What advice or protocols can you share that help to prevent third-parties/consultants from overbilling?

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Chief Information Officer in IT Services, Self-employed
Having been on boards we want high level data - date I say big buttons for big kids style - we want it real - no BS as we have seen it all. Know your numbers. If you are unsure ask a board member for advice as we are here to help. Zero mushroom management, we can smell that as likely we did your job at one point in time. Outline why what your doing matters and have an ask or clear idea as to why your presenting. What’s the ask? What’s the issue you need help with? Etc.
CIO in Education, Self-employed
Ideally, consultants are managed through a formal overall agreement, e.g., MSA, or managed services agreement, to address billing instructions, including a time card for backup and a rate card for how much you pay for each type of resource.  Next, a statement of work is issued that specifies the scope of the work they will perform, time-related deliverables, and anything else that pertains to the work they are performing for you.  Presumably, you will have a project manager or someone who will monitor their work and approve the time card they submit as a backup for their invoice.  Viewed another way, there are two risk profiles that you operate under.  If the consultants are charging you time and materials and their work is directed by you and your team, then the risk is on you, and you need to manage things very closely.  If you have a fixed bid project, i.e., time, scope and cost are fixed, then the risk is on the consultant to get the work done in a timely fashion.  In the case of fixed bid work, however, make sure you have a solid change order process in place, as the consultants may look to bill you extra based on approved work that they say was not in the original agreement.  Is it clear who can approve that work?  Bottom line:  you must manage consultants very closely; there is no foolproof way to avoid the overbilling risk.
CIO in Telecommunication, 1,001 - 5,000 employees
Understand your contract and exactly what and how you are going to be charged, and make sure you have a process in place designed to manage that process.  As noted by Michael Barr, if you're managing time and materials, then you need someone who is detailed oriented to be paying close attention to the hours, effort and productivity being put it.  If it's a fixed price contract, you need clear and well defined deliverables, milestones, and measures of quality, and someone with the skill set to evaluate that and approve the payments.  Either way its a very tough job in most situations.
CEO in Software, 11 - 50 employees
Preventing overbilling from third-party consultants involves setting clear expectations, monitoring progress, and establishing robust controls. Here are some advice and protocols to consider:

1. Clear Scope of Work: Define a detailed scope of work (SOW) outlining the tasks, deliverables, and timelines. Ensure both parties have a mutual understanding of the project's objectives and requirements.

2. Hourly/Daily Rates: Agree upon clear hourly or daily rates for consultants. Ensure rates are reasonable and align with industry standards.

3. Fixed Price Contracts:?For specific projects, consider fixed-price contracts that outline the total cost. This provides transparency and avoids unexpected charges.

4. Detailed Invoices: Require detailed invoices that break down the work performed, hours spent, and expenses incurred. This helps you verify the accuracy of charges.

5. Regular Progress Reports: Request regular progress reports to track the consultant's work against the SOW. This allows you to catch any deviations early on.

6. Regular Meetings: Schedule frequent meetings to discuss project status, challenges, and progress. This fosters open communication and ensures everyone is on the same page.

7. Approval Process: Implement an approval process for any additional work or expenses beyond the initial agreement. Require written approval before any changes are made.

8. Expense Reimbursement: Clearly outline which expenses will be reimbursed and set limits on what is considered reasonable.

9. Review and Audit: Regularly review invoices, expenses, and work performed. Conduct occasional audits to ensure compliance with the agreed terms.

10. Performance Metrics: Establish performance metrics or key performance indicators (KPIs) to measure the consultant's progress and effectiveness.

11. Contract Termination Clause: Include a contract termination clause that outlines the conditions under which the contract can be terminated without penalty.

12. Reference Checks: Before hiring a consultant, conduct thorough reference checks to ensure they have a history of fair billing practices.

13. Legal Review: Have legal counsel review the contract to ensure it is fair, balanced, and protects both parties' interests.

14. Vendor Management System: Consider using a vendor management system (VMS) to track consultant activity, invoices, and performance.

By implementing these advice and protocols, you can minimise the risk of overbilling and ensure a transparent and mutually beneficial relationship with third-party consultants.
5 1 Reply
CFO, Self-employed

These are excellent protocols to consider John. Although you might've implied it, a mandatory, well-defined RFP process as part of the selection process sends the right signal to the vendors/consultants.

Sustainable Supply Chain Adviser in Healthcare and Biotech, Self-employed
1. work with consultants you can trust (they will tell you frank and square if something won't work and won't sugarcoat issues, but they will also allow you to understand how they got to the solution they offer and they will strive for a mutual, balanced relationship)
2. work with project fees by the value delivered and not by the hour (this requires both you and the consultant to work through the the exact need you have and what value they would deliver to your business)

The moment these are clarified and established, you have a contract (larger companies under MSA and then individual project contracts) and you should be good to go.

If you have transactional work for contractors by the hour, then you have to specify a budget ceiling and if they take it for the project or period of work, then you found someone who is reliable, as long as you had the relevant and fair discussions on clarifying expectations on both sides.

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