Fortune Global 5 Refinery Saves Over $2.1 MM In Only Six Weeks

A Fortune Global 5 Refinery asked MCi to provide an analysis of three contractor labor invoices for a 45 day period during their Spring Turnaround. By automatically applying the contractual terms and conditions, the actual access control system in/out events, and the skills and schedules for each contractor, the TRACK Platform identified $2.1 million of overpaid time in the span of 6 weeks. Extrapolating the 45-day loss, assuming a refinery has two Turnarounds a year and uses contractors for routine maintenance, the refinery is conservatively losing approximately $10 million a year in contractor labor billing.

Result Details

The owner provided TRACK with the original invoices for the 3 contractors involved in the analysis. The first table summarizes the invoices by Straight Time, Over Time and Double Time for a total spend of $18.1 million.

Invoiced Hour Comparison

Once the ACS Gate Log was automated and the owner’s pay rules and schedules applied, there was a significant decrease of Straight Time, Over Time and Double Time for a savings of 11.7%. These savings originated from offsite work validated by the owner, early out gate punches, late arrival gate punches and various other situations that weren’t aligned with the Term and Condition’s of the contract.

The table below shows the total calculations and what should have been invoiced and paid by the owner. The Owner paid $18MM for just these three contractors during the 45-day turnaround when they should have paid $2.1MM less.

TRACK Calculated Hours

Detailed Contractor Findings

Each contractor was analyzed fully and detailed below are the various findings. As you can see, each contractor had varying degrees of contractual compliance issues:

Contractor 1

• Hours on the invoice appear to be based on time-on-site rather than scheduled time.
• Billable time is routinely rounded up to the next half-hour increment. Even when only a few minutes of the half-hour is worked, the entire half-hour increment is billed.
• There are 479 occurrences of personnel arriving more than five minutes late.
• There are 906 occurrences of personnel exiting the refinery 10-20 minutes early.
• There are 223 occurrences where onsite time is less than two hours, but the corresponding invoice time is greater than four hours.
• Out of 7,254 invoice-detail lines, TRACK Platform found 4,546 discrepancies -- some of which are legitimate differences due to off-site work, etc.
• Out of 7,254 invoice-detail lines, 3,270 have discrepancies of two hours or less. This is significant because smaller variations are less likely to be explained as off-site work.

• The TRACK Platform-calculated invoice error rate is 8.89% on hours and 12.87% on dollars.

Contractor 2

• On five occasions, it appears that a four-hour minimum was used for billing. Procurement indicates that a two-hour minimum is contractual. Contract compliance is difficult when left to manual processes.
• There are 23 occurrences of personnel arriving more than five minutes late.
• There are 482 occurrences of personnel exiting the refinery 10-20 minutes early.
• Out of 8,941 invoice-detail lines, TRACK Platform found 3,041 discrepancies, some of which are legitimate differences due to off-site work.
• Out of 8,941 invoice-detail lines, 2,267 have discrepancies of two hours or less.

• The TRACK Platform-calculated invoice error rate is 4.99% on hours and 7.15% on dollars.

Contractor 3

• Hours on the invoice appear to be based on time calculated from first-in to last-out badge events. This method discounts interim time off-site and doesn't account for hours worked within schedule.
• A two-hour minimum was applied to all personnel regardless of hours worked.
• There are 23 occurrences of personnel arriving more than five minutes late.
• There are 994 occurrences of personnel exiting the refinery 5-10 minutes early.
• There are 24 occurrences of personnel exiting the refinery 10-20 minutes early.
• Out of the 6,315 invoice-detail lines, TRACK Platform found 918 discrepancies, some of which are legitimate differences due to off-site work.
• Out of 6,315 invoice-detail lines, 610 have discrepancies of two hours or less.
• The TRACK Platform-calculated invoice error rate is 3.58% on hours and 4.39% on dollars.

The Analysis Process

The TRACK Platform starts with a standard process for analysis and then customizes it for each Owner. This ensures an accurate and complete review, giving the TRACK Platform total confidence that the savings claimed can be substantiated:

• Select sample data (turnaround activities -- April 1-May 15)
  • Contractor 1 -- 303 personnel
  • Contractor 2 -- 405 personnel
  • Contractor 3 -- 208 personnel

• Collect data required for the TRACK Platform setup and execution
  • ACS perimeter gate IN and OUT badge events
  • Contractor personnel (company, name, craft)
  • Contract T's C's
    • Labor rates by craft (straight, premium, shift differentials)
    • Pay calculation rules
      • Early time before schedule; late time after schedule
      • Rounding, grace period
      • Lunch deduction
      • Overtime rules (e.g., OT 40 hrs./wk.)
  • Work schedules by personnel (shift schedule start and end times)

• Collect invoices submitted by the vendors for the selected timeframe
  • Labor invoices
  • Timesheet back-up details

• Set up the TRACK Platform master data
  • Prepare gate-event data for import
  • Configure TRACK Platform Agreements, Skills, Rates, Schedules, and Pay Formulas
  • Resolve personnel name discrepancies between gate log and invoice/timesheet records
  • Assign personnel to appropriate work schedules
  • Resolve missing IN/OUT events

• Execute TRACK Platform -- daily/day-to-day basis
  • Eliminate unresolved data exceptions to ensure integrity in the data sample
  • Calculate results by company, by person, by day

• Compare TRACK Platform results to invoice documentation
  • Load Invoice/Timesheet details into Excel
  • Load TRACK Platform calculated values into Excel
  • Identify mismatches

• Analyze mismatches to ensure completeness and accuracy of data
  • Eliminate incomplete or invalid data samples

• Publish the report and present findings

Contact us to learn more about how the TRACK Platform can optimize your contractor workforce.

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About MCi

Management Controls, Inc. (MCi) helps companies obtain better visibility, control and productivity from their contract workforce. MCi’s TRACK® Platform provides automated contract compliance as well as a holistic view across the entire labor, equipment and materials spend. TRACK’s® real-time data stream can be proactively applied to optimize performance and safety for routine maintenance, turnarounds, capital projects and operations. With the powerful addition of MCI’s customized analytics service, Insights-as-a-Service, and its managed service offering, TRACK-as-a-Service (TaaS), companies can leverage MCi’s 30 years of experience to get even more out of TRACK®, as well as identify opportunities to improve site productivity overall.

The TRACK Platform is currently in use at over 300 industrial sites, including over 90% of North American refining capacity and processing over $50 Billion in annual contractor spend; generating over $5 Billion in annual savings across our customer base.