The challenge
The client needed to manage and review multiple contracts in relation to the work completed by its contractors to test whether payments which suppliers had applied for should be paid. The contracts were variously NEC fixed price, target cost or cost reimbursable contracts. Each contract had unique clauses, such as caps on the number of hours that could be charged, and each contractor was responsible for demonstrating how they had complied. When our work started there was a significant backlog of years of payment applications which needed to be sampled.
How we helped
We deployed mixed teams of accountants alongside infrastructure and commercial experts to review costs. The reviews ensure that costs paid are contractually justified and supported by evidence and records. Adverse cost findings are categorised either as ‘recommended for removal’ or ‘requiring further substantiation’.
Alongside the cost reviews, we also provided wider commercial observations, for example on controls, risk management and procurement processes applied to main contractor’s supply chains. After the reports have been issued, we also help to ensure that actions and recommendations are closed out and improvements made by the client and its supply chain.
The client particularly benefitted from the continuity of service provided by our committed team, meaning experience and learning over multiple years of support remained in the client organisation.
The results
We were able to help the client enforce contract rules across the entire application for payment, enabling us to check 100% of the available information and provide comprehensive assurance to the client on how the value of allowable costs had been calculated.
By automating the process, we also delivered a significant reduction in the review time required for each cost submission – from approximately five weeks to less than three days. Our team also identified approximately £10 million of cost as being potentially disallowable, and these have been recommended for removal.
About our team
Our advisory team brings a mix of infrastructure industry experience and accountancy and financial services rigour to the benefit of our clients. Like this one, all of our assignments are led by a highly visible Partner or Director who will continually liaise with the client to ensure their needs are met whilst leading teams of talented consultants, accountants and advisors who care about what infrastructure provides for us all.
