Experts in Project Controls, Commercial Management and Financial Analysis
Deep Dive Consulting
Situation- A supplier has made a claim for over £200k with respect to services provided in the past spanning across more than one financial year. The total claim of £200k is broken down into circa 100 claims of an average of £2k each with clearly spelt out Purchase Orders.
Task- The overriding task is to ascertain the validity of the claim and to settle the claim from the supplier as quickly as possible if of course it is a valid one.
Actions- First step is to investigate each claim from SAP Purchase Order system. Check whether the Purchase Order is valid. Check the services provided (dates critical in this case) and whether a Service Entry has been raised. Check whether the payment has already been made. Finally write a report on each claim and make appropriate recommendations supported by clear robust evidences. The evidences collected were the Purchase Order, the Service Entry and Payment Dates Effected.
Results- Most of the circa 100 claims investigated were rejected as they were already paid and only about £4k were valid claims. A report was sent to the supplier together with all evidences justifying rejections of the claims found duplicated. The supplier did not challenge our stand. We save the client around circa £200k.
Claims Could Not Be Justified By Supplier
Situation- The client operates a framework agreement for technical project management support. The supplier could draw down funding from its Purchase Orders only on the provision of services to the client. The supplier made a claim of circa £20k which was approved by Commercial but the Project Manager disputed this claim.
Task- The task is to ascertain the validity of the £20k cost in the project and to take appropriate remedial action as quickly as possible if of course it was not valid.
Actions- First step is to investigate the £20k by asking Commercial the basis of this claim. In the absence of valid business response from Commercial, the supplier was asked to provide underpinnings for this claim. The Supplier provided some reasons but failed to provide evidences.
Results- The £20k cost was investigated and was rejected as there was no commercial justification for this claim by the supplier. The amount was recovered from the supplier and the supplier did not challenge our basis of rejection of this claim.
Error In Purchase Order Contract
Situation- The client operates a project accounting system coupled with a self billing process with respect to some resource suppliers. One of the project accounts in SAP spitted out an unusual cost of over £100k whilst the cost for this project was supposed to be around £25k monthly as it was just a level of effort project.
Task- The overriding task is to ascertain the validity of the £100k cost in the project and to take appropriate remedial action as quickly as possible if of course it was not valid.
Actions- First step is to investigate the £100k by going through the golden thread in SAP up to the Purchase Order system. Check whether the Purchase Order is valid as well as the Purchase Requisition. Check what services are being provided (rates, hours and allowances critical in this case) and what constitutes the self bill Service Entry. Check whether the payment has already been made. Finally write a report and make appropriate recommendations supported by clear robust evidences. The evidences collected were the Purchase Order, the Purchase Requisition, the Service Entry and Payment Dates Effected.
Results- The £100k cost was investigated and was rejected as there was a disparity between the manual approved Purchase Requisition and the Purchase Order in SAP. The £100k was for two months and it should have been around £2k for a month and hence the total cost should have been circa £4k and not £200k. There was an error in the Purchase System at the rate to be applied was confused with a monthly allowance. A report was sent to Commercial together with all evidences justifying the amendments to be made to the Purchase Order. The Service Entry was rejected and a new Service Entry was created so that the excess amount paid could be recovered from the supplier.