Building Blocks

Past issues

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Issue 23 – August 2015

  • Negotiating aboriginal contracts
    According to the 2011 National Household Survey, over 1.4m people identify themselves as First Nations, Inuit or Metis in Canada. Together, these three distinct groups comprise the term “Aboriginal peoples.” As the first inhabitants of Canada, Aboriginal peoples hold an increasingly significant part of the country’s history and culture.
  • Outsourcing, co-sourcing or in-sourcing vendor cost recovery projects?
    With oil prices falling below $50/barrel, oil and gas companies have been forced to initiate drastic internal efforts to control cash leakage and cut costs. Vendor management departments are focusing on their vendor recovery initiatives in an effort to monitor ongoing costs, identify risk areas and uncover cost recovery opportunities. As a result, many companies are running cost-benefit analyses to determine whether in-sourcing, co-sourcing or outsourcing their contract/vendor audit mandates align with their enterprise cost reduction strategies.

Issue 22 – June 2015

  • Vendor Audit is More than Just Vouching Invoices
    Vendor audits can help reduce or recover costs by vouching invoices and other financial information to confirm compliance with contract terms and conditions. However, they can also cover many other aspects of a business to help a client get value for their money.
  • Union agreements: the importance of continuous monitoring
    Collective bargaining agreements (CBAs) play a significant role in major capital projects. These agreements, negotiated collectively between employers and trade unions representing workers, allow both sides to reach agreements regulating working conditions. If not monitored on a continuous basis, such agreements can greatly impact overall project costs, while a lack of adequate understanding of the relevant financial clauses can unnecessarily increase expenses.

Issue 21 – April 2015

  • Using Benford's Law to target audits
    Auditing is a way of life for many firms, but what do you target and how deep do you go? A surprising mathematical relationship can identify red flags within a data set.
  • Mitigating subcontractor risk in times of economic uncertainty
    Current economic conditions throughout Canada have resulted in the slowdown or cancellation of many capital projects. This has increased the financial stress facing both contractors and subcontractors as they cut margins and decide how to cut costs.

Issue 20 – March 2015

  • Limited-scope JV audits miss potential risks for non-operating partners
    Natural resource exploration and production often calls for multiple companies to work together. One common structure used in the sector is a joint venture (JV), where several companies come together and segment themselves into operator and non-operator roles. Operators manage the consortium’s overall daily activities, a responsibility that inevitably brings additional risks to the non-operators in both financial and nonfinancial means.
  • How can you reduce the risk of construction delay claims after a major capital project is completed?
    Construction delay claims and disputes related to schedule issues are among the most common and complex types of disputes in major capital projects. Claims of this nature are typically initiated by contractors against an owner based on contentions of interference causing a delay or loss of productivity.

Issue 19 – December 2014

  • Internal controls over invoicing and payments: a critical component to the success of any major project
    Internal controls are a critical component of any major capital project. They can help ensure owners get full value regarding the project’s cost. It’s important to make certain internal controls are correctly set up, consistently used and any deviations are accurately reported in a timely manner.
  • A-field-level-LEM-attest-can-prevent-problems-before-they-arise
    Labour, equipment and materials make up the largest costs on all major capital projects. And because the related invoices are typically for very large amounts, often with lots of supporting documentation, it can result in approval of payments without satisfactory review. Compound this with payment deadlines and demanding project schedules, and the risk of overpayment can be significant.

Issue 18 – September 2014

  • Aboriginal title can be a significant factor in getting major capital projects off the ground
    On 26 June 2014, the Supreme Court of Canada issued a ruling that could potentially have a great impact on capital project development in Canada. In the case, Tsilhqot’n Nation v. British Columbia, the Supreme Court ruled in favour of the Tsilhqot’n First Nation, declaring that they hold title over an area of land in central BC for which they had claimed historic use.
  • Mitigating the risk of labour overpayments from statutory burdens
    Labour burden costs in major capital projects are broadly divided into two categories: statutory and non-statutory. To help reduce the risk of overpaying for labour during a project, it’s important to include these cost elements into the contract and define what is reimbursable before any expenses are incurred.

