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Better contract management will be key to reducing operating costs in the UKCS


Published Sep 14, 2015
KPMG

More active contract management in the UK oil and gas industry could deliver significant savings for companies within a supply chain worth up to £35 billion a year, according to professional services firm KPMG.

KPMG’s experience of conducting more than 10,000 contract audits has revealed that 70% of contracts are not complied with, regularly leading to overbilling that often can be between one and five percent of high-risk spend

In the new era of cost reduction and fiscal control in the industry, supply chain and procurement (SC&P) has a critical role to play in assisting businesses in adapting to reduced oil prices by ensuring that contracts are effectively managed.

Organisations typically invest significant effort in negotiating contract terms to offer best value, but as priorities and responsibilities change over time, terms, incentives and breaks are often neglected. Despite original intentions, contract terms are often incorrectly reflected through invoicing.

Tags: KPMG




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