Equipment & Labour Supply
in the Mining Industry

Contract Compliance Technology and Contract Compliance Audits

BHP

Organisations find it challenging to automate invoice compliance against contract terms across all spend categories. With Profectus’s Contract Compliance (CC) technology and services, invoices are checked at line-item level and validated against the contract pre- or post-payment.

The CC technology also provides clients access to low-level data for reporting and highlighting spend optimisation opportunities. BHP engaged Profectus to audit key service suppliers to validate contract compliance.

Errors Identified

Equipment hours Duplicate Charge

Within 12 months of invoices, the vendor charged for the same equipment usage multiple times in error.

Equipment Hours Rate Error

The vendor overcharged for equipment usage than what was agreed upon within the contract.

Gate Records highlighted Absent Workers

Workers who were not on-site during the given period were still invoiced for that period.

Gate Record Mismatch vs. Invoice

The invoice is for more hours than the manpower was on-site.

Unallocated Labour Hours on Invoice

Extra hours being charged on invoice that do not match the invoice s own detailed records.

Audit Outcome

Profectus performed an in-depth analysis on the BHP invoice data for the 12 months prior, reconciling the invoice data against agreed contractual rates, machine-hour details, and internal BHP gate records.

Through Profectus’ Contract Compliance Audit, overcharges of 7.1% of BHP’s total annual contract spend was uncovered, equaling to $237k in value of errors identified.

Cost of Errors Identified

Solution

Profectus offers an ongoing compliance framework validating future invoices prepayment and reviews recent historical invoices.

Compliance Automation

With low-level data from the contract and invoice, the potential for human error was removed.

Spend Optimisation

Better decisions are made with more data available and deeper levels of visibility via a data feed into BI dashboards.

Better Bottom Line

As this document has identified, 7.1% of an annual contract spend was the result of overcharging, including five error types for the world’s largest mining company.

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