KordaMentha KordaMentha is an Australian advisory and investment firm that provides specialist forensic, real estate, turnaround / restructuring and investment management services. The business was formed in April 2002 by Mark Korda and Mark Mentha. Located at
Level 24, 333 Collins Street, Victoria, Australia.
Phone: +61 3 8623 3333

Contract analysis saves a business over $1 million

In the resources sector, specialists with the industry knowledge to identify poor contractor performance can help to deliver substantial cost savings. Corporate Partner Chris Martin, recounts how our recommendations from a contract analysis helped save a gold mine operator over $1 million.


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‘As part of a contract review process, a local gold mine operator engaged us to provide them with assistance in collecting and analysing the performance of a light vehicle maintenance contractor, with a view to determining whether to extend the contract or bring the service in-house. 
 
Contractor arrangements can be a challenge for businesses to monitor and they don't necessarily offer a superior value proposition when compared with owner-operator programs. Our analysis highlighted a lack of planning between the contractor and company management, which saw the service roster not being executed properly. Vehicles were returning to the workshop immediately after being serviced and the cost overruns and time billing issues were contributing to disrupted daily workflows. More worryingly, there appeared to be excessive mark-ups on some parts and labour and a lack of engagement across the entire business line. 
 
Drawing on our knowledge of the resources sector, including industry-wide standards of best practice, we were able to provide recommendations that confirmed the concerns of management. With this empirical assessment, the company decided to terminate their light vehicle maintenance contract agreement and implement a more cost-effective and cohesive owner-operator scheme, saving around $1 million per annum.’

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