Utilities / Selected work

One governance gap repeating six times, not six expensive contractors.

A ~$230M contractor programme was billing roughly $5–6M a year above the assessment benchmark. The cause was not who held the work but the absence of rate-book enforcement — so replacing contractors would have reproduced it.

At a glance ~$5–6M

a year above benchmark — about 2–3% of annual contractor spend

Engagement context

Consulting · large US investor-owned utility

My role

Independent commercial assessment (pre-RFP)

Duration

6 weeks

Exhibit 1

45 of 482 rate-book items drive ~80% of spend

Pareto of the ~$230M annual portfolio

So what

The governance problem is concentrated — 45 items, not 482 — which makes it fixable inside one renewal cycle rather than overwhelming.

Exhibit 2

The same billing pattern appears in all six contractors

Unit-billing variance vs volume-weighted average rate, $M

So what

The two largest carry about half the exposure, but the driver is absent rate enforcement. Any replacement contractor would repeat the pattern.

The commercial question

A five-year renewal of the overhead-construction contracts was approaching, against a rate book five years out of date. Ambiguous work descriptions and time-based billing made the exposure real but unquantified, and spend ran across 482 rate-book items and six contractors — so the diagnosis had to find the few that mattered.

My contribution

Led the assessment end to end: analysed ~565,000 transactions from twelve months of approved spend, quantified above-market billing, isolated its structural root cause, and converted it into a five-pillar contracting framework tied to the RFP critical path.

How I approached it

Concentrate the field

A Pareto of 482 rate-book items showed 45 of them driving roughly 80% of annual spend, which put the whole problem inside one renewal cycle.
Classify every gap, MECE

Sort the top-45 items into missing definition, urgent upgrade, monitor and clean, so the reform list is finite and sequenced.
Quantify only what is defensible

Identify who sits above the volume-weighted average rate, then size exposure by that contractor's own volume, floored at zero.

The decision that mattered

A rate comparison only holds when the work and its units are genuinely comparable. Weighting each contractor's rates by its own volumes, and keeping the finding as one integrated opportunity, stopped it being split into individually deniable line items.

What the work delivered

A ~$5–6M annual opportunity, addressable through one structural lever: rate-book enforcement.
A costly contractor reshuffle avoided — it would not have fixed the cause.
An RFP-ready toolkit: five-pillar contract framework, work-description standard and pricing template.

Sources: twelve months of client-approved contractor spend — ~565,000 transactions across ~$230M, 482 rate-book items and six contractors. Variance is weighted by each contractor's own transaction volume against the volume-weighted average rate and floored at zero, which totals ~$5.0M: the conservative end of the ~$5–6M range. This is an identified opportunity, not realised savings; realisation depends on validation and implementation. Client and contractor identities are withheld and figures are rounded.

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