Contract & Commercial Management in the Public and Private Sector
By Levant Consulting | Policy & Practice Series | June 2026
The Problem Nobody Names: Weak Contract and Commercial Management in Pakistan
Pakistan loses billions of rupees every year — and weak contract and commercial management Pakistan relies on is the common thread. Poorly structured contracts, missed obligations, unmanaged risks, and claims that never get resolved all trace back to the same gap. Infrastructure projects overrun. Energy agreements bleed the treasury. Public procurement delivers less than it promises. Yet this discipline stays overlooked, in both the public and private sectors.
This isn’t an abstract governance problem. It’s practical. It’s measurable. And it’s very expensive.
What Contract and Commercial Management Means for Pakistan
Contract and Commercial Management (CCM) covers a contract’s entire life. It starts with scoping and risk allocation. It continues through negotiation, execution, and performance monitoring. It includes variation management, dispute resolution, and closeout. The goal: maximise value and minimise risk for everyone involved. Strengthening Contract and Commercial Management in Pakistan means investing in every one of these stages — not just the moment of signature.
CCM differs from procurement, which ends at award. It also differs from legal review, which focuses only on enforceability. CCM keeps managing the relationship after the ink dries. It asks the questions that matter: Is the contractor delivering what was agreed? Who owns this risk? What are our entitlements if performance falls short? What happens when scope changes?
The global contract management market was worth USD 3.23 billion in 2025. It’s projected to reach USD 10.50 billion by 2034 — a 14% annual growth rate. The world’s leading organisations are taking this seriously. Pakistan, by and large, is not.
The Global Benchmark: What Good Looks Like
Countries that invest in CCM consistently outperform those that don’t. In the UK, the National Audit Office found systemic weaknesses in government contract management back in 2015. The response was a decade-long reform programme. Today the UK spends roughly £407 billion a year on public procurement — about one-third of total public spending — and treats commercial management as a professional discipline in its own right.
Australia and Canada tell a similar story. Standardised contracts, dedicated PPP units, and trained commercial managers cut cost overruns and improved investor confidence. World Commerce & Contracting, the global professional body for CCM with over 80,000 members, has found the same pattern again and again: organisations with mature commercial management capabilities recover more value from their contracts, and face fewer disputes.
The lesson from every mature market is the same: commercial outcomes are shaped long before dispute arises — in how contracts are written, allocated, and actively managed.
Contract and Commercial Management Pakistan: The Data Is Uncomfortable
Infrastructure: Delays and Overruns as the Norm
A study looked at 65 construction projects built by Frontier Works Organisation. The results: 97% suffered delays, and 90% saw cost variation. 74% ran over budget outright. The average cost overrun was 28.27%. The average delay was 2.1 years per project. Government department projects fared worst — cost overruns there averaged 37.59%.
Research on highway projects in Sindh found the same pattern. Poor contract management. Inadequate planning. Slow decision-making. These were the leading causes of cost overrun — not technical complexity, not external shocks. Just failures of commercial process. Pakistan’s public infrastructure claims crisis shows the same root cause at work: unresolved disputes and cost overruns that trace back to how contracts are managed, not to funding or technical difficulty.
A 2025 international study confirmed it directly. In Pakistan, poor coordination and weak contract management topped the list of delay causes. They ranked above material procurement delays. They ranked above funding shortfalls too.
The Peshawar BRT project shows the scale. Costs jumped from an estimated USD 290 million to a projected USD 500 million — a 70% overrun. Contract management failures, at multiple stages, drove much of that gap.
The Energy Sector: A Generation-Long Contract Management Failure
No sector shows the cost of poor CCM more clearly than Pakistan’s power sector. The IPP agreements signed under the 1994 and 2002 power policies included take-or-pay terms, dollar-indexed returns, and sovereign guarantees covering market risk. They also committed to 15% equity returns in dollar terms. In effect, they shifted nearly all commercial risk onto the public purse. Three decades later, the bill has come due:
| PKR 1,300bn annual capacity payments to IPPs | PKR 2.6tn accumulated circular debt | PKR 1.225tn borrowed in a single day to prevent sector collapse | $724M SOE net losses, FY 2022–23 |
These aren’t the results of bad luck. They’re the direct consequence of contracts negotiated without commercial expertise, executed without ongoing performance management, and left to compound — with no one stepping in early, the way good contract management would demand. Decade-long losses at state-owned enterprises have totalled USD 20.05 billion.
