthat are comparable between students

and also describe the skills developed.

Ways of overcoming these problems

include:l the use of learning contracts, which

describe in detail what the student hasagreed to do (Entwistle, 1992);

l the inclusion of the work based mentor in

the negotiation of the learning contractenhances involvement with the student(Entwistle, 1992);

l recognising that the need for formalassessment is essential to give workexperience its appropriate status within a

degree scheme (Entwistle, 1992);l the use of Personal and Academic

Development Plans (PADPs).

Problems in implementing changes inthe method of delivery of universitybased degree programmesBetts and Liow (1993) discuss the problemsof replacing a traditional didactic approachto university courses with more active

learning. They comment on the need to get

conservative staff and students to change,particularly as both groups perceive projectwork to be a high risk activity compared totraditional teaching methods. In addition,t h e a s s e s s m e n t o f p r o j e c t w o r k i s

problematic. Attempts have been made tointroduce courses that are designed toanalyse the operation and needs of the

construction industry by introducing o seriesof events through which students develop theability to deal with uncertainty, take control

of their learning and develop an ability to

be ‘reflective in practice’ (Boyd and Wild,

1993). However, this innovative course isat Masters level and is designed for entrantswith prior experience of the industry.

The introduction of a more experientialproblem based learning environment hasimpl icat ions for academic staf f . AsPackham et al. (1989) point out, staff are nolonger seen as the sole controller of

learning; neither are they the sole source ofknowledge. The roles of staff ore:

l to provide support to the learner;

l to provide access ta resources forlearning;

l to provide critical feedback to learners;l to assist in student assessment.

Boud (1989) suggests that there are majorimplications for the training of experientialeducators and the design of courses. ACNNA funded research project into

improving student learning (Gibbs, 1992)concluded that:… while different courses revealed differentpatterns of learn ing and ind iv idualdifferences are extremely wide a surface

approach is common, that assessmentd o m i n a t e s s t u d e n t s ’ t h i n k i n g t o acons iderable extent and that some

assessment systems clearly reward a surfaceapproach. However it would appear that itis possible to change students’ approachesto learning as they seem capable ofadopting either a surface or deep approachbut it is easier to do this early in a coursethan towards the end. It is necessary toincrease students’ intr insic motivation

without increasing extrinsic motivation andthat the appropriate focus of attention inimproving the quality of student learning iscourse design and process rather than

teaching and content.”

In summary, the impl icat ion of theinvest igat ion was that a theoret icala p p r o a c h w o u l d n o t b e t h e m o s tappropriate method of helping students

acquire the skills and abilities attributed tothe commercial manager. It was evident,

therefore, that despite a general movewithin higher education towards the use oftutorials, seminars and student centred or

project based learning, to develop astudent’s capabi l i ty in commercia lmanagement more emphasis was required

on student learning rather than in providingteaching.

CONCLUS IONS

Commercial management within theconstruction industry was defined as‘looking after the profits of the company...by keeping costs to a min imum and

maximising income.’ The study has shownthat the following skills and competenciesare inherent to commercial management:

logical thinking; analytical ability; numerical

skills; the technical skills and knowledgeassociated with quantity surveying. In

addition to these skills a ‘good’ commercialmanager was thought to be competent in:managing the company or project cashflow; taking a broad perspective andthinking laterally; analysing risks, whichincorporates being proactive, assessing thepotential cost of a risk and solving anyproblems associated with it; negotiating;communicating and team working. Inaddition to this PQSs believed that anunderstanding of development appraisal,understanding market forces and choosing

the right procurement strategy were

important for a QS in private practice. Therewas, for the PQS, less emphasis on cashmanagement unless the individual was in amanagement position within the practice.

F inal ly , the invest igat ion led to theconsideration of how these skil ls andabilities could be acquired through a courseprogramme. Methods that focused onstudent learning, in particular experiential

learning, were incorporated into theprogramme. These included an outdoormanagement development course, role-playand simulation, and supervised work

experience. However, to maximise thestudent’s ability to learn from experience, anintroduction to personal and academic


development planning and other methods ofimprov ing learn ing ‘by doing’ wereprovided.

ACKNOWLEDGEMENTSThe authors are pleased and grateful to

acknowledge the financial contribution fromEnterprise in Higher Education (EHE), whichfunded this research project. The support ofthe consortium of contractors who sponsorthe BSc in Commercial Management andQ u a n t i t y S u r v e y i n g i s , o n c e a g a i n ,recognised. The data for this research wereprovided by quant i ty surveyors andcommercial managers working for the

following organisations:

Bovis Construction, Bucknall Austin PLC,

Cameron Middleton and tees, Costain,Gardner Theobold Management Services,Laing North West, Masons Solicitors andP r i v y C o u n c i l A g e n t s a n d S i r A l f r e d

McAlpine

The authors are grateful for the time andexpertise which was freely given.

