How PayShepherd Calculates Efficiency Gains

Assumptions

In each calculation, average wages from North America for typical roles performing each process were utilized, with an average labor burden of 30% added to the pay wage.

Project Manager, Project Engineer, Planner / Scheduler, Maintenance Supervisor, Operations Manager / Coordinator, Field Supervisor, etc.
Average rates of $100/hour are derived from hourly wages ranging from $56-$108 per hour with an ‘Average Base Rate’ of $76.92 (plus burden)

Project Engineer, Maintenance Supervisor, Operations Coordinator, Field Supervisor, Site Coordinator, etc.
Average rates of $85/hour are derived from hourly wages ranging from $47-$92 per hour with an ‘Average Base Rate’ of $65.38 (plus burden)

Project Manager, Project Engineer, Maintenance Supervisor, Contract Administrator, Project Coordinator, Procurement Specialist, Accounting Clerk, Project Accountant,  etc.
Average rates of $75/hour are derived from hourly wages ranging from $35-$108 per hour with an ‘Average Base Rate’ of $57.69 (plus burden)

Contract Administrator, Jr Project Coordinator, Accounts Payable Clerk, Procurement Clerk, Buyer, Maintenance Planner, etc.
Average rates of $60/hour are derived from hourly wages ranging from $33-$64 per hour with an ‘Average Base Rate’ of $46.15 (plus burden)

Junior Procurement Analyst, Data Entry Specialist, Administrative Coordinator, Project Coordinator, Accounts Payable Clerk, Business Analyst, etc.
Average rates of $50/hour are derived from hourly wages ranging from $28-$54 per hour with an ‘Average Base Rate’ of $57.69 (plus burden)

Real-world examples from PayShepherd's client base

1. Digital Timesheet Review, Verification, and Approval
Contractors have unique terms, rate structures, processes, and templates—making timesheet review complex. It requires significant effort to ensure accuracy, prevent overbilling, and maintain accountability.

A lack of oversight or accountability in contractors' resource use and work accomplished can weaken compliance. It reduces discipline, encourages inefficiency, and enables entitlement—increasing costs and risk.

Efficiency Gain: Automating timesheet review, verification, and approval eliminates manual effort. This accelerates approvals and minimizes errors.

Average Impact for a $100M Facility: $452,958 per year

Assumptions for the calculation:

• Total number of timesheets per year is 13,726 (based on an average value of $7,285)
• Average time to manually review (stare and compare) each timesheet is 30 mins
• Average time to review all daily timesheets using PayShepherd is 10 mins
• Time saved per timesheet view is 20 mins or 0.33 hours
• Labor rate is $100/hour
• Estimated savings: 13,726 timesheets × 0.33 hours × $100 = $452,958 per year

2. Automated Invoice Reconciliation and Verification
Invoice reconciliation issues often stem from errors, missing information, unknown cost overruns, or mismatches between invoices, backup (timesheets), purchase orders, and contracts.

Common issues include incorrect coding, duplicate charges, incorrect rates, missing approvals, unauthorized/ineligible expenses, and late submissions. This leads to payment delays, disputes, increased administrative workload, and potential financial losses. These issues can escalate, impact cash flow, strain contractor relationships, and create audit risks.

Efficiency Gain: Automating invoice verification by having timesheets pre-approved by project owners reduces redundant approval workflows. It ensures batched, approved billing flows through for accurate payment without manual intervention and re-introduction of data entry errors, omissions, or issues.

Average Impact for a $100M Facility: $181,763 per year

Assumptions for the calculation:

• Total number of invoices per year is 9,694 (based on an average value of $10,315)
• Average time per invoice verification is 15 mins or 0.25 hours
• Labor rate is $75/hour
• Estimated savings: 9,694 invoices x 0.25 hours × $75 =  $181,763 per year

3. Proactive Invoice Issue Detection & Resolution
Invoice errors often require extensive back-and-forth communication between project managers, accounts payable, and contractors. Without automation, issue resolution is reactive, time-consuming, and prone to delays. This impacts payment cycles, contractor relationships, and financial accuracy.

Efficiency Gain: Automating invoice verification eliminates reactive issue investigation, reduces resolution follow-up time, and ensures accurate, contract-compliant payments. This frees up accounts payable resources for higher-value financial oversight.

Average Impact for a $100M Facility: $72,700 per year

Assumptions for the calculation:

• Total number of invoices annually is 9,694
• Assuming 30% have issues, there are 2,908 invoice issues to resolve
• Average time per issue investigation is 10 mins for each of the following roles: AP/PM/Contract Admin (or Buyer) for a total 0.5 hours
• Labor rate: $50/hour
• Estimated savings: 2,908 invoice issues × 0.5 hours × $50 = $72,700 per year

4. Accruals & Digital Contractor Spend Reporting
Manual accruals and reallocations require finance teams to actively track contractor costs. They must also reconcile accounts and adjust for missing or misallocated expenses. These tasks introduce delays, increase administrative overhead, and lead to inaccurate reporting.