Issue 17 – June 2014

  • The importance of project health checks on effective capital projects
    Capital projects are complex, expensive and challenging to manage. They’re executed in a dynamic, ever-changing environment. So it’s critical to embed effective project controls in the process to manage risks along the way. Control systems can manage scope, change, cost, risk, quality, communication, time, procurement and resources.
  • Joint venture agreements: getting the basics right
    Joint venture (JV) agreements take on a variety of forms, but they’re usually formed for the same reason — a commercial collaboration. Multiple unrelated parties pool resources with the intent of mutual gain. This pooling, exchanging or integration of resources is ultimately to leverage the expertise of the group as a whole, while at the same time remaining independent from one another.

Issue 16 – April 2014

  • Reducing indirect tax costs can reap rewards on major capital projects
    For major capital projects such as the oilsands projects in Northern Alberta or mining projects in British Columbia or Saskatchewan, indirect taxes can become a significant portion of the overall project cost and can negatively affect cash flow.
  • Beware: ambiguous contracts can cost you big
    In the course of a compliance audit of cost-reimbursable contracts, opportunities for cash recovery are regularly discovered. The recovery of these amounts, however, can often be put into question or simply denied due to missing or ambiguous contract language. But proper contract language can mitigate or even entirely eliminate such loss of recoveries.

Issue 15 – February 2014

  • Pre-award audit of contracts
    A pre-award contract audit takes place before the two parties sign the contract. Pre-award audits review the commercial terms to verify that costs are accurately presented by the contractor and there is no hidden profit within the cost elements.
  • Contract compliance audits complement invoice attest
    For most companies, payments to vendors represent the single largest contract spending category. Continued advancements in business needs, more complex business transactions and increased volumes of work are resulting in more complex contract terms. This can make proper invoice attest extremely difficult, and the intricacies of invoices only continue to increase.

Issue 14 – December 2013

  • Risk doesn’t need to hold a project back — if you know your risk appetite
    The motto of the British Special Air Service is, “Who dares, wins.” A successful, major capital project exemplifies this thinking: a large investment involves significant inherent risks, but has the potential to drive major returns for shareholders.

Issue 13 – October 2013

  • Financing infrastructure through P3
    Public private partnerships (P3s) are becoming an increasingly popular option for infrastructure development at all levels of government in Canada. They represent an innovative, performance‑based approach to provide high-quality, long-lasting public infrastructure.
  • Effective communications: an integral part of a contract compliance review
    Effective communication during a contract compliance review between the auditor and each stakeholder — from the project sponsor to the contract owner and individual vendors — is of paramount importance.

Issue 12 – August 2013

  • Value-added findings in vendor audit
    Vendor audits usually focus on identifying opportunities for cash recoveries due to overpayments and/or noncompliant charges. However, a second type of finding, referred to in this article as “value-added” findings, instead provides long-term value by preventing overcharges before they occur.
  • The need for project governance to manage risk
    Key stakeholders in the Canadian mining industry — from Northern Quebec to British Columbia — have faced ongoing turmoil in recent years, highlighting the significance of clearly defining roles and responsibilities in mining projects to minimize operational risks.

Issue 11 – June 2013

  • Finding the right technology balance for enterprise project management
    Most executives of large project-centric organizations will agree that desktop tools such as spreadsheets and slide decks are inadequate for managing and reporting on a multibillion-dollar project portfolio. These tools are designed for discrete projects and do not provide insight into the employment of resources across the enterprise and the performance of the project portfolio.
  • Data analytics can result in more effective and efficient supplier auditing
    During supplier contract compliance and cost recovery assessments, data analytics can be an effective tool to identify non-compliant or erroneous transactions, such as hidden fraud schemes or duplicate charges.