Whether it’s handled in-house or managed by an outside service provider, the facilities management process can open your organization up to financial risk. Contractual complexities, a multitude of vendors and lack of transparency all contribute to profit leakage (excess costs resulting from poorly administered or noncompliant billing practices). Utilizing a facilities management contract audit can help you overcome these challenges while delivering added value to your organization.

Large companies with multiple locations nationally or globally often engage the services of an enterprise facilities management company to oversee the full breadth of operations: hard and soft costs, energy use, security solutions, building and property maintenance, food service and more. While working with one vendor may seem simple, the contract for work at this scale is extremely complex – layers upon layers of opaque terms often involving global markets with unique regulations, multiple currencies and high spend amounts.

Contract audits are most typically performed for organizations with enterprise facilities management agreements, yet companies that choose to self-manage their facilities can also have a need. Their efforts to maintain a well-run workplace often involve a high volume of procurement work, resulting in a myriad of contracts with varying terms and hidden pitfalls.

Though it may seem counterintuitive to engage yet another outside partner for the purpose of auditing your facilities management contracts, the benefits of doing so can be significant. An audit partner – ideally one with specialized facilities management contract audit experience – can make these complicated situations understandable, delivering actionable insights and quantifiable value while avoiding friction with your vendors.

Here are three of the primary benefits of conducting a facilities management contract audit:

 

01: Compliance Assurance

When dealing with either the size and scope of an enterprise facilities management agreement or the multitude of contracts involved with overseeing facilities management in-house, it can be difficult to easily and accurately assess whether or not your vendors are in compliance with all of the agreements. These are just a few of the issues that can impede the process:

  • Very complex, high-spend arrangements
  • Global markets and regulations that vary by location
  • Transitioning from one service provider to another or the use of subcontractors

Compliance on average is typically found to be 95% or higher – but that still leaves gaps. By identifying those gaps and ambiguities, a facilities management contract audit enables you to effectively address and resolve them with all parties, leaving you in an optimal position for ongoing future compliance.

 

02: Spend Transparency

It’s critical to have transparency in your facilities management allocations so you have a full understanding of where your money is going. Are you getting what you expect from your vendors? Do you have sufficient visibility into your costs and are they in line with your budget? Was the budget correct to begin with?

A successful facilities management contract audit will dive into these issues and uncover the areas where changes and adjustments need to be made. Most errors identified are unintentional, and good facilities management vendors will be willing to make the necessary modifications to eliminate opacity and improve their results.

 

03: Cost Savings

Of course, one of the added benefits to conducting a facilities management contract audit is cost savings. By identifying billing errors, unsubstantiated or duplicate charges and other gaps, a facilities management contract audit can help your organization boost performance and get profit leakage under control. In fact, when acted upon and pursued through to recovery, these findings can often meet or exceed the cost of performing the audit.

Partnering with an experienced and specialized third-party facilities management contract auditor, your organization will be able to optimize your vendor relationships, improve compliance and transparency, tighten contract language, get alignment around billing matters and, ultimately, stop profit leakage.

 

Want to learn more?

Check out the Facilities Management Contract Audits for Future Cost Savings webinar for more information on how to select a facilities management auditor, why you should do it and what to expect from the process.

 

PRGX helps companies spot value in their source-to-pay processes that other sophisticated solutions didn’t get to before. Having identified more than 300 common points of leakage, we help companies reach wider, dig deeper, and act faster to get more value out of their source-to-pay data. Want to learn more? Contact us today to See What You’ve Been Missing™.

 

 


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