Commercial Management

Topics: Cash flow, Management, Money Pages: 4 (1308 words) Published: January 9, 2013
In the current economic climate it is essential that commercial management skills are utilised as to gain advantage in an increasingly competitive market. This is achieved through maintaining positive cash flow throughout a project as to keep banks happy and maintain funding. According to a questionnaire carried out by Odeyinka, H., Kaka, A. and Morledge, R. (2003) the best way to keep positive cash flow is overvaluation. In the current market however this is difficult due to companies driving down their rates to win limited work. Profit is sanity in the sense that level-headedness is needed when deciding the profit you are going to take for the job. Amidst the competition presented within the industry it is easy to undercut your competitors to win work. You must however be rational in the amount of profit you deduct to win a tender. Profit margin is a cushion for what can go wrong. If you go on to complete the works in an efficient and timely fashion this sum acts as a reward. You may however break something while carrying out the works or miss something on the estimate which is your responsibility. If you have a profit margin this figure should cover these losses which were not covered, meaning the effect on the cash flow isn’t as damaging. In companies bringing down their rates, companies must ensure that particular care is taken in their risk analysis. On my placement with a ground works contractor we were on a housing scheme which had been demolished and was to be re-built, the quantity surveyor therefore included an item for exploratory work. This was utilised when an existing electric cable was found across a parking bay which was not on any of the drawings. If that item wasn’t on the BOQ the company would have had to front up that cost leading to a loss in potential profit. Good time management is essential in ensuring good cash flow. ‘If a company that is responsible for constructing an office...
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