The Covid-19 pandemic has slowed global economies and upended energy and commodity markets with its unprecedented effects on workforce management and supply chain disruption. The mining industry, while strongly positioned heading into 2020, has not been immune to the economic downturn. Mining companies worldwide have had to adapt to major challenges such as lockdowns ceasing mining work, physical distancing slowing down progress on projects, and segments of its workforce having to keep track of operations remotely, leading to a long backlog of activity.
Managing Contractor Spend in a Down Economy
As uncertainty continues, companies must remain agile and develop strategies that aren’t just reactive, but proactive. Improving efficiency doesn’t have to mean massive budget cuts or workforce losses—it can be an opportunity to introduce digital solutions that keep companies running leaner and more profitably. With contractor spend and all its associated costs at the heart of mining operations, it’s critical that companies strategize on how to better control those costs in the current economy.
Consider these four strategies to better control mining contractor service costs and help your company work smarter through the economic downturn:
1. Better budget management
A recent survey we conducted across 140 mining companies of all sizes showed that 60% of them reported projects being behind schedule and over budget. Capital discipline is especially crucial in a slow economy, so having clarity around every cost for labor, equipment, and materials is a necessity.
With the right software, you can track every expense and stay on target—relying on spreadsheets or manual entry when every penny counts is a gamble you can’t afford. By eliminating timesheet errors, incorrect invoices and overbilling while ensuring compliance with terms and agreements, your mining operations can save as much as 10% to 15% in annual spend.
2. More workforce visibility
When you can truly see the progress that’s being made day by day, it’s easier to balance expenses. Ensuring you have the right mix of skills on a project can avoid costly delays, while real-time metrics will show you the exact hours it takes to manage a project.
By investing in a contractor management solution that offers real-time personnel and equipment information, you’ll gain efficiency while minimizing cost and eliminating any surprises that might pop up along the way. With a view into actual production, you can monitor mining operations exactly as they progress, from start to finish, keeping contractors accountable and minimizing disputes.
3. Optimized wrench time
Wrench time is simple productivity—and not having eyes on the mine site can mean unanticipated delays that require overtime hours to stick to the schedule. A recent report by a national contractor suggests that only 29% of the standard workday is spent on actual work, while the rest is divided up among work rules, travel, instruction, idle time, and more. Imagine if you could double that to nearly 60% and immediately decrease overtime by double digits, saving tens of millions of dollars. That’s true optimization. And it’s achievable with automated reporting that keeps the company and contractor on the same page.
Through daily contractor agreements and with full transparency, there’s less room for idle time, missing permits or materials, late inspections, or disputed timesheets. These common problems are products of a less streamlined era and its manual processes, and digital solutions can put documentation, time tracking, and productivity metrics front and center every day.
4. The right contractor management software
The software market can be an overwhelming space, but the TRACK® Platform is uniquely positioned to benefit mining companies and their operations. Using real-time data, automated tracking, and integrated contract compliance, TRACK gives unprecedented visibility into your workforce, productivity, and spending through a comprehensive set of capabilities, including:
- Interfacing with your existing Enterprise Resource Planning (ERP) system, so you can receive and break down purchase orders and work orders in real-time.
- Displaying workforce headcount instantly, as well as time-on-site or gross time by interfacing with existing Access Control Systems (ACS) or MCi’s TRACK Anywhere mobile applications.
- Applying contractor-specific terms, conditions, rates, and schedules to gross time to calculate Net Billable Hours.
- Presenting Net Billable Hours to a contractor timekeeper to allocate each craftsman’s work, equipment utilization, and material charges for the prior day, including skill, billable rate, and total costs to appropriate project cost objects. The allocations are delivered directly to the responsible supervisor.
- Facilitating approval or rejection of allocations by the owner’s supervisor through an authorization process that includes access to all allocation details.
- Giving owners visibility into data so they can analyze progress in the field, make schedule updates, or produce additional invoices if necessary. It also enables contractors to use the same data for internal systems, so everyone is working with the same data.
- Enabling service entries staged for payment to contractors through the ERP system once authorized allocations are received.
Digitizing Your Response to Economic Downturn
Each mined commodity is affected differently by the economic downturn, but all can be managed more efficiently. For those hit especially hard by the energy market’s volatility and the supply and demand rebalance that follows, finding an effective contractor management solution is critical—enabling data-based decision-making that can improve efficiency and profitability by millions of dollars every year.
Request a free TRACK® demo today
Get a firsthand look at how the TRACK® platform can transform your mining operation and save you millions in annual contractor spend.
