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Target Cost & Open Book Accounting
Get to grips with Target Cost Contracts and Open Book Accounting
The move towards the use of Target Cost Contracts and Open Book Accounting is being driven by the need to make efficiency savings and is being achieved through improved transparency and clarity in project costing. With the goal of delivering better value for money, many public sector clients are actively embracing the necessary process changes.
Target Cost Contracts and Open Book Accounting are effective mechanisms for generating cost savings and improving value for money – if they are well understood and implemented with attention to detail.
Therefore, it is important to get the right advice to prevent falling into the common pitfalls which can result in systems that are difficult to manage, create an administrative burden and may cost more, instead of generating promised cost savings and value for money.
Typical problem areas include:
- The process is difficult and time consuming
- Cost savings or value for money are not achieved or can’t be demonstrated
- Information is not presented by the Contractor in the format that the Client requires
- Cost information is not received in a timely manner, limiting or negating the effectiveness of the cost management process
- Limited understanding of the process by the team results in poor commercial decision-making and poor cost control
To implement Target Cost Contracts and Open Book Accounting successfully team members must clearly understand:
- The Target Cost setting process and the Open Book Accounting process
- The potential pitfalls in order to prevent problems
The Client’s role:
- The Client’s role is to lead and manage the process and they must therefore have a thorough understanding in order to achieve their objectives
The Contractor’s role:
- The Client’s role is to lead and manage the process and they must therefore have a thorough understanding in order to achieve their objectives
How we can help
Our bespoke services build your team’s expertise and promote best practice, with the benefits of improved financial control, demonstrable value for money, quicker implementation, less pressure and frustration for team members and no wasted time on systems that don’t deliver.
Our services include:
- Clear advice, support and guidance - drawing on our significant experience and numerous successful implementations
- Developing and implementing a new system – to improve financial control, with practical processes and procedures
- Improving an existing system - an independent review of your system clearly identifies any problems and we can assist in making the necessary improvements
- Auditing an existing system to verify the costing information - an independent audit ensures accurate feedback, the ability to demonstrate accuracy to Internal Audit or Inspectors, provides trust and confidence in the process and identifies any problem areas – we can also provide support in their resolution
- Informative, high-impact training designed to get you and your teams completely up-to-speed on the practical implementation of Target Cost Contracts and Open Book Accounting - improve your knowledge to avoid costly and time consuming mistakes
- Support for contractors and sub-contractors, to ensure ability to meet the needs of clients and to improve your ability to win work by demonstrating your proficiency in the Target Cost and Open Book process
Used appropriately, Target Cost Contracts and Open Book Accounting can provide a sound basis for better commercial arrangements for all partners.
Find out more
For a confidential discussion about how we can help you to implement a successful Target Cost Contract & Open Book Accounting process please contact us.