Today’s project budgets are mostly built on unit prices or fixed budgets for the entire project, whilst consulting and insourcing contracts are generally based on a fee for time basis. All of these contract models have their distinct advantages and disadvantages, and they should be carefully chosen, based on predictability of scope, resources available for controlling, and other parameters.
It is however very important to understand the pitfalls of each contract type, and be aware of the remedies required to limiting the threats and taking advantage of the opportunities each of them bear. For this purpose it is on one hand important to set up an effective, project-specific cost controlling system and on the other to perform financial audits to verify whether cost-saving opportunities are being exploited, and whether waste is being avoided.
ProjectPharm has conducted a series of financial project audits, and regularly detected waste and unexploited opportunities worth 10% of the project budget and more. In one case 2 clinical trials outsourced to one vendor were inspected and it was found that the vendor had overbilled the sponsor for an amount exceeding 1 million USD.
Please contact us to know more about financial project audits and to have one performed for one of your projects.