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During the busy season, the alignment between maintenance, procurement, technology and operations teams is critical to ensure service contractors deliver as negotiated in their contracts.
In some cases, audits have revealed issues such as poor contract compliance, invoice discrepancies and disconnected processes between procurement and contracted services.
Tracking thousands of invoices manually poses a significant challenge. Without automation, organizations risk losing up to 15% on contracted services due to inefficiencies in compliance management.
Just how bad can an audit be? Consider the case of Bechtel Power Corp. They were accused of overcharging the Tennessee Valley Authority (TVA) by almost $7 million for work done between 2010 and 2015.
According to the audit, $3.8 million was charged for “ineligible craft labor and related costs,” and almost $3 million in “ineligible and excessive craft labor costs for material handling.” According to the contractor, the audit did not accurately reflect its agreements regarding union labor.
7 ways companies lose value
For those uncertain about automating the work-to-invoice process, here are seven ways money may already be slipping through the cracks.
1. Contractors routinely leave 5-15 minutes early every day, but bill for a full shift.
When workers wait at plant gates for the owner to process paperwork, those hours are often billed as time worked.
In a typical 8-hour shift, contractors who routinely leave 15 minutes before their scheduled shift ends contribute to a 3% overbilling per craftsman.
Imagine having 50 or 100 craftsmen billing for 15 minutes extra per day. This can add up quickly, especially if they are billing excess time at an overtime (OT) or double-time rate.
2. Contractors routinely badge out late after their scheduled end time but bill at that time at the OT rate — without approval from the owner.
Ever had workers stay past their schedule to complete a job and end up getting hit with unexpected OT charges? Unapproved OT hours can quickly add to bottom-line costs. All supplier agreements have rules for when contractors are supposed to be paid OT, whether that is after 8 hours in a single day or after 40 hours in the week.
Consider technology that helps easily track and enforce OT rules to eliminate excess spending.
3. Purchase orders are frequently overspent with little visibility into why or which contractors billed more than estimated.
Many managers don’t have timely visibility into the funds remaining on purchase orders or the total number of purchase orders issued. Purchase orders must be closed out as soon as the job is done.
Without proper management and visibility into active purchase orders, companies could be leaving a blank check for contractors.
When an invoice doesn't describe the details of the work completed, it's impossible to know if anything's been added or if the work is being done in the agreed way.
4. Site rules are inconsistent regarding items such as emergency call-outs, holiday pay, weekend pay, rounding rules, grace periods, paid and unpaid lunch.
Every work site has different rules and procedures in place. Companies will continue to leak value without a way to enforce adherence to the site and payment rules.
For example, if a contract states that contractors do not get paid during lunch, but are still billing for their lunch break, can errors be caught on the invoice? That is another 30 minutes of extra pay that can quickly multiply if there are too many craftsmen on site.
5. Contractors step up their skills throughout the day without prior approval.
Skill compliance is often an overlooked area because companies don’t have a way to track or tie qualified skills to the individual worker. If workers are stepping up their skills, that means an increase in the hourly pay rates, which directly correlates to overbilling.
6. Contracts are unclear if per diems are paid or at what rate, resulting in inconsistent per diem billing across vendors.
Contracts clearly state which contractors receive per diems. But problems arise if not many people have access or knowledge of what was agreed upon in the contract. Per diem payments can have a big impact on the bottom line if they’re not managed effectively.
7. Offsite work is out of sight, out of mind. This leads to little visibility into the actual offsite work performed, but incorrect invoices are still getting paid — every day.
Is work happening at offsite locations? Many companies do not have a process to validate worker presence, or the actual hours worked at offsite locations. Without visibility into the work occurring at these locations, the risk of inaccurate billing remains.
Automating the work-to-invoice process
How myTrack can help
From early departures and unauthorized OT to per diem discrepancies and offsite work validation, myTrack addresses the most common — and costly — sources of contractor overbilling. Trusted across more than 400 sites globally, myTrack equips organizations with the tools to enforce contract terms, validate labor activity and maintain accountability at every stage of the contractor lifecycle.
A key advantage is the velocity of data. myTrack captures and surfaces real-time data on workforce presence, crew mix, time on site, schedule adherence and labor costs as the work happens — not days or weeks later. With access to daily actuals, managers have a clear, accurate view of labor performance and spend, enabling faster, more confident decisions.
Automating the work-to-invoice process
By automating time capture, applying site-specific business rules and tying contractor activity directly to contract terms, myTrack ensures labor is tracked precisely and paid only for approved work — no more, no less.
It also provides actionable oversight into who is working, on what tasks, at what rate — making it easy to catch issues like unauthorized skill-step ups, OT rule violations and overspent purchase orders before they escalate.
With myTrack, companies move from reactive to proactive contractor management —controlling costs, improving compliance and gaining full transparency across the work-to-invoice lifecycle.
For more information, visit managementcontrols.com.
