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ContractCompliance

A Presentation by

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Aim:

Strengthening the Pillars of Business

To inform clients of the Contract Compliance Services & Capabilities offered by CorGuv.

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Background & SkillsCorGuv is 51/2 years formed after a successful SOX

implentation.Background & Skills:

Contract Compliance/Management Forensic Investigations. Business Process & Risk Analysis. Project Management & Governance.

Internal Control - System Design & Implementation. Joint Venture Auditing

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Customers

Apache North Sea.BG Group.Centrica Energy.Premier Oil.Marathon Oil.Total E&P UK.Venture PetroleumBP Exploration.

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The Scope of Contract Compliance Services

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Forensic Investigations Investigative approach – ‘Beyond the Paper’ Third Party pricing checks. Cross-Referencing different data-bases. Process Reviews.

Root Cause Analysis. Review & Improvements to:

Procurement Processes. New Contracts. Award. FU

LL S

CO

PE O

F C

orG

uv’s

SER

VIC

ES

Long Term Benefits from a Holistic Approach

Monthly Contract Checks

Checks on Scope, Rates, Invoices & Processes, Man hours, Overtime, Burdens, Equipment & Running Charges Rates, Variation Orders, Amendments.

Routine Scope

Feedback on ‘Actual’ Performance

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Independent Contract Compliance Review

Initial Health Check 3-5 days internal audit (normal rates). Initial report. Proposal to proceed with commercial options. Agreement on how to proceed.

Forensic Audit Audit on contractor’s books. Monetary and procedural. Findings and negotiating strategy. Root Cause Analysis for future contract improvements.

Negotiations on Findings Agree Negotiating Strategy. Negotiate Recoveries.

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Value Through ImprovementsAud

it

Strategy

Scoping

Tender

Evaluation

Award

Futu

re

Contra

cts

Recoveries

MonetaryFindings

5%

10%Neg

otiat

ion

Future Leverage on:1. Risk Reduction.2. Reduction of Overcharging.3. Reduction of Fraud

exposure.4. Cost Effective Contracts.5. Contractual Relationships.

Root Cause Analysis applied to:1.Existing Contract Conditions.2. New Tenders.3.Invoicing Process.4.New Contracts.

Improvements

Future Savings

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Example

5 year contract, £7,000,000 p.a

Time taken – 25 days.

Actual Cash recovered £600,000: £24,000 per day

Total Reward, £95,000: £3,800 per day.

Time Charged client-risk - £16,000: £640 per day.

Contract Strategy Changes - £4,000,000: £160,000 per day

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Why we have Something Special to Offer Experience – 30+ years in Supply Chain, Contracts, Management,

QS or Audit. All our staff are selected for their Curiousity, Persistence, Maturity, & Focus on the client-supplier relationship.

Scope –Depth, Supply Chain, Root Cause Analysis, Follow-up, Sustainable Improvements.

Investigative Techniques – our proprietary process ensures we find issues.

Focus – Commercial/Ethical, dedication to the task, can be an addition to company audit programs.

Independent – Willing to seek out reality, no conflicts of interest, completely confidential.

Results – our Project Management approach delivers benefits/value in a limited time.

Commercial Flexibility –Standard Rates, Fixed Price or Risk/Reward as appropriate.

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Case Studies (CorGuv)

Average recovery could be 5-10 times the cost.

NIC overcharges of £3.0m.

Identification of excess profits of £1.5m due to unethical third party invoicing.

£700 m Project – Cost Recovered - £40-50 m.

Checking of sub-contract costs showed 65% discount of £1.5 m not passed on to client over 3 year period.

Over charge on local delivery of 45% margin reduced to 5% (£1.0 m).

Review of timesheets for engineering contract identified accounting allocation errors resulted in over charging by £1.5m.

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Business Benefits

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Performance In-depth insights and feedback of your contract's real performance. Improved contract/procurement strategies - through feedback of actual performance. Improved service delivery. Improved contract management.

Costs Cost Recoveries, if due. Sustainable future cost savings – through improvement of contract strategy & drafting. Reduction in the potential for unethical activity.

Relationships Improvements with JV partners. Improvements in client/supplier relationships – through improved transparency, openness &

trust.

Time Time saved on dispute resolution. Time saved on invoice checking - due to improved invoice process/documentation.

Risk/Reward deals - that avoid on-going consultancy costs and maintains our commitment.

Assurance that Contracts are cost effective, commercial & Ethical.11

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Summary

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Based on our Core knowledge of post-award performance we can apply our experience at any point in the Contract Cycle: Post-Award contract performance, Forensic Audits. Procurement & Award Phase. Contract drafting. Contract Management. Contract Strategy. Setting up Compliance Regimes.

Health Check is a low cost entry point.

The Benefits . . . . . . . . .

We Recover for our clients what is rightfully theirs.12

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Summary

Cost RecoveriesHistoric Errors & Overcharging.

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Summary

Long-Term ImprovementsContract Management and Strategy.

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Summary

Experienced staff Integrity, Curiosity, Maturity.

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Summary

IndependenceFree from operational pressures.

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Summary

Deterrence of FraudFear of being detected.

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Testimonial"CorGuv have undertaken a number of contract compliance assignments  on behalf of Apache . All of these assignments have been performed efficiently & effectively and with minimal effort/input required from us as the client . Without doubt CorGuv has delivered value on each assignment. Cash recoveries alone have been substantial although that was not the primary objective in every assignment. CorGuv have also assisted us to further clarify & strengthen our contracts which has subsequently saved even greater costs in future contracts. CorGuv have a well developed process for keeping audit costs to a minimum whilst maximising benefits. In particular, they treat the whole process as a project, focusing on delivering value, including supporting us right up to the point where recovery negotiations are complete. In short CorGuv offer a compelling  blend of experience and commercial knowledge that delivers a complete service and I have no hesitation in recommending their services."General Services Manager, Apache North Sea

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Strengtheningthe Pillars

of Business

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