Think about this…

How does a VMS / MSP claim savings without knowing contractor labor rates?

Here is a pet peeve of mine ... I would like to add a fundamental procurement practice which allows VMS hard savings numbers come to life.

How can a VMS program provider or for that matter anyone in procurement negotiate only bill rates and claim savings?

I believe knowing what a contractor is putting in their pockets and then establishing vendor markups is the most effective way to negotiate costs / compare vendors / evaluate contractors ... and claim hard savings through establishing a real MARKET rate.

Establishing labor rates and negotiating markup later is a best practice seldom used. Most programs focus on negotiating bill rates which results in leaving money on the table. If your VMS comes equipped with a savings module....you can track labor rates ....markup % and fringe costs by vendor. Question for you... how can procurement or your vendor really negotiate a rate without knowing vendor labor costs ...would love to hear your thoughts.