The award of a contract is only the beginning.
It is imperative that a cost control framework be in existence from day one, in order to identify, associate, and monitor performance of contracts. We can provide an effective means of implementing such a framework; one that will provide you with confidence in what you are paying for and what you are receiving.
Our contractor reviews are tailored to each contract in order to ensure contractual compliance with the specific terms and conditions of each contract and our contractor reviews are geared toward making absolutely sure that you are receiving the best value possible.
We can conduct regular compliance or forensic examinations of all aspects of the contract, in order to provide you with a complete, transparent, picture of the financial management and operational performance of the contractor ensuring that the agreement is being executed in accordance with the intent of all parties to the contract.
There are many benefits realized in performing effective contract compliance reviews:
Audits should be initiated when the customer’s relative leverage to change processes or recover overpayments or missed discounts and rebates is strong. Looking at a traditional cumulative spend curve for a contract (see below) there is optimal range to execute an audit.
Control audit: typically, auditing during the early cumulative spend period gives the customer an understanding of the contractor systems, controls, and supporting documentation being generated to support costs billed to the customer. The majority of audit issues and recommendations relate to improving communications, streamlining processes and avoiding future overspend.
Recovery audit: audits executed toward the end of the cumulative spend spectrum are usually considered "Recovery Audits". The objectives of a recovery audit are to determine whether any contractor charges are not valid, do not relate to the project, were duplicated, paid on a prior invoice or are overstated. These audits need to occur while the customer still has leverage to collect overpayment amounts from the contractor.
It is essential for all parties of the contract to realise from the initiation of the agreement that it is a best practice activity to regularly perform contract audits. From our experience the earlier our involvement in Contractor Audits the greater the benefits for our clients.