You are only as good as your last contract

Plant operatoAll is under controlrs manage complex assets valued in the billions. It takes thousands of employees and contract craftsmen to keep it all running. Plant maintenance budgets are in the 100’s of millions of dollars annually, most paid to contractors. A lot of money flows through your contracts. Are they up to the challenge?

Operators focus on safety and production. Process control systems, plant upgrades, and sophisticated reliability systems have added to your ability to assure quality and profitability. Yet contracts are routinely negotiated and executed in the same fashion as in days gone by.

Labor cost control efforts seriously lag behind plant investments. Contracting proliferated but rarely encourages productivity and effectiveness. Contract negotiations center on controlling labor rates; little attention is paid to labor volume (rate x volume = cost). Large, multi-plant manufacturers spend billions annually on projects, maintenance and turnarounds without disciplined contract cost controls.

Visibility Leads to Better Performance

A full view of contractor activities provides a more accurate picture of performance leading to improved control of contracted service cost. Service cost is a function of labor volume x labor rate. Project managers typically aren’t sure of contractor headcount throughout the day. Headcount is just half of the volume calculation (headcount x duration = volume). You can’t complete the volume calculation without duration information: how long was each craftsman on-site today. Do you know how many contract craftsmen are required for the activities scheduled today? There may be craftsmen on-site with no work to do or worse yet, work scheduled but no one on-site to perform the work.

Evaluating contractor labor volume can be accomplished with an investment in the right contractor service cost management system. This solution starts with technology to assure “proof of presence”. Plant-wide RF/ID access control systems and mobile/GPS remote worksite tools are the frontend. Contract compliance software like Track from Management Controls, Inc. guarantees timesheet and invoice accuracy. The solution is rounded out by proven interfaces to your ERP and planning and scheduling systems, typically SAP and Primavera. Think of the combination as one-stop-shopping for automated contract cost control.

Ask yourself, “Have these contractor invoices been validated for accuracy of hours claimed?” “How about these charges for equipment use and supplies. Are they permitted under the contract?” “Have vendor invoices been automatically compared to contract terms and rates before being presented for my review and approval?”

Managing multi-million dollar turnarounds, routine maintenance and capital projects without a robust contractor management system is managing in the dark. Without visibility of accurate labor hours, equipment usage, supplies and materials consumed contract rates and terms, crew mix, safety procedures and progress against work orders and POs, managers of large contracted work forces are vulnerable to late delivery and busted budgets. Management Controls, Inc. has more than twentyfive years of industrial software experience addressing the complexities of contractor services management.

A Contractor Services Management Solution (CSM)

So how valuable is confirming contractor invoices are paid only after validating hours, materials and equipment compliance to a well written contract? Management Controls identified a consistent 5 – 15% error. Track helps plant owners unlock real value in their contracted services by having better visibility to the entire contracting process and data set.

Today Track software is implemented in 85% of North American refineries, in chemical plants, in pulp and paper, power generation, steel manufacturing and mining representing over 225 sites worldwide. Today, Track processes over $30 billion per year in contractor invoices.

Management Controls designed automated contract compliance into the Track software suite by capturing labor volume from access control systems and comparing those hours to contract terms, conditions and rates. Newly released Track Mobile extends Track’s value to remote operations where there are no gates or fences.

Visibility Leads to Better Forecasting

Forecaster by Management Controls works with data from Track, Primavera and SAP to evaluate daily progress and total cost of projects large and small. Clients using Track and Forecaster routinely forecast project completion and cost with 98+% accuracy. The data in Track has become an instrumental data source to reduce costs, make faster, smarter decisions and create better outcomes.

Management Controls clients match Smart Contracts with the right contractors. Owners work with contractors to develop Smart Contracts that suit the specific requirements of the work to be performed. Some jobs fit the time and materials model, some require lump sum and some are best suited to unit rate contracts. Knowing what contract strategy fits best with each project is good for both owners and contractors.

To learn more, ask for a demonstration of the Track Software Suite. We will be happy to show you how Track will work for your organization.

Visit our case studies to see actual Track clients. Call us at 800.532.8348 and visit us at www.managementcontrols.com.

Leave a Reply

Your email address will not be published. Required fields are marked *