Efficiency Gain: Automating accruals of contractor spend and removing reallocation eliminates manual investigation. It ensures accurate cost tracking, reduces month-end corrections, and frees finance/project teams to focus on high-value work.

Average Impact for a $100M Facility: $225,000 per year

Assumptions for the calculation:

• Average of 1,000 POs per year require accruals repeating over a 5-month period
• Time per PO spent is 30 mins or  0.5 hours
• Total hours across POs annually is 2,250
• Labor rate: $100/hour
• Estimated savings: 1,000 POs × 5 months recurring × 0.5 hours × $100 = $225,000 per year

5. Daily Contractor Cost Visibility
Project cost tracking requires managers to compile data manually from timesheets and contractor reporting. This is often only visible to them and lacks comprehensive data, such as the contractor’s actual billing.

This process leads to delays in identifying cost overruns and making proactive adjustments. A lack of real-time reporting increases financial risk and reactive budget decisions.

Efficiency Gain: Automated reporting and dashboards eliminate manual data work. They enhance financial planning, track costs accurately, and enable early detection of overruns. This reduces unexpected expenses, corrective actions, and schedule delays.

Average Impact for a $100M Facility: $114,338 per year

Assumptions for the calculation:

• Total number of timesheets per year is 13,726 (based on an average value of $7,285)
• Average time to manually track each timesheet is 5 mins or 0.0833 hours
• Labor rate is $100/hour
• Estimated savings: 13,726 timesheets × 0.0833 hours × $100 = $114,338 per year

6. Duplicate Billing and Error Prevention
Duplicate billing (accident or fraudulent) of contractor third-party invoices can lead to unnecessary payments, financial losses, and audit risks. This is especially true with high-volume transactions like contractor timesheets and invoicing.

Common causes include manual data entry errors, lack of system controls, contractor resubmission errors, multiple departments handling invoices, invoice format variations, and technology gaps.

Efficiency Gain: Automating error detection and duplicate billing validation significantly reduces investigation time from days to mere hours. By eliminating manual processing and paper-based invoicing, automation enhances accuracy, minimizes resolution delays, and streamlines workflows. This allows teams to focus on higher-value tasks instead of tedious, time-consuming audits.

Average Impact for a $100M Facility: $72,000 per year

Assumptions for the calculation:

• Assumes half a FTE sampling for duplication and error prevention or two investigations per month
• Total number of hours spent annually is 960
• Labor rate is $75/hour
• Estimated savings: 960 hours × $75 = $72,000 per year

7. Internal Audit Investigation Optimization
Internal audits require significant manual effort to verify contractor expenses, review compliance, and find and cross-check documentation. The process is time-intensive—especially when discrepancies arise, as it delays financial reporting and increases operational risk.

Efficiency Gain: Automating controls and compliance with a fully digital workflow with an audit trail for contractor spend optimizes internal audit processes. It eliminates manual verification, interruption to project teams, missing documentation, and gaps in compliance. This accelerates error detection and ensures real-time compliance.

Average Impact for a $100M Facility: $90,000 per year

Assumptions for the calculation:

• Internal audit teams spend approximately 1000 hours across combined stakeholders annually
• PayShepherd reduces the effort by 90%
• Labor rate: $100/hour
• Estimated savings: 1000 hour × $100 / hour × 90% reduction = $90,000 per year

8. Manual Data Creation & Analysis
Finance and operations teams often rely on manually compiled spreadsheets to track contractor spending, analyze trends, or forecast budgets. This process is prone to errors, inefficiencies, and delayed decision-making.

Efficiency Gain: Automating contractor spend transparency eliminates the need to create, normalize, or analyze contractor actuals. It ensures data and trends are readily available for informed decision-making.

Average Impact for a $100M Facility: $67,500 per year

Assumptions for the calculation:

• On average 3 project/contract support staff are required to manually create, transform, normalize, and analyze data
• Average time spent by each staff member is 25 hours per month or 300 hours per year
• Labor rate is $75/hour
• Estimated savings: 3 staff x 300 hours × $75  = $67,500 per year

9. Contractor Claims Preparation
Organizations often need to prepare financial justifications and data-backed positions when contesting contractor claims. Without automated spend tracking, this process is manual, time-consuming, and increases the likelihood of overpayments.

Efficiency Gain: Automating contractor spend visibility and transparency eliminates the need to create, normalize and analyze contractor actuals when organizations need to be prepared to challenge contractor claims.

