Overbilling Examples

 
Labor
Type of Cost SavingsDescriptionResultCost Savings
Overbilling occurring daily at each site Contractors routinely leaving 5-15 minutes early every day but billing for a full day. Contractors overbilling Loss in Productivity Client 1 = $2.1M savings Client 2 = $822K savings Client 3 = $1.5M savings
Overbilling occurring daily at each siteContractors routinely badging out late (after schedule) and billing that time at the OT rate without approval from the ownerContractors working unapproved OT and billing at the higher OT rate; unapproved OT percentage 40%+Reduced OT from 40% to <5% resulting in $2M/yr savings; Other client examples include:Client 1 = 25.5% of unapproved OTClient 2 = 11.5% of unapproved OT
Use of schedules was not a common practice Due to automating the service to cash process and integrating TRACK and their ERP system, the owner was able to reduce their daily count of time keepers by 80% Resulted in a re-purpose of time keeper resources to other value added activities $2M/yr reduction in contractor support
Unapproved Offsite Time Contractor resources were frequently leaving the site and charging hours to their jobs without the owner's approval.  The owner was paying for activity they had no line of sight to and couldn't confirm progress or even needed. Resulted in owner requiring contractors to  seek approval via TRACK for all off site work to be charged back to the owner and POs/WOs $800k uncovered in for a review of only 1 month's time
Unapproved Travel TimeThirty (30) vendor resources were charging six (6) hours/week each for travel time to and from the site.  The contract did not allow for travel time to be charged.Resulted in 9000 unapproved hours of travel time per year$720K savings/yr
The Rounding Phenomenon (Overbilling) The contractor bills the minimum billable increment of time at 1/2 hour and would round up in their favor.   Contractors were staying one minute past the hour so they could bill for an additional half hour each day. Over Billing$300k/yr
Inconsistent lunch rulesContracts not clear if lunch is paid. Some contractors billed lunch, some contractors didn't.30 minutes over billing occurring everyday for each resource.$500K/yr
Automation allowed a reduction contractor support resources Due to automating the service to cash process and integrating TRACK and their ERP system, the owner was able to reduce their daily count of time keepers by 80% Resulted in a re-purpose of time keeper resources to other value added activities $2M/yr reduction in contractor support
Equipment
Type of Cost SavingsDescriptionResultCost Savings
3rd Party Equipment Mark-up Owner removed 3rd party equipment markup out of contract; Contractor continued to bill markup for 8 months until TRACK was implemented and it was discovered.Over billing - TRACK was implemented and the owner discovered the situation and prevented it from going further $1M/yr
Equipment Double DippingContractor was accidentally billing pieces of equipment under two different PO's in one day.  Owner was paying for each piece of equipment twice daily.Double billing-
Phantom Equipment Contractor was charging for equipment that was never on site. Owner addressed with vendor -
Missed Equipment DiscountsContractor charged the higher weekly rates for equipment no matter how long the equipment was used because the contractor's billing system couldn't handle the lower monthly rates that were agreed to in the contract.Over Billing; This practice stopped once TRACK was implemented$1.2M/yr
Equipment Double Billing The same piece of equipment was utilized on the day and night shift.  The contract had a daily rate and daily fuel surcharge  (24 hour period). The contractor billed the daily rate and surcharge twice each day. Over billing:  This was identified when TRACK was implemented -
Materials
Type of Cost SavingsDescriptionResultCost Savings
Material Double DippingContractor billed for materials they are contractually obligated to provide, such as PPE, etc. Over Billing -
OverbillingOwner was purchasing materials from a vendor that was adding a 10% markup that wasn't agreed to in the contract.  Owner was unaware that this was occurring for years with a nested contractor. Owner renegotiated contract and now supplies materials to vendors to avoid markups -
OverbillingThe contractor was including tax, freight and surcharges in the markup. Over Billing - TRACK was implemented and prevented the contractor from this practice -
Unapproved Material purchases The contractor purchased many different types of materials (office supplies, bicycles, calibration equipment, etc.) without permission of the Owner and billed them (with markup).Over Billing - TRACK was implemented and all materials were reviewed before authorization. $100,000+