AssetQS Saves £Millions on Large Repair Contracts!
Typically in multi-million pound repair contracts around 10% of the cost can be suspect.
However, Quantity Surveyors have a difficult job on their hands in this type of situation. They are faced with the task of analysing a very large quantity of information, verifying whether or not it tallies with the activities that actually happened on the ground and then quantifying the overcharging. As if that was not difficult enough, few systems make it easy to see a full history of works carried out at each location.
AssetQS is a tool designed to audit large Schedule of Rates repair contracts. It's main function is to suggest areas for potential savings and provide workflow processes to propose, agree and then certify the reduced costs.
Getting a Clear Picture of Contract Activity
People responsible for large multi-million pound repair contracts want answers to questions such as:
Is the budget on track?
Are enough repairs being carried out on time?
Where can we save money?
Where are repairs not cost effective?
Are Schedule of Rate codes being used in ways that contravene contract terms? If so where, how and what figure can be reclaimed?
What kinds of activity is the money being spent on and what is the breakdown in percentage terms?
Which are the most frequently visited premises?
Which places are costing the most to maintain?
Is Preventive Maintenance preventing the number of breakdowns sufficiently?
Which Rates are getting used the most? Where, when and at what cost?
What value of works is being carried out under the MANUAL SORCode and what is the break down by rate category?
AssetQS enables all of the above questions to be answered easily.
What Kind of System is AssetQS?
AssetQS is a specialised “Data Warehouse” that imports repair data largely from spreadsheets.
It makes available a wide variety of information on repair histories, rate usage and suspected overcharging at the click of a button.
This, in combination with a wide range of analysis reports and workflow routines, enables Quantity Surveyors to keep an overall view of contract activity, and to reclaim overcharged costs.
Why not find out more? Call us now on 020 7622 0169 to discuss your requirements.
You get to keep on top of contractors - uncovering invoicing irregularities and analysing their performance, whilst at the same time increasing your ability to treat them fairly.
Extensive reporting functionality enables all concerned parties to be kept aware of budget expenditure in a format appropriate to them.
Thoughtfully designed user interface enables rapid use - you do not need an army of administrators to monitor very large contracts.
AssetQS identifies and calculates two main areas of overcharging:
In-Warranty Claims: where the same kind of activity has been charged more than once on the same Property during the warranty period for that activity. For example “Replace Pump” should not normally happen more than once per year.
Over-Claims: where items are charged twice incorrectly in the same order.
Clear screens are provided to make it quick and easy for Quantity Surveyors to set up the parameters so that In-Warranty Claims and Over-Claims can be discovered by an automatic process.
AssetQS even enables uncategorised rates (sometimes coded as MANUAL) to be included in the overcharging discovery process.
Acme Borough Council, Estate Property Management Department employs large private contractors to carry out repairs of boiler houses and domestic heating systems, in thousands of blocks throughout the very populous London borough.
In order to get good value for money the council employed an independent Quantity Surveyor (QS) company to carry out an oversight function. However despite this arrangement the council was still unhappy with contractor costs because insufficient suspected overcharging was being uncovered and reclaimed by the QS company.
Therefore there was a plan at the council to bring the process of oversight in-house. As such a reorganisation was already under way and a small number of highly professional people had been hired by the council. The overall plan, if all went well, was to replace the external QS company with these in-house people.
One of the new professional people (who can be called “Fred” here ) had been transferred from another department. We had got to know him well because he had inherited our existing AssetQS system which had been monitoring a variety of repair contracts since 1996. (In 1996 it saved the council nearly £400k in lift repairs by rejecting duplicate invoices. In June 2006 it identified the unexplained disappearance of a contractor discount from Acme Borough's mainframe, saving the council potentially tens of thousands of pounds.)
One day Fred called and told us about a big new heating repairs contract he would soon be responsible for. The approximate value was £12m /annum with an expected volume of 9000 orders per month and he wanted us to quote a price for a system to help him ‘QS' it. To cut a long story short we quoted him a £40k system, but this was rejected by Acme Borough's IT department on the grounds that he should be able to use their mainframe computer in combination with manual scanning of orders on Excel spreadsheets.
Within a few weeks, however, Fred was on the phone again. “Our mainframe is the slowest, most tedious system known to man.” he said. “We've hardly been able to challenge anything.”
(This was obviously perplexing for me.)
“It takes far too long to look at the details of each order, and we're losing the will to live.” He added.
Again, to cut a long story short he persuaded us to write them a system for a reduced budget. We agreed a specification and began coding, but we were irked by the knowledge that he still was not going to get the system he needed to do the job properly.
Then, one day in the Acme Borough offices I overheard the new head of department - who called himself a “poacher turned gamekeeper” - in a heated conversation about “double bubbling”
“Double Bubbling?” I thought, “What on earth is that?”
I knew he was talking about coded works, in which repairs are valued using a “schedule of rates” (standard prices for materials and labour), and this was what all versions of AssetQS had always used to do their calculations, but double bubbling was a term that was new to me.
In due course we learnt that double bubbling is a method of overcharging commonly used by contractors on schedule of rates (SOR) contracts, to add on charges for items that should be included in another item. For example: the code and price for “Supply and fit Boiler” would normally include the first metre of pipe work, but this often gets added on to the invoice with a separate code and price.
We decided to add a discovery mechanism into the new version, to automatically find and list examples of this type of overcharging, and asked if there were any other methods of overcharging he knew of. A meeting was convened in which all the experienced QSs and contract managers were assembled and asked what kinds of irregularity they were looking for in repair contracts. This provided us with a mine of information on how to design their ideal system.
We coded a number of discovery routines into AssetQS3 and ran them on the past six months of repair data. The results were staggering - over 14% of contractor costs showed up as potentially reclaimable! On a £12m contract that was going to be the order of £1.7m. At this point we realised our program uncovered something that was going to be very valuable to the council.
From looking at the “overclaimed” items we had become aware that they were mostly small in value but quite numerous. This posed the challenge of how users were going to manage a workflow involving high volumes of information. Contractors expect to be given a reason why their charging is being challenged, but Acme Borough didn't want to hire an army of administrators to type in a reason for challenging each and every order.
So AssetQS now includes a variety of routines and features to automate much of this workflow. For example large groups of selected items can be simultaneously processed in bulk, with “reclaim reasons” being applied whilst all necessary recalculations are carried out at the same time.
Having uncovered so much overcharging with so little effort, the Estate Management Department are now seriously considering adding further high value, high volume contracts to AssetQS.
The department head is extremely pleased with the savings being achieved and the relatively low cost of achieving those savings.
Their plan of bringing the oversight process in-house has been a great success.
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