Private Sector: Structural Gaps in Commercial Capability
The World Bank found that only 1.86% of Pakistani firms spent any money on R&D. Only 3.3% had introduced new products or services in the previous three years. These numbers point to an economy where firms compete on cost and relationships — not on commercial sophistication. The US Department of State’s 2025 Investment Climate Statement for Pakistan flags this directly: a lack of transparency in public-sector decision-making, and contract disputes, remain key challenges for foreign companies.
Why This Gap Exists
- No Professional Pathway. Pakistan has no widely recognised qualification or career path for contract and commercial managers. Lawyers, procurement officers, or project managers absorb the function instead. None of them can fully substitute for a trained CCM professional.
- The Low-Price Trap. Pakistan’s public procurement rules reward awarding on price. They give weak incentives to manage for value. Losses get pushed into the execution phase, where they compound quietly — until they become crises.
- Weak Institutional Memory. Government departments lack standard contract templates, commercial playbooks, or lessons-learned systems. Each new project starts from scratch. Old mistakes get repeated.
- No Consequence for Poor Management. Cost overruns and delays rarely trace back to specific commercial failures. Accountability almost never follows. Without consequences, there’s no incentive to invest in the capability.
What Pakistan Needs to Change
- Standardised Contracts and Commercial Frameworks. Standard forms cut transaction costs. They improve risk allocation. They give both parties a shared commercial language — well beyond PPPs, across every category of public works.
- Dedicated Commercial Functions. Major public entities — NHA, WAPDA, provincial works departments, large SOEs — need dedicated commercial management units. This protects public money. It isn’t bureaucratic overhead.
- Professional Training and Certification. World Commerce & Contracting offers globally recognised certification. Pakistani universities could build aligned programmes. Training a generation of commercial managers costs little next to the price of one major contract failure.
- Performance-Based Contracting. Shift from input-based contracts to output- and outcome-based ones. Specify what will be achieved — not just what will be done.
- Early Commercial Involvement. The costliest mistakes happen before signing. Commercial expertise needs a seat at project scoping, feasibility, and tender design — not a summons after the crisis hits.
The Opportunity Cost of Inaction
Pakistan is actively courting Gulf sovereign wealth, multilateral DFIs, and regional infrastructure investors — the same pool of blended and institutional capital Pakistan is courting for its infrastructure pipeline. Every serious investor checks more than project fundamentals. They check the commercial management capability of their public-sector counterparty too. Pakistan’s IPP contracts left a reputation behind: a country that signs agreements without fully grasping their commercial implications. That reputation genuinely deters the calibre of investor Pakistan needs.
A real, visible shift in how Pakistan manages contracts would send investors a far stronger signal than any policy announcement could.
Conclusion: Why Contract and Commercial Management Pakistan Can’t Ignore This
Contract and Commercial Management is not a back-office function. It’s the discipline that turns agreements into outcomes, risks into managed positions, and relationships into long-term value. Weak Contract and Commercial Management in Pakistan carries a real cost — measured in trillions of rupees, in a power sector that bleeds the economy, in infrastructure that costs twice what it should and takes twice as long to build, and in investors who stay cautious.
The discipline exists. The global standards exist. The training pathways exist. What Pakistan needs now is the will to treat Contract and Commercial Management as a core capability — not an afterthought — in both the public and private sector.
The price of continuing to ignore it is one Pakistan can no longer afford to pay.
LEVANT is a civil engineering and water resource consultancy with expertise in infrastructure project delivery, donor-funded programmes, and technical advisory services across South Asia. For enquiries on commercial management advisory or capacity development, visit levantc.com
Sources: World Commerce & Contracting · National Audit Office (UK) · Leeds Beckett University / FWO Projects Pakistan · World Bank PPI Database 2024 · PIDE Pakistan · IEEFA Energy Report 2024 · US State Department Investment Climate Statement 2025 · Fortune Business Insights Contract Management Market Report 2026 · The Friday Times · Express Tribune · TransPeshawar 2020