Average Impact for a $100M Facility: $96,000 per year

Assumptions for the calculation:

• Each claim takes approximately 4 weeks of preparation and manual effort for project owner and contract teams to compile and validate supporting data
• On average 2 people are required per claim
• Organizations handle 4 claims per year on average
• PayShepherd reduces claim preparation time by 75%, saving 240 hours per claim
• Labor rate is $100/hour
• Estimated savings: 320 hours × 4 claims × $100/hour × 75% reduction = $96,000 per year

10. Contractor Estimates, Planned Project Spend and Actuals Analysis
Organizations rely on contractor estimates and planned project budgets to manage spending effectively. However, manual tracking of planned versus actual costs is time-consuming, prone to discrepancies, and often lacks real-time visibility.

Without automation, teams must reconcile cost variances manually, increasing administrative effort and reducing the ability to make proactive financial adjustments.

Efficiency Gain: Automating contractor actuals with real-time visibility into resource utilization (labor, equipment, material & subs) enhances financial planning, estimate verification, and contractor selection.

Average Impact for a $100M Facility: $99,450 per year

Assumptions for the calculation:

• Project support teams spend an estimated 3 hours per week manually reconciling planned versus actual contractor costs
• 10 employees are typically involved in this process across different project teams
• PayShepherd reduces the effort by 75%
• Labor rate: $85/hour
• Estimated savings: 3 hours × 10 employees × 75% improvement x  52 weeks x $85 = $99,450 per year

11. Sale Transaction Date Cost Assignment
Tracking and aligning contractor costs with sale transaction dates is complex. Variations between invoice dates and work completion dates, delayed invoices, manual documentation, and a lack of technology contribute to this challenge.

Manual assignment, relying on stare and compare, as well as waiting for contractor invoicing increases reporting errors, financial discrepancies, and audit risks.

Efficiency Gain: Automating contractor spend visibility eliminates the manual effort of Transaction Date Cost Assignment. It resolves challenges caused by contract complexity, record quality, reliance on manual processes, and contractor diligence. This ensures accurate, real-time cost allocation

Average Impact for a $100M Facility: $30,300 one-time acquisition cost assignment

Assumptions for the calculation:

• Average number of invoices per month was 808
• For each transaction assignment, invoices from the months before and after the assignment date were manually reviewed to ensure accuracy
• Average time spent per invoice was 15 mins or 0.25 hours
• Some were processed faster, while others required additional documentation, verification of work incurred dates, and manual allocation when a single invoice spanned both sides of the transaction date
• PayShepherd created an automated report removing all manual verification
• Labor rate is $75/hour
• Estimated savings: 1,616 invoices reviewed × 0.25 hours × $75 = $30,300 one-time acquisition cost assignment

12. Contractor Cost, Rates & Spend Benchmarking
Managing contractor costs and compliance is inefficient without standardized pricing structures. Inconsistent rates for services, labor, equipment, or materials create challenges in benchmarking. This complicates negotiations and leads to time-consuming manual processes.

Efficiency Gain: Automating contractor rate and spend benchmarking eliminates manual data compilation. It removes inconsistencies, provides real-time cost visibility, and streamlines analysis. With accurate insights, procurement and finance teams make data-driven decisions. They optimize contractor selection, negotiate better rates, and improve contract adherence—saving time and reducing risk.

Average Impact for a $100M Facility: $281,250 per year

Assumptions for the calculation:

• Contract renewal activities, including reviewing the current contract, proposed rates, and source performance information from actuals, take an average of 250 hours per contractor
• Average of 15 contract renewals per year
• Labor rate is $75/hour
• Estimated savings: 250 hours per contract renewal × 15 contractors × $75 = $281,250 per year

13. Local and Community Impact Reporting
Organizations often track contractor spending contributions to local economies and community impact. Manually compiling this data from various sources requires extensive effort and delays ESG reporting.

Efficiency Gain: Automating local and community impact tracking streamlines data collection. It ensures reporting accuracy while reducing administrative effort—improving compliance and public accountability.

Average Impact for a $100M Facility: $97,200 per year

Assumptions for the calculation:

• Project support teams spend 10 hours per contractor each month gathering timesheets and invoices. They then manually align workforce and spending data with local governance requirements.
• Average number of contractors is 15
• PayShepherd reduces this manual effort by 90%
• Labor rate is $60/hour
• Estimated savings: 120 hours per contractor × 15 contractors × 90% Reduction x $60 = $97,200 per year

14. Contractor Management Performance Evaluation
Evaluating contractor performance requires compiling data from multiple systems, tracking compliance, and benchmarking performance over time. Manual processes lead to incomplete assessments and inconsistencies in contractor selection.

Efficiency Gain: Automating contractor performance tracking centralizes data, provides standardized benchmarks, and enables proactive decision-making. This improves contractor selection and accountability.

