Contractor Audit
The insurance industry client, based in Farringdon and employing 6,500 people, was undergoing a significant three-year transformation programme. To ensure the effectiveness and efficiency of their investment in contractors, they engaged us to conduct a comprehensive contractor audit. The programme relied on a diverse team of 30 contractors, including 20 from top consultancies and 10 from various agencies.
The Requirement
The primary objectives of the contractor audit were to understand each contractor’s role within the transformation programme, assess their skill sets and day rates, identify opportunities to optimise costs by balancing contractor remuneration with market standards, and mitigate risks associated with losing critical contractors due to underpayment.
How We Helped
We conducted detailed interviews and meetings with the client to understand the scope of the transformation programme and each contractor's role. We collected data on current day rates and contract terms for all 30 contractors and analysed the specific skill sets required for each role. Comparing the contractors’ day rates against industry standards and market rates for similar skill sets and roles, we identified discrepancies where contractors were either overpaid or underpaid.
Evaluating the performance and impact of each contractor on the programme, we provided tailored recommendations for each contractor, including replacements, rate adjustments, and retention strategies. To address challenges such as resistance to change, market volatility, and sensitive negotiations, we maintained open and honest communication with all stakeholders to explain the rationale behind the changes. We introduced changes in phases to allow for smoother transitions and minimise disruptions to the programme. For critical contractors identified as underpaid, we recommended tailored retention packages that included not only rate increases but also other benefits such as extended contracts and performance incentives.
Results
The contractor audit yielded significant positive outcomes:
Cost Savings: By replacing 18 out of the 30 contractors who were identified as being overpaid and adjusting the rates for 4 critical underpaid contractors, the client realised substantial cost savings:
- Saved £300-330 per day on 12 contractors.
- Saved £450-500 per day on 6 contractors.
- Total annual savings amounted to £1,524,900.
Optimised Contractor Performance: Ensuring that contractors were paid according to market standards helped improve overall morale and productivity within the team.
Risk Mitigation: By addressing the risk of losing underpaid contractors through proactive rate adjustments, the client secured key talent crucial for the transformation programme’s success.
In conclusion, our strategic contractor audit not only optimised costs for the client but also enhanced the overall effectiveness and stability of their transformation programme. This case exemplifies our consultancy's commitment to delivering value through meticulous analysis, strategic recommendations, and innovative solutions. Due to the significant cost savings, quality of replacements, and detailed honest analysis of the workforce, we were granted exclusivity on all positions moving forward, with the organisation confident in the cost-saving measures and the ability to supply a high volume of quality contractors.