Everyone was delivering savings, and nobody was making money
Efficiency Transformation
The situation
A portfolio of offshore maintenance contracts was delivering operational improvements every day, yet the portfolio as a whole continued to lose money. Each part was being managed competently. Nobody ould see the whole.
Client and contractor managed spending and savings separately, and the relationship had become adversarial. Without a shared view of cost, there was no basis for joint decisions. Real efficiencies in one part of the portfolio were outweighed several times over by uncontrolled spending elsewhere, and the net overspend ran into eight figures.
The approach
The commercial arrangements were redesigned so that client and contractor saw the same spending and the same savings, and efficiencies were agreed before costs were locked in.
The outcome
The portfolio went on to deliver £13m of realised savings. Nobody worked harder. What changed was where decisions sat and who could see the numbers.