Cost Recovery Consulting
There are various facets of Cost Recovery Consulting. These include: the Errors and Omissions process, Thresholds, Hard Costs, and Negotiation process. These steps help a company determine the amount of recoverable costs. Using the Cost Recovery Consulting process, a company can estimate their profits based on their total revenue less the cost of projects.
Errors and omissions
Errors and omissions are often covered by professional indemnity insurance. This type of insurance protects companies from financial harm resulting from mistakes that consultants make. For example, suppose that a foreign corporation followed a consultant's advice and incurred unexpected costs. The consulting firm subsequently filed a countersuit, blaming the foreign corporation.
Errors and omissions insurance protects businesses from lawsuits related to mistakes and omissions, and also pays for legal defense. Such claims can result in settlements or court judgments. Furthermore, they can also lead to disciplinary hearings by regulatory boards. Errors and omissions insurance is especially important for consulting firms.
Errors and omissions insurance is expensive. Many small businesses choose the most inexpensive option available. However, the cost depends on several factors, such as the industry and type of business.
While the soft cost recovery model continues to be the most prevalent approach to cost recovery, incorporating hard costs can be a more efficient strategy. Hard costs are tangible fixed assets that are subject to depreciation, and most should be included in the depreciable cost basis. Firms should set aside what they think they know and conduct a data-driven analysis to determine the best approach for their firm.
The negotiation process for cost recovery consulting can involve several steps. Generally, the process begins with the Chief Engineer reviewing the EO issue, determining whether it warrants cost recovery. If it does, the Office Administrator will notify the designer and negotiate the costs. During the negotiation process, the parties may also use non-binding mediation, if necessary.
Aside from negotiating the amount, the parties may also discuss other aspects of the cost recovery. For example, they may determine that the consultant did not provide a complete set of documentation. This documentation can be used to evaluate the consultant's past performance and consider his or her abilities for future contracting opportunities. The process is detailed in Figure 7 of Appendix B.
During the design and construction phase, cost recovery is a critical consideration. The Chief Engineer reviews EO issues to determine whether they warrant cost recovery and notifies the designer. The Office Administrator then negotiates with the designer to determine the appropriate costs. In some cases, non-binding mediation may be used to reach an agreement.
Using a cost recovery consulting firm to provide estimates is a vital part of the process, but the process has limitations. Cost estimates should be based on the entire scope of repairs, including any unanticipated costs of future material prices. To make sure that cost estimates are reasonable, FEMA should provide clear guidance and oversight. This will help ensure that the newly increased threshold grant funds will be adequate to implement necessary projects.
Cost recovery consultants can help you turn your Accounts Payable department into a profit center. They can identify hidden financial assets, stop profit leaks, and improve processes. They can also pair your company with an expert in cost recovery technology. This book covers cost recovery from every angle, including telecommunications, healthcare, and utilities. This book also describes how to reduce tax bills, and avoid project fraud.
Recovery rates dropped during the Great Recession, and clients began scrutinizing billing practices. The number of firms that recover cost has remained stable since then is approximately 28%, but true recovery rates remain higher than that. This is because firms have hit the 'bottom' on pass-through costs.