Average Impact for a $100M Facility: $66,300 per year

Assumptions for the calculation:

• Average of 10 contract managers manually compiling contractor performance data
• Each manager will spend 10 hours per month on these tasks totaling 120 per year
• PayShepherd reduces this by 65%
• Labor rate is $85/hour
• Estimated savings: 10 managers × 120 hours x 65% improvement x $85 = $66,300 per year

15. Automated Purchase Order Closeout
Closing out POs manually is a time-consuming process that involves verifying outstanding balances, reconciling commitments, ensuring final charges align with contract terms, and coordinating approvals across multiple stakeholders.

Without automation, this process is prone to delays, errors, and administrative overhead. This will impact financial reporting and vendor payment cycles. Inefficient PO closeout can also lead to unaccounted costs, unused budget allocations, and unnecessary contract extensions.

Efficiency Gain: Automating PO closeout streamlines reconciliation, eliminates redundant manual reviews, and ensures timely closure of financial commitments.

PayShepherd systematically verifies PO balances, reconciles invoices, and flags discrepancies in real time. This reduces administrative workload, improves financial accuracy, and strengthens contractor accountability, allowing procurement and finance teams to focus on strategic cost management.

Average Impact for a $100M Facility: $90,000 per year

Assumptions for the calculation:

• Average time per PO closeout is 20 mins for each of the following roles: finance, procurement, and project managers, for a total of 1 hour
• Organizations close out 1500 POs per year
• PayShepherd reduces time spent per PO closeout by 80%
• Labor rate is $75/hour
• Estimated savings: 1 hour x 1500 POs x 80% improvement x $75 =  $90,000 per year

16. Automated Accounts Payable (AP) Processing & Payment
AP clerks spend 40% of their day on invoice processing and data entry. They spend another 20% of their effort on payment processing and approvals. Manual invoice processing leads to increased workload, higher error rates, and duplicate payments—creating compliance risks.

Without real-time tracking, AP teams face challenges in forecasting cash flow and managing vendor payments efficiently.

Efficiency Gain: By automating invoice processing, organizations can reduce manual workload, improve accuracy, and enhance cash flow management. This frees up AP staff for higher-value tasks such as reconciliation, month-end close, and supporting financial reporting.

Average Impact for a $100M Facility: $78,000 per year

Assumptions for the calculation:

• Total number of invoices processed annually is 9,694
• With a fully manual system, this requires approximately 1 full-time AP clerk
• With PayShepherd, this role is no longer required
• Labor rate is $60,000/year
• Estimated savings: $60,000 + 30% employment burdens = $78,000 per year

17. Digital Contractor Communication
Effective communication between clients and contractors is critical for compliance, efficiency, or operational continuity. Often, high contractor employee turnover creates a repetitive need for communication and creates challenges.

Lack of structured communication can lead to safety violations, project delays, financial disputes, and compliance risks.

Efficiency Gain: Implementing structured digital communication with automated workflows reduces administrative workload. Centralized contractor portals streamline processes, while real-time notifications eliminate manual follow-ups and prevent misalignment.

Average Impact for a $100M Facility: $27,000 per year

Assumptions for the calculation:

• Average number of contractors is 30
• Average time spent per contractor on manual communications is 12 annually
• Labor rate is $75/hour
• Estimated savings: 30 contractors x 12 hours × $75 = $27,000 per year

Total Estimated Efficiency Gain

By adding up the impact from these areas, PayShepherd delivers an estimated efficiency gain of $1.5 million to $2 million annually for an industrial facility with a $100 million contractor spend.

This aligns with our industry benchmark of 1.5% to 2% of contractor spend throughput, ensuring that the estimate remains conservative and credible while still capturing the meaningful impact of PayShepherd.

Scaling the Model for Different Facility Sizes

While each facility is unique, this framework provides a strong baseline for estimating efficiency gains at different spending levels. Customers can scale the calculation accordingly:

• For a facility spending $10M per year on contractors, estimated gains would be $150K to $200K annually.
• For a facility spending $1B per year, estimated gains could be $15M to $20M annually.

While not a perfect calculation, this model provides a practical and defendable estimate for organizations implementing PayShepherd.

Customers covering 75% of contractor management processes outlined in this document with PayShepherd can expect efficiency gains to fall within this projected range.

Conclusion

PayShepherd is designed to bring measurable efficiency gains to industrial contractor management. By leveraging automation, data-driven decision-making, and process optimization, we consistently deliver 1.5% to 2% efficiency gains on contractor spend throughput.

This benchmark has been developed with conservatism in mind, ensuring that organizations can confidently present and defend these estimated gains internally.

In many cases, actual efficiency savings may exceed this range, but our goal is to provide a reliable and achievable projection. For companies looking to improve their operational effectiveness, these efficiency benchmarks provide a clear and practical model to estimate the impact of PayShepherd in their facility.