The well-known saying ‘you have to spend money to make money? has been around for years ? and officials with Independence Township are hoping a new twist on the old concept will help them maintain a tightly balanced budget.
At the Feb. 15 regular meeting, township trustees voted unanimously to hire Alliance Telecommunications, Inc. (ATI) Cost Reduction & Profit Recovery Services for one year.
ATI examines any area client requests for cost reduction, develops an audit and tracking system for those services, and then proposes possible means of cost reduction and savings.
‘Our ultimate job is to reduce our client’s cost,? said Doug Cash, senior partner with ATI.
‘We have been doing this for 14 years,? stated Cash during the meeting. ‘We have across the board experience… and have specialists in many, many different areas.?
ATI has worked for government entities such as the City of Auburn Hills, the City of Troy, the Macomb-Oakland Regional Center and several school districts.
In the case of Independence Township, ATI will take three months worth of statements from service providers for review. After forming a proposal, ATI will return to the board of trustees with a course of action for approval.
If passed, ATI will begin collecting credits and negotiating with suppliers on behalf of the township. Once the new contracts are established, ATI will provide township officials proof of cost savings and profit recovery, and create an ongoing, monthly audit.
After all steps are taken, ATI is paid through a percentage of the cost savings acquired.According to Cash, when negotiating with suppliers, ATI first looks at the contracts and confirms exactly what needs to be done for the township to be in compliance. The next step is to confirm the prices throughout the industry. Finally, ATI will ask vendors to negotiate or provide assistance.
‘We never strong arm the vendors,? said Cash. ‘We never mistreat the venders. We find our best tactic is to beg.?
Independence Township only pays ATI for costs recovered. According to Cash, the township will pay 39 percent of the cost savings in the first year’s contract.
For example, ATI specialists work on an insurance contract for the township. After hearing a recommendation, township trustees vote not to accept the proposal, therefore receiving no cost savings. As a result, ATI does not receive any payment.
‘We’re not spending any extra money on this. The money is already budgeted anyway for the contracts,? said Supervisor Dave Wagner. ‘I think this is what the department heads found amazing.?
During public comment, one resident questioned whether the township could not simply find these costs reductions on its own.
Wagner stated township workers are often already quite busy with regular budget planning, much less attempting to perform these types of reductions and negotiations without the expertise. Also, he stated a new perspective will help the township find holes often overlooked.
‘We are outsiders… I come in and (the suppliers) don’t know who I am, so they think ‘Oh, maybe the township seriously needs help,?? explained Cash. ‘They work differently with us.?
In addition to the cost reduction and profit recovery service, ATI will establish databases and train township workers in the cost reduction process.
Township officials entered into a one year contract with a 30-day approval or rejection period. After the contract expires, the township can choose to not continue with ATI, or enter a partial contract.