Aircraft MRO: How Best to Review Your Invoice

In the concluding article in his series on overseeing an aircraft maintenance event, JSSI’s Brian Wells discusses how to review the invoice correctly to avoid the feeling of consternation…

Brian Wells  |  10th August 2020
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Brian Wells
Brian Wells

Brian Wells, airframe manager for the EMEAA region at Jet Support Services, Inc. (JSSI), has almost 40...

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Questions regarding an aircraft maintenance invoice - private jets and

Let’s assume the aircraft maintenance project has now reached completion: You have completed the maintenance debrief and successfully monitored the work remotely during the four-week event. Now it’s time for the aircraft to fly off to its next destination. But what about the invoice...?

All documentation has been cached, including work-in-progress (WIP) reports, quotes, teardown reports and all communications related to the project. You have a solid sense of what the financial impact is going to be, and are expecting no surprises.

‘Consternation’ (noun)

Feelings of anxiety or dismay, typically at something unexpected.

For complete transparency, it should be noted that a significant portion of my duties includes invoice reviews. A single aircraft operator might see the number of invoices I see in a week over an entire year, depending on utilization. This is by no means a statement of expertise, however the volume has allowed me to devise a systematic approach to identify certain concerns that may arise during the review process.

Much like the approach to managing the event, where invoices are concerned one size does not fit all. Here, we’ll identify a handful of scenarios that should prompt you, the paying customer, to investigate further.

Quoted Labor and Materials for Scheduled Maintenance or Inspections: Verify that the invoice amount for quoted work packages matches the quote you received prior to input. If not, check why not and confirm that any overages were explained prior to invoice receipt.

Consumable Charges: Many MROs will invoice on average 3-4% of the total labor amount   for consumables versus charging for them individually, and this is standard practice across the industry.

For those MROs choosing to invoice individual consumables, check that the items and amounts are relevant to the inspection or defect. In other words, confirm you are not being invoiced for 10 screw extractors under a gear lube work order item . If the consumables used do not fit the narrative of the inspection item or defect, you should ask for further clarification.

Handling Fees: If you have elected to supply your own parts, you should verify that these fees are in line with the percentage agreed at debrief. When an MRO orders a part, there is often a reluctance to show you their cost (less markup).

If you sense something is amiss, there is enough information on the open market for parts pricing. Find the comparable parts price (i.e., new, repaired or overhauled) and add the agreed markup. If there is a large disparity, it is reasonable to question it.

Freight: In the aviation industry, freight is inherently more expensive than what we are accustomed to in our normal daily lives. However, a $100 freight charge for a $0.60 O-ring is clearly cause for concern and should certainly be reviewed more closely.

Warranty: Always confirm that any applicable warranty has been properly applied. This is not just relevant to newer aircraft but parts (or even in some cases workmanship might have applicable coverage).

Though never intentional, MROs may not always perform warranty research when ordering a part. It should be one of the first things considered but unfortunately this step is too often overlooked. Regardless, it is a crucial step and you should reiterate the importance of it during debrief and throughout the maintenance event.

The Common Cause for Invoice Disputes…

Most invoice disputes I see arise from time and material (T&M) defects. Every corrective action should tell a story and explain the solution. This is where you should find the hours expended, including all disciplines (i.e., mechanical, avionics and engine), at either a standard, overtime or weekend rate. Additionally, you should also find parts usage and pricing, as well as consumables and freight.

The following invoice items are some indicators that should raise a red flag and prompt a closer look:

  • The invoice includes 15 hours “avionics normal time” for a tire change. Avionics time at this hypothetical MRO is $10 higher than the standard mechanical labor rate, which should have been applied to this line item.
  • Corrective action for a generator defect states that a frequency converter was changed but the defect still exists. Then a variable speed generator was replaced and the defect cleared, however, you are still being invoiced for both. Since you have done your due diligence and requested the teardown report for the converter, you find that the net result was no fault found (NFF).
  • Overtime and weekend rates are included but were these approved?
  • Rental tooling, hangar charges and towing fees appear on the invoice. If you went to an authorized service facility, the MRO should have the adequate tooling to perform the work. This should not be billable to the paying customer. Additionally, hangar charges and towing fees should be accepted by the MRO as the cost of doing business when they accepted the responsibility of completing your maintenance package.
  • Incoming inspections and video charges, if invoiced, are there to protect the MRO. 

In Summary…

This is by no means a comprehensive overview of the entire invoice review process but hopefully will provide you with some guidance moving forward. Any consternation you may have can be relieved if the first two steps in the process are followed:

  • The maintenance debrief should ensure expectations are delivered in a crisp, clear manner and financials are understood; and
  • The work in progress report, should provide a clear indicator to track financials and overall job progression.

More information from www.jetsupport.com

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Read More About: JSSI | MRO | Aircraft Maintenance Planning

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