REFERENCESAshworth, A (1994) Education and Trainingof Quantity Surveyors Construction PapersNo. 37 The Chartered Institute of Building,Ascot

A s h w o r t h , P a n d S a x t o n , J ( 1 9 9 2 )

Managing Work Experience Routledge,London

Barrie, G. (1995), ‘The Top QSs Struggleto find Graduates’. Building. 29, 12.

B e t t s , M a n d L i o w , S R ( 1 9 9 3 ) ‘ T h erelationship between teaching methods andeducational objectives in building education’Construction Management and Economics,

Vol. 11 pp 131 - 141

Boud, D (1989) ‘Some Competing Traditions

in Experiential Learning’ in Making Sense ofExperiential Learning (edited by S WarnerWeil and I McGill) The Society for Research

into Higher Education &, Open UniversityPress, Buckingham

Boyd, D and Wild, A (1993) ‘Innovationand Learning in Construction Management’Proceedings of 9th ARCOM Conference,September 1993, Ed. R Eastham &, RMSkitmore, ISBN 0951906070

Cornick, T and Osbon, K (1994) ‘A study ofthe contractor’s quantity surveying practice

during the construction process’ ConstructionManagement And Economics, Vol. 12 pp107-111

Cottrell, G.P. (1979), The Builder’s QuantitySurveyor The Institute of Building. 1-7.

De Bono, E (1985) De Bono’s Thinking

Course BBC Books, London

Entwistle, N (1992) The Impact of Teachingon Learning Outcomes in Higher Education:A literature Review CVCP

Eraut, M (1994) Developing ProfessionalKnowledge and Competence The FalmerPress, London

Gibbs, G (1992) Improving the Quality ofStudent Learning Technical and EducationalServices, Bristol

G i lb reath , R . D . (1983) , M a n a g i n gContracts : Operat ional Contro l s forCommercial Risks. New York: Wiley.

Handy, C (1989) The Age of UnreasonArrow Books, London

Knowles, M S (1970) The Modern Practice

of Adult Education: from Pedagogy toAndrogogy Cambridge Book Company

Langford, D and Newcombe R (1991)‘Management Development in Construction’

in Competitive Advantage in Constructionedited by S Male & R Stocks, ButterworthHeinmann, London

Lansley, P (1985) ‘Putting organisationalresearch into pract ice’ Const ruct ionManagement and Economics, Vol.3, pp1-14

Lovell, B R (1980) Adult Learning CroomHelm, London

Male, S and Stocks, R (1991) ‘Competitiveadvantage in construction: a synthesis’ inCompetitive Advantage in Constructionedited by S Male &, R Stocks, ButterworthHeinmann, London

Ndekugri, I and Lansley, P (1992) ‘The Roleof simulation in construction management’

Building Research and Information, Vol. 20,No. 2

Packham, R, Roberts, R and Bawden, R(1989) ‘Our Faculty Goes Experiential’ inMaking Sense of Experiential learning[edited by S Warner Weill and McGill) TheSociety for Research into Higher Education&, Open University Press, Buckingham

RICS (1992) The core skills and knowledgebase of the quantity surveyor The RoyalInstitution of Chartered Surveyors, London

S c o t t , P . ( 1 9 7 4 ) , T h e C o m m e r c i a lManagement of Engineering Projects.Gower Press.

APPENDIX A

TASKS

PaperworkTwo to three hours a day tends to be spent

dealing with paperwork. This consists of:l reading all in coming mail. This is

thought ta be necessary as it provides theopportunity for the commercial managersto be kept up to dote with all sites. Thisbroad perspective is thought to beimportant to make sure any problems areidentified as early as possible. Wherenecessary, any actions derived from themail are then delegated to other membersof the team;

l writing letters and memos. A large

amount of these are to subcontractors tokeep them informed of any variations, orto respond to any claims;

l preparing reports. This usually involves

collating financial and progress reportsfrom sites and presenting them to clientsand senior members of the managementteam.

MeetingsMeetings include:l formal and informal meetings with site

staff involving discussions about progress,costs and potential problems. They ofteninvolve walking around the site to check

on progress, assessing risks, identifyingproblems and finding solutions;

l meetings with clients to discuss progress

and to negotiate payments;l formal meetings with senior management

to discuss financial reports;l negotiating with sub-contractors and

solicitors in an attempt to resolve disputes.

Managing cash flow.This is predominantly about making sure thatthe site is making a profit. It has been

described as ‘good housekeeping’. Itinvolves making sure that the sums of cash

coming in are higher than those going out.This incorporates a number of aspects:

l agreement of sub-contractors’ terms ofpayment so that the sub-contractors are

paid after payments hove been receivedfrom clients. It also involves the analysisof the site evaluations to determine whatthe payments should be. Having the abilityto spot excessive claims or work not doneis important in relation to this area.

l assessing tenders for possible risks andattempting to minimise those risks so thatany financial cost is minimised.

l forecasting cashflow. This involves the

production of weekly or monthly turnoverand profit forecasts, taking into account

any variations and anticipated increasedcosts.

l negotiating payments with clients. In

some situations costs may increase. It isthe responsibil ity of the commercialmanager to obtain any money due fromt h e c l i e n t w h e r e n e c e s s a r y . T h e

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commercial manager also needs to agree

final accounts in relation to both the clientand the sub-contractor.

