Case Study
How Coria’s Digital Cost Assurance improved National Highways’ actual cost confidence
The IPA and NAO has reported that across government and ranging from small simple schemes to mega complex schemes that a traditional approach to commercial assurance can contribute to 12 - 48% of overspend.
National Highways, one delivery arm of the government, is responsible for operating England’s motorways and major A roads - the backbone of the nation’s transport network. It keeps vital routes moving for millions of drivers every day, with safety as its top priority.
It is also responsible for managing investment in the strategic road network through major replacements and enhancements, delivering complex projects that cost billions of pounds.
Following research in 2023, commercial reviews reflected the IPA findings that traditional approaches to commercial assurance were contributing to significant project overspend towards the midpoint of IPAs range.
Traditional approaches to project cost assurance were seen to be heavily dependent on manual activities with only basic software tools in use to help deliver complex tasks in severely pressured time limits.
In an attempt to counter this National Highways procurement of cost assurance contracted assessment of costs using a sampling methodology. (80% of the cost from 20% of the cost data per month on a rolling basis to cover all cost data every 6 months).
This sampling was however compromised by poor administration of the contract commercial terms where forecasting and reconciliation compounded the accuracy of payment certification. What the reviews found was inefficient, inaccurate, incomplete and inconsistent outcomes. However the real kicker is that all this data is used multiple times throughout project controls, meaning the ripple effect of this poor data input and handling also manifests into poor data-based decision making.
So, for the infrastructure industry to adopt technologies forming part of Construction 4.0 there is demand for the automation of processes which leads to better use of specialist’s time, improving “should cost” accuracy, and better empowerment of innovation from the supply chain by harnessing the power of digital tools in collaboration with human talent.
Working with National Highways and one of its key construction suppliers, the Coria team used low-code, rapid development, tools and process analysis to design and build a hyper-automated cost data management solution called Digital Cost Assurance, automating as many manual activities in the cost assurance process as possible.
As part of our design and build strategy, Coria employed an agile approach to swift prototyping with quick, iterative feedback to improve the software as it developed.
Development required a design steering group to understand the Client’s protocols, governance, internal systems and ambition. It required an understanding of the construction communities cost data production and finally required an understanding of the contracted agreement between parties.
As part of our discovery process, we recognised and understood how to use the existing contracted data standards ensuring compliance and governance in a political environment where scrutiny is more intense than ever.
The introduction of an automated solution means data can be accepted as raw cost data from the construction suppliers ERP system and doesn’t require the Contractor to compile a project ledger. By pre-agreeing with the parties, the analytical rules for the system, in line with the contracted agreement, data is pre-sifted at source.
This means that assurance checks on invoice data that previously took days now takes minutes. As a result, the capability now exists to assure 100% of all costs rather than a sample-based approach driven by constrained timeframes and limited resources.
This ensures consistent and standardised data analysis, that improves confidence through governance, verification, and continuous audit, creating consistent and reliable results faster, and ultimately reducing the number of people and manual hours spent on cost process and analysis.
The automated assessment process based on the contractual requirement to provide accounts and records to substantiate what will have been paid by the contractor before the next assessment date.
Specialists then have an elevated workload moving from sample based random checks to meaningful assessment that demands better use of their highly valuable skills, enabling them to achieve more with their time and protect the client’s interests more effectively. By providing analysed data to the cost specialists in minutes we allow for data submission on day minus one of the assessment dates. This reduces forecasting inaccuracies and the need for retrospective reconciliation, makes agreement of actual cost easier and reduces the stress and pressure of the team involved.
A crucial part of the work done in conjunction with the software development team was to understand what impact the use of process automation has on people and the contracting parties processes, protocols, and governance. As part of the development of Coria’s’ solution behavioural, business and people, changes are addressed in parallel by specialised advisors and coaches to optimise the benefits of Digital Cost Assurance
Ultimately, automating the assessment of Applications for Payment reduces risk, improves certainty of cash flow, and allows outturn forecast confidence by feeding project controls and management with reliable data that establishes and maintains Digital Trust.
Traditional methods of cost assurance deliver a suboptimal outcome that is typically based on 20% sample data. This creates an opaque risk for clients, such as National Highways. Clients consider the outsourcing of cost assurance to professional service providers as risk mitigation, where evidence from the market shows that this risk is not being mitigated.
When overspend becomes a reality clients then resort to independent audit and attempt to claw money back after the event, which is both time consuming and costly.
Coria’s Digital Cost Assurance solution enables 100% review at each assessment date and real time problem identification, creating better value for public money.
Benefits
For National Highways, the primary benefits are:
Reduced time through consistent and automated compiling and assessment of payment certificates
Reduced waste through improved consistency across projects
Reduced financing overheads and inaccuracies through faster and more reliable cash flow
Improved wellbeing of staff through the lessening of stress and anxiety across the commercial community
Mitigated risk achieved through building greater confidence from accurate, consistent cost assurance
There are a wealth of additional benefits including better contract compliance due to the more rigorous and standardised process, improved quality due to real time identification of rework and error, a transparent and consistent financial dataset, as well as the potential for construction partners to deploy the solution to manage information throughout the supply chain.
Finally, as part of Construction 4.0 and, more specifically Infrastructure 4.0, the shift to AI, IoT, and PA, is paving the way for better use of specialist’s time, improving “should cost” accuracy, and better relationships with the supply chain by harnessing the power of digital tools in collaboration with human talent.
“Coria’s agility in thought, and focus on delivery, has been immensely helpful in developing an Automated Cost Assurance capability as a critical solution alongside the business changes required to optimise its use. The results have the potential to change the industry. We look forward to expanding this solution to help manage value for money.”
