Commercial Department
Commercial Department Overview
Strategic Cost Management, Contract Administration, and Quantity Surveying for Mega Construction Projects
1. Introduction
The Commercial Department at BEC Arabia plays a vital role in managing financial, contractual, and procurement aspects of construction projects. It ensures that projects are delivered within budget, comply with contract terms, and achieve profitability while maintaining operational efficiency.
The department consists of key functions that contribute to the financial success of BEC Arabia’s projects:
Cost Estimation and Budgeting – Ensuring accurate project cost projections and budget allocation
Contract Administration – Managing contractual obligations, claims, and risk mitigation
Quantity Surveying (QS) – Overseeing material quantities, cost control, and value engineering
Procurement and Subcontractor Management – Ensuring cost-effective purchasing and supplier compliance
Payment and Financial Reconciliation – Verifying project costs, progress payments, and financial reporting
A 360-degree approach ensures the department optimizes cost efficiency, mitigates financial risks, and ensures compliance with contractual and regulatory requirements in Saudi Arabia’s construction industry.
2. Commercial Department Structure and Responsibilities
Function
Key Responsibilities
Integration with Other Departments
Cost Estimation and Budgeting
Prepares cost estimates, forecasts budgets, and assesses financial feasibility
Business Development, Project Planning
Contract Administration
Drafts, reviews, and manages project contracts, claims, and variations
Legal, Procurement, Project Management
Quantity Surveying (QS)
Conducts material take-offs, cost control, and value engineering
Engineering, Procurement, Construction
Procurement and Subcontractor Management
Manages supplier contracts, cost negotiations, and vendor compliance
Procurement, Logistics, Finance
Financial Reporting and Cost Control
Tracks project expenditures, cost deviations, and ensures payment approvals
Finance, Accounting, Project Control
Benchmark: The Commercial Department ensures that all projects remain within 5% of their allocated budget while maintaining compliance with contractual terms and financial targets.
3. Key Responsibilities of the Commercial Department
3.1 Cost Estimation and Budgeting
Develops project cost estimates and budgets based on tender documents
Evaluates cost implications of design changes and engineering modifications
Ensures all estimates comply with FIDIC, NEC, and KSA regulatory cost structures
Works with Finance to track and adjust project cost forecasts
Deliverables:
Project Cost Estimate Reports
Cost-Benefit Analysis and Financial Feasibility Studies
Cost Tracking and Adjustment Plans
Benchmark: 90% accuracy in cost estimates compared to actual expenditures.
3.2 Contract Administration and Risk Mitigation
Drafts, reviews, and manages client contracts, subcontract agreements, and supplier contracts
Ensures compliance with contractual obligations, payment terms, and risk mitigation strategies
Monitors contract variations, claims, and dispute resolution processes
Works with Legal to ensure adherence to Saudi contract law and FIDIC contract frameworks
Deliverables:
Contract Review and Risk Analysis Reports
Variation Order and Claims Documentation
Contractual Risk Mitigation Strategies
Benchmark: 100% compliance with contract obligations and legal requirements.
3.3 Quantity Surveying (QS) and Cost Control
Conducts material quantity take-offs and bill of quantities (BOQ) preparation
Monitors on-site material usage to prevent over-purchasing or waste
Identifies opportunities for value engineering and cost-saving solutions
Works with procurement to negotiate competitive material pricing
Deliverables:
Project Bill of Quantities (BOQ) Reports
Cost Control and Material Usage Analysis
Value Engineering Recommendations
Benchmark: Minimizing material waste to below 3% of total project costs.
3.4 Procurement and Supplier/Subcontractor Management
Oversees procurement of materials, equipment, and subcontractor services
Negotiates cost-effective pricing and favorable contract terms with vendors
Ensures supplier compliance with BEC Arabia’s quality and contractual standards
Conducts procurement risk assessments to prevent supply chain disruptions
Deliverables:
Procurement Cost Savings Reports
Vendor and Supplier Performance Audits
Procurement Risk Assessment Reports
Benchmark: Achieving at least 10% cost savings through strategic procurement.
3.5 Payment Processing and Financial Reporting
Verifies contractual payment terms and approves progress payments
Conducts cost reconciliation between estimated and actual project expenses
Works with Finance to generate accurate cost reports and profitability analysis
Deliverables:
Payment Approval Reports and Cash Flow Analysis
Financial Reconciliation and Cost Variance Reports
Budget Performance Analysis
Benchmark: Ensuring that 100% of payments are processed within contractual deadlines.
4. Compliance and Regulations in the Commercial Department
The Commercial Department ensures compliance with:
Saudi Ministry of Finance and Etimad e-Procurement System
FIDIC and NEC Contract Frameworks for international contract management
VAT and Financial Reporting Standards for Saudi Arabia
Anti-Corruption and Compliance Regulations in procurement and subcontracting
Benchmark: Zero non-compliance incidents in financial and contractual audits.
5. Digital Integration and Cost Control Monitoring
Technology
Functionality
Application in Commercial Department
SAP ERP
Cost Tracking, Budget Forecasting
Monitors project expenditures and financial reconciliation
Aconex
Contract Documentation and Claims Management
Manages contracts, claims, and payment approvals
Primavera P6
Cost Scheduling and Forecasting
Ensures project cost planning aligns with construction schedules
Power BI Dashboards
Financial Analytics and Reporting
Tracks budget deviations, cost savings, and financial KPIs
Benchmark: 100% financial transactions and contract data must be digitally stored and monitored.
6. Commercial Department Key Performance Indicators (KPIs)
KPI Name
Definition
Target Benchmark
Cost Overrun Percentage
Difference between actual and estimated project costs
Below 5%
Contract Compliance Rate
Percentage of contracts executed as per legal and regulatory requirements
100% Compliance
Procurement Cost Savings
Percentage of cost reduction through strategic sourcing
Minimum 10%
Supplier and Subcontractor Performance
Percentage of vendors meeting contractual obligations
Minimum 95% Compliance
Invoice Payment Processing Time
Average time taken to approve and process payments
Within 30 Days
Benchmark: All financial KPIs must be tracked and reported monthly for performance monitoring.
7. Conclusion
The Commercial Department at BEC Arabia ensures:
Strategic cost management and financial control for mega construction projects
Seamless contract administration, claim management, and dispute resolution
Effective quantity surveying to optimize material usage and cost control
Procurement and subcontractor management to achieve cost efficiency and quality compliance
Compliance with Saudi regulations, FIDIC standards, and financial reporting requirements
By integrating structured commercial management, digital tracking, and strategic cost control, BEC Arabia ensures profitable, compliant, and financially optimized project execution.
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