ProcurementThis involves analysing information in thetender. The works are split into packages.

A scope of the works and a list of possiblesub-contractors are drawn up for eachpackage. The commercial manager will

research i n t o t h e s u b - c o n t r a c t o r ’ s

background to make sure that they arefinancially reliable and provide a quality

service. The sub-contractors are then sent an‘out to tender’ document. It is felt that a

degree of commercial awareness is neededto decide how to split the packages up.

Analysing TendersThis incorporates:l assessing the risk involved in tenders.

This involves spotting potential problems,identifying the problem and managing thesituation such that the problem does not

come up in the end product. An analysisis made as to whether the risk outweighs

the profit;l establishing whether a client is financially

sound;l analysing the content of sub-contractor

tenders to establish what aspects are

i n c l u d e d i n t h e f i n a l f i g u r e , t h e nestabl i sh ing which wi l l prov ide thecheapest quality service.

Dealing with DisputesThis involves investigating claims from subcontractors, usually in the form of collatinginformation, usually from company recordsand analysing the information to determinewho is right. Decisions then need to bemode about how to progress. For example,

to back down and pay the subcontractor, totry to negotiate a payment or to take it toarbitration / litigation if no solution con befound.

COMPETENCIES

It was assumed that a good QS will hove the

following four skills, which are thereforeinherent in a commercial manager. Thesefour skills are considered prerequisites to the

remaining skills listed.

Analytical skillsThis is the ability to analyse information

presented in numerical and written format.

Numerical skills (Interpretation ratherthan calculation).This is the ability to interpret the numbers incash reports, tenders and the like. If ocommercial manager is weak in numericalinterpretation then the ability to interpretinformation in tenders and evaluations and

the ability to forecast future cash flow will beinadequate.

QS technical skillsEssentially the basis skills of a QS, whichinclude compiling contract documentation,

measurement and evaluation.

logical ThinkingIt was felt by all of those interviewed that tobe a good commercia l manager anindividual needs to be a logical thinker, asmany of the other competencies will interactwith this competency. (For example, to beable to analyse risk then one needs to be

able to think through all possible optionsand outcomes in a logically systematicmanner). The following skills are those thata commercial manager needs to be able toperform the job well. They are in no specificorder except that those that are consideredmore important to commercial managementcome towards the top of the list.

Cash ManagementThis is the ability to analyse and interpretnumerical information and then forecast

future cash flow. It has been termed ‘goodhousekeeping’. I t i s about apply ingcommon sense to manage the cash flow.

Examples given are not paying the sub-contractors before the client has paid you. Itis the ability to save and make money

outside of a framework.

Broad perspectiveCommercial managers should be able toshow a broad based view of events, issuesand activities and perceptions of the long

term impact and wider implications.Examples given of this brood perspectiveare:l understanding the importance of the cash

flow that construction generates to the restof the company;

l recognising that it is better to try to solve

a sub-contractor dispute throughnegotiation rather than litigation as thereare implications for the company in termsof cost and reputation.

Risk AssessmentThis is thought to be heavily related to thecommercia l s ide of the commercia lmanager’s role and complements the broad

perspective that a manager should have andtheir knowledge of cash management. Acommercial manager should be able toidentify constantly any possible risks inherent

in tenders, sub-contractors and clients andfind ways to minimise that risk.

Examples given were, if there is an intricate

brickwork design required on a job it, thenthe commercial manager should be able toassess that even though it will cost moremoney a specialist should be brought in todo the brickwork because it may savemoney in the long run.

NegotiationThis skill incorporates persuasiveness and isa combination of both interpersonal skills

and problem solving ability. The managershould influence others in o way that results

in acceptance and agreement. It isconsidered important to know the rules of

negotiation, when to give away small pointsin order to win bigger ones. It is having the

ability to know when and how to put peopleat ease and also when not to. This can alsoinvolve knowing when to be flexible and

move away from procedures when

necessary. An example given is: wheninterviewing sub-contractors one needs tomake them feel at ease, so it is best not tohave a desk in-between you and use veryopen gestures. This way they will be more

likely to open up.

Oral and WrittenCommunication skillsThis was considered important as many ofthe problems that occur on site are due to

poor communication. Commercial managersneed to document important decisions onsite to avoid the risk of misunderstandings

and associated additional cost. A record,

therefore, is kept of everything for future

disputes.

Organisational SkillsThis is the ability to organise oneself and

other people. It involves co-ordinatingdifferent tasks and individuals

Ability to be proactiveThis skill is thought to be related to riskanalysis and having a broad perspective. Agood commercial manager needs to beproactive about finding out information inorder to acquire a broad perspective and to

be informed about any possible risks orproblems.

Team WorkingThis is the ability to work with o group ofpeople. This can involve delegating tasks to

different members of the team.

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Commercial Management an Investigation Into the Role of the Commercial Manager

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