Case Study: Effective Invoice Analysis |
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The process of managing an engine through an overhaul is both complex and time consuming. EVS manage a number of engines for various owner/operators and have a significant data set of repairs/overhauls for major engine types. Through effective management in all aspects of the repair, and skillful invoice analysis, EVS has been able to secure excellent savings for their clients. In the case below, EVS were involved with the management from contract negotiation through to completion and MRB.
The Scenario
After carefully crafting the contract and advising the client of all the usual pitfalls, engines were sent to a global MRO for repair. At an early stage it was apparent that there were significant opportunities to affect savings for the client. The contract stipulated that material purchased from the market had to be supplied at cost plus a handling fee.
The Situation
In order to make sure that the MRO facility provides material at the best price on offer in the market, EVS looks at all high cost scrap material from the engine being overhauled, and obtains quotes with appropriate paperwork. In some cases the MRO will then purchase this material from the market, in others the data serves as a useful benchmark when final invoice costs are received.
The Conclusion
In this instance significant differences between market prices obtained by EVS, and those charged on the MRO’s final invoice, strongly suggested that parts were being charged well above the contracted rate. As a result we were able to challenge the costs, and prove that in some cases the MRO had bought parts from the market and marked them up by as much as 900% before adding the approved mark up.
The case was put to the MRO and after thorough investigation, a credit of $789,000 was agreed to be split over 2 engines.
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